Agents told not to fight letting fees ban but concentrate on making it work

Civil servants have stressed that it is the “political will” of Government to ban letting agent fees and that the industry’s focus should be not on preventing the ban but on how it will work.

The message has been relayed by the Fair Fees Forum Working Group, set up towards the end of last year by the National Approved Letting Scheme just before the fees ban was announced by Chancellor Philip Hammond in the Autumn Statement.

With government officials last week stressing that the ban will go ahead, it is clear that the promised consultation will focus only on details and not the principle of the ban in England.

The Fair Fees Forum Working Group said in a statement: “DCLG [the Department for Communities and Local Government] reminded the group that it was the political will of Government to ban fees.

“Therefore, the excellent work of the group should be focused on continuing to provide evidence and data to help inform Government on the fee ban and how best to make it work.”

Those at last Friday’s meeting who heard the message included representatives of agents such as Hunters, Belvoir, Chesterton, Connells, LSL, Northwood, Savills, Countrywide and Winkworth, as well as ARLA and RICS.

DCLG was also in attendance, making its point, along with the Greater London Authority and the two main landlord bodies, RLA and NLA.

The meeting was also attended by the three property redress schemes.

Delegates agreed to contact the Competition and Markets Authority with a request that it review fees and charges in the lettings market and how best it should operate, ahead of the consultation being launched.

The group agreed to meet again when the Government consultation has been issued to consider a joint response, but members will also provide individual views to the consultation and share them, if they choose.

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21 Comments

  1. SLP

    Don’t fight it?? Why do we simply have to rollover yet again?

    Instead of allowing the few agents charging excessive fees to damage our entire industry, why not place a reasonably cap on them and allow those of us who employee lots of people, pay rates, tax etc etc and most importantly provide a good service, carry on doing so?

     

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    1. RobMills21

      I could not agree more, a simple cap would be the best solution. What the industry needs is compulsory overall regulation (not just for addressing issues) which would be more effective, we all know there are lots of ‘Rouge Agents/Landlords’ out there and regulation would cut these back and eventually stop them from operating, well of course as long as it is implemented correctly and run by people with the correct knowledge that is!. This is where insurance went, there was the GISC which was created as a ‘optional membership’, this did not work. When the FSA (FCA now) was created and ‘Rouge Brokers’ eventually disappeared and also insurance companies had to change the way they operated, it basically sorted the bad practices out that had been allowed to be operated for far too long across the whole insurance market. Of course this would not be instant as it would take time to be fully implemented and effective,but it would work as long as it is managed correctly and is the only way forward in my opinion….

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    2. Rickman2154

      I have just bought two tickets to Phil Collins for a special birthday treat for my wife, i have been charged £110 admin fee for processing on top of the outrageous cost of the tickets!! how absurd to just accept the no tenant fee rule when we chauffeur them to view the properties, advise them on legal issues, protect their deposit, go out of our way help with various issues, If something is too expensive and they are aware of the charge prior to purchase, then common sense states NOT to proceed! use an agent with reasonable charges.

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      1. LondonR90

        Your landlord fees would not become due without finding a tenant to fill a property.

        It is a part of your job letting a property.

        Presumably you chauffeur around a tenant to increase your chances of finding a tenant for your landlord? You don’t have to offer this service to tenants.

        You don’t have to protect the tenants deposit if you don’t want to. Ask the landlord to do it if it’s proving to time consuming. You can charge them for it if you want.

        In my opinion it is wrong to charge a landlord to find a tenant and then charge a tenant to move in to that property.

        It doesn’t sit well with me but that is my own opinion.

        Also, you say a tenant can walk away from excessive fees, you could have walked away from the £110 admin fee in the same way. But I guess it might have been hard for you, in the same way it might be hard for a tenant once they’ve found their dream property.

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  2. Headache

    Let’s be honest,look at the fees if you can find them on the main corporates sites and then wonder why the government are adamant about the ban.

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    1. Ding Dong

      agree, how many of those fall under the professional bodies “umbrella”?

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      1. Bless You

        Still don’t know why we cant charge buyers. All they do is moan they get no service and pull out of a sale for fun…£1000 withdrawal fee would be about right.

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  3. lettingsguru

    Are we any clearer exactly what fees the Government want to ban. The article refers to “letting agent fees”, and then later goes on to advise that the  “Competition and Markets Authority (CMA)” are to be contacted “with a request that it review fees and charges in the lettings market”.

    I hope the CMA don’t come back and start tinkering with fees to Landlords too!

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  4. mrharvey

    “the industry’s focus should be not on preventing the ban but on how it will work.”

    And maybe the government’s focus should not be on forcing through the ban but on how it will work.

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  5. redkey40

    Mortgage lenders, car finance companies etc are able to charge interest, early exit fees, and all other fees possible.

    When buying a washing machine, tumble dryer, fridge/freezer or any other electrical appliance that has been made in China for minimal price, and not just electrical appliances but anything you purchase, all of which has been made at minimal price, but yet allowed to be sold on to consumers at higher prices “for a profit to be made”… This is called business.

    How is it not fair for Lettings Agents to do the same, and charge letting fees for the work we do to ensure the right property is found for a potential tenant?

    I agree, some agents charge extortionate fees that are unjustifiable, and agree that these fees should be capped. Capped throughout the country so that all fees are standard and remain the same.

    Every company, shop, businesses operate in the same way Letting agents do and HAVE to charge fees in order to survive and provide the best service possible.

    Am I right in thinking, that mortgage lenders, shops, retailers and all other businesses mentioned above will also have their fees/potential profit making stopped to follow suit?

     

     

     

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    1. Ding Dong

      RK40

      I work in lettings, but you do have to look at this from an impartial view as well.

      We sign a terms of business with the landlord, and for that we receive commission and potentially a set up and renewal fee.  In that TOB, I would expect a lot of the services you mention that are conducted, will be included under the services within the commission/fee?  i.e viewings, tenant referencing, drawing up a tenancy, dealing with deposit compliance, right to rent checks.

      You have the ability to load all the costs plus any profit margin onto the landlord.  You could charge a set up fee of £300 and 15% commission but I would hazard a guess, you do not, because the agent next door charges 6%, small set up fee.  But they also charge the tenants between £600- £1000 to move in and uplift all their work invoices to the landlord by 33% (called the foxtons uplift for ease)

      Under the law of agency, you work for the landlord and not the tenant. The tenant is never really a client, so therefore charging a tenant for services, which in most cases is covered under the landlord TOB, is somewhat unjust?

      I can really understand why the Government have bowed to tenants pressure groups.  Okay, I have to tweak my business slightly to offset the loss of income, but I never charged tenants massive amounts in the first place, so it will be easier for me than I believe most others in London.

       

       

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      1. LondonR90

        Agreed. We do not charge tenant fees unless they fail a reference check after withholding information that would be pertinent to that application.

        Three years ago when I was at university I went to see a flat with my partner. We loved it. The agent from Ellis and Co said, I’m really sorry, there’s something to tell you, there’s admin fees of £300 each to move in.

        I wasn’t impressed with that at all.

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  6. LondonR90

    ‘Agents told not to fight letting fees ban’
     

    I think there’s some sarcasm to the headline. Agent will not fight. Comments on an article do not constitute a fight.

    https://petition.parliament.uk/petitions/173668 – just 6,000 signatures.

    Countrywide alone must have more than 10,000 employees. Add another 10,000 or so from LSL and Connells combined?

    Add a few friends and family into the mix and you’ll get to 100,000 no problem.

    So why just 6,000 signatures? It makes me wonder…

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    1. James

      Great post LondonR90

      Please don’t just sign this petition but get it out there to your LANDLORDS too…it will impact them just as much as it will Agents.

      https://petition.parliament.uk/petitions/173668

      A rallying call to all agents!…. Don’t be apathetic about it….do your bit and do it now…. your job could well be on the line!

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      1. jeremy1960

        Perhaps the petition should have been organised by one of the “governing bodies” such as ARLA or Nals, that way a couple of things may have happened: –

        1) The petition header may have been written better; the English is poor.

        2) Every member of the body could have received a personal email with a link to the petition making it more likely that the required numbers would have been met.

         

        As I’ve said here before the few have ruined it for the majority; last week I “lost” an instruction to the local CW branch, I say lost but in reality they gave in on fees and offered the landlord a let only fee of £200 INC VAT – when I look on their web site it would cost 2 tenants north of £750 to move into that house. Take the inflated fees away from companies like this example and the only option will be to charge the landlords a reasonable fee. Incidentally to let the house to 2 tenants through my office would have cost (landlord & tenants combined) £860.00 less than CW will earn just apportioned differently!

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  7. LondonR90

    How many of you above have signed the petition and how many of you have asked your friends and families and their friends and families to sign? Have all your employees and their friends and families signed? Have you send the petition to your client databases explaining what’s going on?

    I could have got more than 6,000 myself. I could have even got this number to 100,000 with enough work.

    Join together and fight if you want something to happen. Individually you are all very small fish but collectively there is no stopping you.

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    1. mrharvey

      calm down, I’ve already signed 😉

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  8. PLCO

    Until the government can actually understand the difference between a letting agents fee and a cost to an applicant, this will not be resolved.

    The applicant is not a Tenant whilst we apply for their references and progress the letting.  In days of yore they would have to pay their bank for a reference, as is the case today. So what is the difference in paying the cost for a reference  application/credit check.  The same applies to an inventory check out, its a cost not a fee, they pay for the clerks work – simple.  Plus it gives them mutual ownership of the Landlord inventory report.  In the main very few agents actually charge excessive Tenants fees according to the surveys/polls. The muddle is that the rent in advance and the deposit seem to be lumped in to the quoted figures in the media/press, so it costs thousands to move in.  Well it doesn’t when you subtract the initial rent and the tenancy deposit.

    My main concern is that applicants will be non commital if they do not pay a reservation fee/holding deposit or whatever else you want to call it, to hold the property and show their commitment whilst their references and the tenancy is processed. Its easy enough to offset it from the balance.  But not if this is banned in the first place.

    At the moment there is no legislation going forward for the government to act on.  It will take years for the legislation to be written and approved.  In the meantime keep calm and carry on.  Mrs May has got Brexit, HS2 and Mr Corbyn to deal with, plus she will probably go through a couple more Housing Ministers before they put this ban to bed.

     

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  9. Hillofwad71

    Surely if it,is  the Governmnet,s will to introduce this then the agents should persuade them to address the unfair practice  of charging a fee without a sale and forcing theri custoners who want to defer to use their conveyancing service ie Purplebricks.

    It might avoid situations like this as a recent review in Trustpilot shows

     

     
    Purplebricks UK

    Published 8 hours ago
    Diabolical service.
    Put property up for sale on 11th Nov 2016 and had one viewing over 3 months. That viewing was someone who wanted to just check out ours as they were selling round the corner!! Our property expert Emma Poland had all the banter and we felt so positive! When I checked our advert I had to correct numerous spelling and grammar mistakes! We have had 2 property reports which literally just say what we can find out from the app! I emailed several times to ask questions…no response! She may as well not exist! I have just asked to remove our property, no response! I will be challenging the fees, they have done NOTHING!

     

     

     

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    1. A_J42

      I see what you’re saying, but I’m not sure that simply pointing out other fee-chargers we deem unfair will help our cause.

      Seems like a tricky spot to be in. Conceding that the Govt will not change their mind on this and discussing terms might seem like surrender, whilst refusing to be part of the conversation because we think the ban should not take place might mean we get no say whatsoever in how it is put into place.

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  10. marlington52

    The government has publicly stated they will abolish upfront fees.   I do not see how the industry can make them back down.  The sensible strategy is to ensure we can still take a holding deposit/fee from Tenants.   If we cannot take a holding fee then it will make securing a Tenant impossible until contracts are signed.   Agents will therefore rush to get Tenants to sign putting Landlords at risk or Tenants will pull out leaving Landlords with Empty properties.  Either way it is lose lose.

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