Why was no one asked before bombshell? Consultation on fees ban to be launched in New Year

A consultation into banning letting agent fees is to be launched in the New Year. The ban will also require primary legislation through a new Act of Parliament.

However, questions are now emerging as to the alleged lack of any prior consultation whatsoever with the industry. It appears that none of the industry bodies had any inkling of the ban.

ARLA has slammed the Government for announcing the measure without  consultation, while also urging letting agents to continue business as usual. However, ARLA has in turn been criticised by a previous adviser over its tactics.

The Government U-turn on letting agents fees follows an announcement only last month by TPO, which announced a joint initiative with Trading Standards to make agents aware of their mandatory responsibilities to show fees. In an EYE recent meeting with TPO, no possibility of a ban was even mentioned. That possibility was also not flagged up in conversations with ARLA, NALS or RICS.

However, ARLA is now urging businesses to make their views heard.

ARLA managing director David Cox yesterday said: “ARLA is extremely disappointed that this announcement has been made without a strong basis of evidence.

“We are asking the Chancellor and the housing minister for a meeting at their earliest opportunity in order to ensure that they fully understand the damage that this will cause to housing standards and the impact on the cost of renting.

“We need the Government to explain why measures have been brought forward without prior consultation, undermining the work that we and other partners are doing.”

Separately, it is clear that there has been a gathering roar of protest against the ban on letting agent fees charged to tenants, with many agents warning that it will only fuel the housing crisis.

At EYE, we  have received an unprecedented number of emails on the subject – so many that we simply cannot report on the majority – and have had to choose a tiny handful of reactions. However, please do keep posting up your comments and also letting us know your responses. Every single one of your emails will be read and noted.

Paul Smith, head of Spicerhaart, said: “Government intervention in the rental market will sadly only lead to a backdoor rent rise for tenants.

“The cost of administration such as references and inventories that tenant fees would have previously covered are now likely to be passed on to the tenant through their rent. We estimate that rents will on average increase by £21.25 per month, which is an extra £255 a year, as a direct result of this change – with tenants in London likely to be much worse off.

“This measure represents yet another government blow for landlords, following the 3% Stamp Duty surcharge on second homes, the end of mortgage relief and the new rules on lending relative to rental income that have already come from the government in the last year.

“Landlords are already abandoning more expensive cities such as London because of the costs, even though this is exactly where more rental properties are desperately needed – and this announcement is hardly going to persuade them to return.

“The buy-to-let market is suffering, with haart data showing that the number of landlords registering to buy has fallen by 25% annually across the UK, and by 60% in London.

“We’re creating a time bomb for Generation Rent by pushing landlords out of the market, as well as undermining house-builders’ pipelines by cutting demand.

“The Government should concentrate on getting the market moving again, not penalising landlords, and we cannot wait until the situation reaches a crisis point.”

Glynis Frew, managing director of Hunters, which was founded by her brother Kevin Hollinrake who is now a Tory MP, said: “We are very disappointed. An outright ban would have unintended consequences on the very people the government wants to protect perhaps financially or even in terms of property safety. Agents perform both a service and a paralegal role when assisting tenants to move home.

“In our national tenant survey earlier this year, 75% of respondents said they did not want rents to increase to cover the cost of banning lettings fees. Unfortunately, it is very likely rents will increase in response to these changes.

“Whilst helping first-time buyers on to the housing ladder is important, the Government has overlooked the fact that some people genuinely want to rent or have short-term plans. 60% of respondents from the Hunters tenant survey also stated they chose to rent for reasons other than being unable to buy.

“We welcome the opportunity to enter into consultation and we sincerely hope the Government listens. The proposal that landlords would simply pick up the cost may have been acceptable in a different climate, however landlords have received countless knocks from the Government earlier this year which will make this unlikely.”

Andrew Ellinas, of London agents Sandfords, said: “Tenants have to be referenced, but if they subsequently fail those checks, preventing the tenancy from going ahead, who pays that fee?

“What about inventory checks? How can you now expect the landlord to pay for the inventory at the beginning and end of a tenancy – it doesn’t make sense. A tenant pays for it on the way in for their own peace of mind and the landlord once the tenancy has ended so that they can check everything is still there and in good condition.

“Landlords will not welcome this news and will look to recover their incurred costs elsewhere. Tenants may avoid a fee at the start of the tenancy, but there will be an unavoidable outcome of higher rents for them to pay.”

Eddie Hooker, of insurers Hamilton Fraser which runs the Property Redress Scheme and also mydeposits, said some agents will have to close.

He said: “This ban will increase costs on landlords who are trying to plug the gap in a difficult housing market. Parts of these costs are likely to be passed back to the tenant through increased rents as a result.

“It could also have a negative impact on the rental market as a whole with possible office closures and some agents having to shut up shop entirely.”

Separately, former adviser to ARLA Malcolm Harrison criticised ARLA for not being clear enough in stating that letting agency fees are about passing on costs, not profit.

Harrison said: “What is surprising is that the professional bodies so significantly failed over the last few years to counter that these items are on-costs not fees and also that their members should not remain members if they continued to see allow these profit centres to be milch cows fit for a Lehman Brothers.”

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106 Comments

  1. Robert May

    A while back there were a few bits came out of CLG that read like GCSE homework  written by generation rent activists. It appears  Mr Hammond has been influenced  by the situation in London at the cost of the rest of the industry where fees are reasonable and any excessive fees  or charges adversely affects the agent that tries it on.

     

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    1. Bix006

      No one was consulted because letting fees are an abomination and wholly unjustifiable. The uproar is indicative of an industry that is failing to move with the times and drowning in its own self-worth. Hard to admit, but I think Mr Pryor may just have been right with his ‘fat and lazy’ accusations.

      Time to move on.

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      1. Robert May

        what is an abomination is the  way people in  the densely urban areas are being fleeced by criminals (which includes some staff of letting agencies) who advertise their own properties to let, take fees and reject all applicants and now decent honest agents away from  the City sprawl are paying the penalty for a crime they are not committing.

        There is a  workable solution that suits the needs of all stakeholders.

        Accusations of fat and lazy? that will endear him to an industry that is the only workable solution to the housing crisis. Wasn’t Henry  the  expert who  helped the BBC put together  a Watchdog  show about  how Nigel havers AST was mis-handled by a letting agent? Turned out Nigel havers had a company let  direct with the landlord.

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        1. Bix006

          If someone can explain to me why the fee charged to the tenant for their ‘application’ is justifiable, I’m all ears. I haven’t heard anyone suggest an expense that wouldn’t already be easily covered by the fee they are charging the landlord. Tenancy fees are charges hidden in plain sight. There isn’t a single expense in drafting (editing) a contract (template) and referencing costs are minimal.

          I hear a lot of people wincing at the thought of losing another revenue stream, but zero concerns about any cost incurred as a result of losing the fee.

          Cheer up.

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          1. Woodentop

            If someone can explain to me why the fee charged to the tenant for their ‘application’ is justifiable, I’m all ears.

             

            About to see if you really will listen. Do you work or are you on the dole? If you work, you are paid for the time you do your work by your employer or does your employer say to you, do the work but I will not pay you! An application fee is to cover the work that is done and in the case of references its is the tenants reference that is required and has to be paid for expenses as well  as time work done … not forgetting the overheads that employer has to cover to provide the business and service and employee holiday pay and pension contributions etc, all of this before profit. Too many people are blinkered into thinking it is money for old rope, with no expenses. Now if you still do not agree, then your claim applies to every employer in the world.

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            1. Bix006

              “An application fee is to cover the work that is done and in the case of references its is the tenants reference that is required and has to be paid for expenses as well  as time work done”

              Thanks for that. I still don’t actually see an argument there for the fee. The work you ‘do’ is covered by your client that you are charging for renting their property. i.e…

              “If you work, you are paid for the time you do your work by your employer”

              Your employer is the landlord. He is already paying you.

              Nobody will convince me that altering a contract template or the actual cost of referencing is anywhere near the figures currently charged as a ‘fee’.

              I’m still all ears, though.

               

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              1. Woodentop

                I see your point and I would not disagree that some fees that are charged for hitting a pc button that prints at a cost of 1p doesn’t warrant what some agents charge. We don’t as it happens. However the landlord does not pay for tenancy referencing in the contractual terms, never has. It just doesn’t work that way for many reasons and many do not realise actually how much work is involved. Many an agent does nothing, load the premium and sends it off to a company that does the work for them. Agreed this is wrong for the premium some charge. But again many agents don’t. Referencing is just about always confirmed to tenants as a requirement that they are required to pay, those references can be used for other landlord properties! If we charged the landlord they would be paying for every abortive tenant … just too expensive when one comes to the conclusion that it would open the gates to wild and horrid tenant from hell. They would bump the rent up even further.

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              2. TheGreyAgent

                “Thanks for that. I still don’t actually see an argument there for the fee.”

                I’m not sure you are all ears, perhaps selective hearing might be more accurate?

                First off, if I’m referencing a tenant for the property it’s probably empty. Empty property means no rent which equals no income for landlord and therefore no income for me so the landlord isn’t necessarily paying me at all.

                I’ve certainly never come across one that will pay agents to reference tenants in my 27 years experience. The agent is paid to manage the tenancy in most cases.

                If I’m referencing a tenant for a potential property its because the tenant wants their application to be supported by some evidence of their ability to meet the obligations of any subsequent tenancy.  It’s for the tenant’s benefit that they can show they are a low risk to increase their chances of getting accepted.

                The landlord doesn’t benefit from that; at best he has a bit less to worry about. Until the tenant, if accepted, has fulfilled all of the obligations of the tenancy  until the end it’s still all at the landlord’s risk.

                If a tenant can’t or won’t provide evidence of their ability to pay why should the landlord pay for it?

                If I walk into the deli to buy lunch they expect me to show I can pay for it before handing it over; it benefits them to sell me their produce but does that mean they should let me have it for free? No it doesn’t.

                None of us work for nothing although you might be surprised just how little some people in the industry are paid in comparison to the hours they work. Like any industry there are people who take the mickey over what they charge but the vast majority don’t and no one, not even Gen Rent or Shelter have been able to provide any hard factual evidence that that is the case.

                 

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            2. Yorkshire Landlord

              Going back to the bombshell ‘why was no-one consulted’ perhaps the question should be WHO was consulted and what result did they want?

              Who will receive preferential treatment from the recent hammering of the private landlords and the agents that serve them? Large corporate investors that have been big tory donors that have started to change business models to convert their commercial properties to residential as they can get more per sq metre.

              The general assumed rent increases due to all the landord squeezes/ the reduction in competition when they sell, all make the PRS sector more and more appealing for the big corporates….and all to the detriment of the tenant. Just ask all the students having to fork out astronomical rents once the big corporates took control.

              Also hasn’t generation rent and all been campaigning for longer tenancies with the suggestion that landlords are evicting on a whim – interesting that the rhetoric has been changed to tenants wanting to move several times and so incurring fees on numerous occasions in a few years. Tenants wanting a stable long term let will not be having to pay any more upfront fees.

              I can see the argument for a REASONABLE cap on fees as we are probably the cheapest local agency for tenancy fees at just £75 each per tenant, (inc VAT) ie only £62.50 to us which believe me does not cover the cost of constantly chasing employers and previous landlords for their references and sometimes doing land registry checks let only credit checks on tenants. Believe me this does not cover the cost of referencing a tenant. The tenant faces no further upfront fee from us, we recognise that a lot are struggling just to pay their first months rent and deposit. However some local agents have far larger fees and numerous services that the tenant must pay for before their tenancy starts.

              Unfortunately the loss of the private landlords that genuinely care for their tenants will leave these same people to the mercy of faceless corporates that will squeeze as much profit as they can get away with.

              Lets not also forget the foreign investors that are circling, with the lower pound making investments here more attractive. We’re are seeing these people setting up British Ltd Companies, taking British mortgages, (that they can offset against profits) sweeping up properties from distressed private landlords that can’t. These people don’t care about the areas that they are investing in, or keeping tenants happy – they just want the profit that will all be taken out of this country.

              Whilst all recent ministers have sought to set tenant against landlord, none seem to be able to see what the future is beginning to look like – such a sad state of affairs…

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              1. Yorkshire Landlord

                what did they used to say about labour? ‘If it’s working regulate it, if it keeps working tax it when it stops working subsidise it’ seems to have become a tory policy now – and it will be the big corporates that get the subsidies to ‘solve’ the problem they created

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          2. Robert May

            Would you prefer to be  meet someone at the property you wish to rent who can be traced back to a known  physical location , someone you can trust or are you happy to meet and pass money to just anyone?

            Because there are lying cheating scamming criminals that the police and authorities choose not to apprehend, Honest decent people are competing  to make a living with them.  There are lying cheating criminals who  pass themselves off as honest, the genuinely honest agent is competing with them too. (I know boo hoo boo hoo from you) abolishing tenant fees which enable honest decent agent to compete with lying cheating  scammers is a passport to chaos and a meltdown of decency and honesty.

            Well intentioned people have orchestrated  student union  level lobbying to influence an accidental chancellor to do something to make a name for himself. He has done that and you and your likes will reap the very undesirable  results of that.

             

            You will end up paying an insurance premium  where an insurance company is  referencing you and taking the risk up till now shouldered by landlords.  Well done you you got rid of tenancy fees but incurred an annual insurance premium that will cover the risk and include a profit for the insurance company.  All you good tenants will end up paying for the baduns!

             

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            1. Bix006

              Again, thanks, but that’s not actually an argument against scrapping the fee. That’s an argument for industry regulation, not charging a fee for a contract template or the actual cost of referencing to the landlord.

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              1. Robert May

                It was a question you haven’t answered.

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            2. Yorkshire Landlord

              …and lets not forget the announced additional 2% insurance premium tax…

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          3. Maxwell73

            I’m afraid I’m mostly with Bix006 on this one.

            I don’t have a problem with paying a reasonable fee for a service so long as I can understand how it’s justifiable. When it comes to tenant fees, I’d say paying £80-100 in admin fees would be fair enough. Still quite a bit to pay for what is essentially just filling in a template form, but we understand that this is how the world goes round.

            However, most agents have been greedy and kept pushing their luck because they know tenants don’t have a choice, especially when demand is high. More often than not, tenants are paying premium prices for rubbish customer service. Many, if not most, agents have used the low supply/high demand to take advantage and rip off consumers.

            My partner and I paid over £550 in admin fees recently, and this is simply extortionate.

            Furthermore, I don’t believe rental prices will inflate too much after the fee ban because agents and landlords have already been pushing prices to the limit as it is, and that can only be taken so far.

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            1. Woodentop

              My partner and I paid over £550 in admin fees recently, and this is simply extortionate. I would agree, we charge £90 and nothing else.

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              1. Tim Hall

                Each property, landlord and tenant is different – the “template” always needs amending. We are required to give the tenant a copy of the right to rent guide, the EPC, the gas safety certificate, prescribed information and information about the relevant deposit scheme being used and when the tenant has signed we then contact the relevant authorities for them, having taken meter readings that day when carrying out the smoke detector checks.

                On average the time taken to arrange, prepare and sign a tenancy agreement is 2 to 3 hours. And yes, drafting the tenancy alone, even though it is a template, can take up to an hour by the time amended it for the specific Landlord and property and you’ve filled in all the relevant information.

                The reason a tenant should pay towards the cost of preparing the agreement is it is for their benefit as well as the landlords – the tenancy protects both parties and we, for example, have always split the cost equally between Landlord and Tenant (£72 incl. vat each).

                The tenant could always employ their own solicitor, as they would for a commercial lease, but they would pay much more than £72!!

                 

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            2. Yorkshire Landlord

              please don’t forget that 20% of any fee is paid to HMRC as tax…

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      2. Eamonn

        Fat and lazy from a self proclaimed property expert?  PMSL

         

        Now that agents can’t charge for their services can we all stop doing right to rent checks.  After all, we done won’t to end up being be unpaid members of border control.

         

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        1. Ding Dong

          Eamonn

          the agent has no obligation to conduct a right to rent check, the obligation in the legislation is that of the landlords…

          if the landlord wants to protect himself, they need to get an agreement for the agent to do such and pay the appropriate fee.

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          1. Eamonn

            What world do you live in

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    2. PeeWee

      Take note.  Notice how when they need to beat a drum London / PCL stands alone as a beacon of success or in most news these days a bubble of extremes,  Here the chancellor has run roughshod over everyone because of that bubble.

      Its the same in any business when you let greedy number focused people who only focus on the numbers run the show.

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    3. Officerdibble10

      Come on lads. If you ask a bunch of turkeys whether to vote for Christmas or not, what do you expect them to say? We weren’t asked because we have some numpties that can’t even see the wood for the trees! At my hub we saw this coming ages ago – some people need to wake up and smell the coffee! Those days are over!

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  2. danandsan17

    Once again the governments hatred of landlords, not happy with smashing them with crazy stamp duty, taxes that will start making BTL that much less attractive, all of the other hoops you have to jump through, and once you sell up good old capital gains,  this is mostly smaller entrepreneurs buying a property wanting to add something extra to their pension pot who are going to rethink whether buying a property is the right thing to do. I wonder whether in difficult times the government might spend a bit more time looking at the Starbucks and Amazons out there, instead of trying to ruin the property market, my guess some little number cruncher, seeking to appease the liberal left and not thinking of the consequences, seems standard these days.

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    1. Robert May

      No it is far simpler than that, the junior civil servants who cobble stuff together to brief ministers  and influence change live and work in an area where even a £100,000 salary doesn’t buy a flat. Consequently their issues, those of generation rent are significant influencers over what is going on in their real world.

       

      The anonimity of the city means rogues can flourish and scams like the  Uber weekend rental scam  can be pulled off time and time again.

       

      Hammond is solving a  problem he doesn’t understand, there isn’t an anti agent anti landlord  sentiment to it just understandably skewed reality served up by people affected by the problems of a fraction of the industry.

       

      Hammond is  solving the wrong problem with the wrong stick.  The less well off tenants won’t benefit at all  from the abolition of tenant fees. Those who can well afford them already will simply have more cash.

       

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      1. Woodentop

        He needs to go and work in letting agency for a couple of days, he wouldn’t cope out of his bubble.

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    2. new life

      What have ARLA done? taken the money of all those agents under false pretences !! The so called voice of the industry  I cant hear that voice standing up for its members nor any of the other trade bodies that we pay our fees to.

      This is something that has been on the cards for quite a while so no real surprise to anyone that this has come about instigated by such a small amount of people. yet as a collective we still all stand apart !!

      As an industry  we have a very strong point to make and as individuals far outnumber the minority of so called do gooder’s who have lobbied a very weak and unelected government. Its time we stood together and made our collective voices heard.

       

      DONT MOAN ACT..      .

       

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  3. Paul House

    This is what happens after years and years of inactivity.

    This should the time for ARLA to stand up and be counted and fully make the case and should push a cap on fees as a better option.

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    1. MemyselfandI

      It’s too late, I doubt the government will make a U turn on something which has been so high profile yesterday and is popular with the public majority in favour of appeasing a few letting agents. No chance.

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      1. Robert May

        He will have to,  there are legislation checks that don’t benefit agents or landlords paid for out of fees,  who is going to do that if no-one is paying for it?

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        1. MemyselfandI

          I agree but I don’t see them turning

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          1. Robert May

            People didn’t think ripping off investors through portaljuggling was a crime anyone would take notice of!

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            1. Tim Hall

              If we all think it is too late then it will be. We have to speak as one voice and lobby for one, capped, reasonable fee for arranging the tenancy and ensure fees (which can be set) for breach of contract can still be charged.

              ARLA cannot be blamed wholly for this – we as agents knew it was on the cards but how many actually reviewed and revised their charges?

              In my area alone the maximum fee charged by a certain agent (for two applicants taking a tenancy) is £540, the minimum is £132 (which is my charge – I charge £30 per person for referencing up front and £72 at the point of signing the tenancy – I will only ever charge for work DONE!).

              Most ARLA agents were around the £202 figure quoted by ARLA, except one who charged £450!

              Except of course £202 is not a reasonable figure to charge!

              Why did we ever think displaying fees and transparency would ever make a difference?

              We should not treat this as a fait acomplis – we should lobby for legislation to cap fees at a fair level for work done for the benefit of the tenant.

              Not that it will do any good of course – I can still be cynical whilst being naively optimistic!

               

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  4. nextchapter

    This is a welcomed ban! There is no fairness with tenants and it’s all about profit margins. Sometimes it’s about doing the right thing and not conning the public. The fees are ridiculous. it might even make tenants like lettings agents again, as they collect their keys, they will no longer feel robbed whilst the lettings agent is counting team cash.

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    1. Paul House

      Tenants and the general public will never like letting agents. This policy will change nothing and will only serve to massage the idea that letting agents are worthless, uneducated and unprofessional eeks in a job that anyone can walk in to.

      This policy shows a complete misunderstanding of the PRS.

       

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    2. Will

      Nextchapter may well think this is the “right thing” but there is no such thing as “free”.  It has been said so many times that the only solution to rising costs of housing is to increase supply of housing, particularly social housing where needs are most. There is no other solution and government, generation rent & shelter know this but like too offer “something for nothing” solutions to those whose who are vulnerable, gullible and so desperate they believe it! This is how all cons work!!

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    3. Votta583

      You couldn’t be more wrong!!!

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      1. Ding Dong

        Votta 583

        Are they really that wrong?

        I agree that fees should be charged to tenants for certain services which benefit them and the law requires to be done. However some agents, some of whom are ARLA members, have taken the proverbial for a long time, charging fees way in excess of costs and a reasonable margin.  They have fleeced tenants for a long time and now the chickens have come to roost and ARLA are moaning?

        For example Mydeposit, charge two ARLA agents I know, some £4 for deposit compliance but the agents charge some £36 to the tenant.  They charge admin fees in excess of £400 for a single tenant and then on top comes the credit checking which again is uplifted by 600 – 800%.

        Personally, I blame ARLA and all the other professional bodies, who have done pretty much zero on tenants fees, and actually make our jobs harder because they have their noses in the trough i.e. deposit compliance as they all some form of ownership in the deposit schemes.

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        1. Woodentop

          What is coming out loud is agents agree with Government that some agents take advantage on fee’s, which are unjustifiable. What is also coming out loud and clear is that a total ban on fees is not the way forward. There is a place for tenants fee’s which should be proportionate to costs involved. Getting that agreement would be a hurdle without the industry being allowed to sit down with Ministers and  make their case. A set fee of charge(s) or a maximum % of rent either of which will be geographical dependent and argumentative.

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        2. new life

          Well said Ding Dong

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  5. IHS

    When carrying out rent reviews from now make sure you add on a sum to cover the cost of future referencing so landlords won’t feel so aggrieved when you have to charge them instead of the tenants!

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    1. Yorkshire Landlord

      yes we’ve already had numerous landlords asking us to consider dividing the upfront tenant admin fee by 12 months and adding it to the rent! Really not fair for tenants that plan to say in a property for a few years but the landlords have to cover their costs.

      ….but the tenants for those properties when advertised will presumable be happy in the knowledge that they’ve paid no admin fee – how delusional

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  6. MemyselfandI

    The government have been talking about this for ages. This is ARLA caught napping and the likes of Shelter banging a louder drum. I think David Cox should be considering stepping down.

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    1. Votta583

      ARLA wasn’t caught napping. ARLA just arent listened to as much as they should be whatsoever. Numerous attempts to stop this were made and ignored! And if you understood the work David Cox did you wouldn’t be saying he should stand down.

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      1. MemyselfandI

        ARLA aren’t listened to as much as they should be?! Really? Surely that means they don’t have a voice and government don’t respect their opinion because they’re ineffective?!

        I know David and I’ve seen first hand some bad decisions he’s made. Compared to his industry rivals he’s weak. ARLA have had very little positive effect on our industry in last few years and it’s time to take responsibility and make some changes.

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        1. Woodentop

          He needs to go to dinner more often with the right people!

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          1. Tim Hall

            Goodness me Votta583, I actually agree with that comment!

            ARLA represents letting agents – it is the agents overcharging that have caused this problem, not ARLA, and ARLA had told its agents to look into their charges.

            How many actually did?

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    2. Eamonn

      ARLA should hang their head in shame,  they have centred around a debatable arguement that a ban on fees will push up rents.  Shelter proved in Scotland that isn’t necessarily the case.

      they should have focuses on much better arguments.  There are plenty of them.

      ARLA played the tune of regulating agents.  No doubt a money maker for ARLA.

      Its members should walk away,  save their money and put it into something that serves them better..

       

      dont nut know how hard David Cox works,  I’m sure he’s a nice guy but has failed his members

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      1. Ding Dong

        Agree on ARLA

        should have stamped and thrown out the members who were charging fees way off the scale

         

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      2. Woodentop

        If he has failed he is not the only one, what about those other industry figures that sit on panels in our name! As I said yesterday they are keeping very quite on the subject, while they are normally happy to voice opinion on EYE. Considering their posturing that they were doing us a service …. becomes questionable.

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  7. Will

    I guess we all need to get used to it. It is like all consultations; a sham. You consult say you have listened and  ignore it!  Many years ago there was  consultation on the third London Airport but strange enough the M11 was put in place before it was announced as being Stanstead!!  If they sound like politicians, look like politicians and talk like politicians you already know the result. Give virtually anyone too much power and they will abuse it.

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    1. Yorkshire Landlord

      well can you call it a consultation if you’ve already announced the outcome???

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  8. Headache

    I can’t for the life of me see my landlords accepting reference fees as their responsibility

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    1. Eamonn

      Your right, they won’t.

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      1. Ding Dong

        Out of interest, whom demands the referencing to be done?

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  9. nextchapter

    Here’s an idea for you all! how about you just lower your referencing fees and ‘admin’ fees to make your landlords happier. oh wait! I think you will. And this just shows how you you’ve been ripping off tenants and how if you wanted to, you could have lowered the cost substantially years and years ago!

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    1. Votta583

      heres an idea, why don’t you come up with another source of income to help cover the costs of running a lettings business.  When you work out the hours that the letting agents work and divide it by the salary it’s minimum wage!  Taking away tenant fees could put good agencies out of business what don’t you understand about that???  Just like many other individuals you see it as greed  as opposed to keeping the lights on.  Any idea how much it cost to advertise on right move now?  Course you don’t.

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    2. mj97

      How about all the Tenants that will now waste Landlords/Agents time by having no commitment to a property, no fee’s required means tenants potentially hopping to other properties when they want too.

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      1. Ding Dong

        From reading the Scottish law, you can charge the deposit up front. to show commitment

        Obviously if they dont take the property, then I assume the landlord could deduct any rent he/she have potentially lost. Obviously the agent cannot deduct any fees which is the issue here.

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        1. Tim Hall

          In this scenario, assuming the Landlord is allowed to charge lost rent (which I very much doubt), I assume the agent could charge the Landlord for collecting the lost rent ….?

           

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    3. Will

      How about landlords just hand over the keys to anyone who fancies taking their house (without any checks) and does not want to pay rent or be responsible? forget about referencing, forget about inventories, forget about tenancy agreements, don’t hold deposits just sort the problems with a bunch of heavies once its gone wrong!!!!  Forget all the additional costs imposed by Government acting as Border Control Staff and the raft of other duties put on landlords and agents. Oh yes that would make such a good investment wouldn’t it!!  Oh by the way landlords would withdraw from the market and we would be back to the 1980’s when YOU COULD NOT RENT IF YOU WANTED TO BECAUSE THERE WAS NOWHERE to rent due to rent controls. NO MOBILITY OF LABOUR TO MOVE AROUND THE COUNTRY, NO IMMIGRATION AS THERE WOULD BE NOWHERE TO RENT. At least back in the 1980’s you had council houses but they have all been asset stripped by government. Still I guess living in cardboard boxes will make for effective recycling.

      Landlords will be forced to  look at alternative sources of income such as holiday lets and emergency accommodation and this is starting to happen.  It will all end in tears

      There are some agents who rip off both landlords and tenants and this is not acceptable but the latest is no answer.

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  10. Aaron

    Suggestions of passing on the fees to landlords is less than ideal, I think many landlords will consider their costs when they get an increase of fees and may even consider changing to cheaper agents as a direct result of higher expenses, regardless of whether their current agent works well for them, they could even consider trying to manage themselves for a period or worse – be drawn into the cheap world of online only agents for £49.

    Secondly, what about recovering costs for failed referencing?

    Hypothetically, a property is on the market with two letting agents –

    Letting agent 1 finds a tenant, instructs referencing and performs the RTR checks, the tenant fails and the property is re-marketed.

    Letting agent 2 then finds a suitable tenant, and all goes swimmingly and this agent recovers their costs from the landlords fee.

    Who covers letting agent 1’s expenses occurred, and when is this charged? If its a landlord who then fails to pay, are you going to take him to court over £25?

    It will also be interesting to see what they class as ‘fees’ and whether they allow for cost for services to be charged. i.e a contract, which benefits both the landlord and the tenant. The tenant needs to rent as much as the landlord needs to let, so why shouldnt this cost be split? The likes of the big dogs charging £450 plus vat for an application in London is excessive and is obviously the catalyst for such activists who drove this forward, but for an agent charging £100 – £150 for checks etc I think is fair.

    Stop the ban…. Introduce a cap!

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  11. Woodentop

    Landlords and agents have demonised for so long that people believe it is true of all, been driven by the likes of Shelter and Generation Rent. They use the word “Profit” which generations have come to despise, like the Bankers salaries, MP expenses etc. I don’t see the government banning bankers overdraft fees of £45 for being £2 over drawn or the likes of Pay Day loans interest rates…. often used by the vulnerable. As someone said were are talking about banning the covering of costs not profit. The most absurd thing is the ignorance of those making decisions on the need for some of those costs … referencing is a prime example and too many don’t do that properly on the cheap. It hasn’t helped that some have milked the system with high fees that could never be justified, but not all and that is where this draconian measure is outrageous, it penalises the industry that has played fair, it penalises the landlord by putting them at higher risk of financial loss and damage to their property by allowing no commitment from tenants who are being provided a service and rogue tenants …. something that no political party has EVER addressed. They need the private rental sector to support the housing crisis and what do they do …. shaft landlords and agents and expect us to role over following some delusional far left wing propaganda. It is about time Government looked at who they are sleeping in bed with when it comes to advisory panels.

     

    At the end of the day they will have failed, the tenant they thought they were protecting will end up paying more, as rents will go up to cover costs, not profit.

     

     

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  12. Woodentop

    Oh and why was no-one asked before they dropped the bombshell …… they knew they are in the wrong.

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  13. SLCMD95

    Agents are to blame for this, they are greedy – charging up to £500 for administration and referencing for two people and that without all the extra add on’s such as addendums at £60 and ‘move in within three days’ another £50. I know as I used to work for one that charged it. It is unjustified and although I think Hammond has gone to the extreme, something certainly needed to be done.

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  14. simonh

    One question: Is it legal for government to ban a business for charging a fee to do a job?

    We are not civil servants, we are businesses. The vast majority of us on here do not rip off tenants, we charge a fair fee for an important job that aids them to get into a quality property. Cut fees, cut checks, cut out agents, cut corners; it will just result in poorer property and more scarce supply.

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    1. Eamonn

      I have asked the same question.

      I don’t think it is.  It’s seems a bit communist.

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      1. Ding Dong

        I think this about the law of agency i.e. the landlord is your client not tenant

        as an agent, you never have a contractual relationship with the tenant, as you have an obligation to serve your master i.e. the landlord

        as someone alludes to further down, in estate agency, you never charge the purchaser only the vendor.

        TBH, the logic is common sensed, but we are in market where it has been easier to charge tenants because of lack of supply.

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        1. Eamonn

          That’s complete and utter  nonsence and in some regards at the heart of misconceptions around this entire affair.

           

          too many people draw parallels with the selling market where the buyer receives a service at the cost to the seller.   They assume the same should apply,  The buyer however still employees a solicitor to act on their behalf.

          joe public, lobbyists and now politicians fail to see that in the lettings business their is no legal advisor doing all that important work for the tenant.

          THerefore the letting agent plays a very important paralegal role which is critical in the process.  They should be able to charge for their reasonable time and expenss,  and yes a make a profit.

           

          I don’t apologise for making a profit,  it employs people, provides for them, myself and families and children.

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          1. Ding Dong

            Eamonn appreciate your views

             

            actually they are not really mine, but based on case law, and one of the most recognized solicitors on the housing law circuit

            just have a look at the nearly legal blog for his views

             

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        2. Woodentop

          Possibly not. The tenant is your customer and part of that service is that they required to be referenced, therefore one can argue that the cost of the application (as many industries do) incurs costs (not profit) which can require the applicant to pay. e.g.  Mortgage application fees, visa fees etc. The point here is that the need for is being overshadowed by the over charging by the few and ignorance of those that do not understand.

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          1. Ding Dong

            I think you need to read law of agency before you comment

            read Giles blog (which i tend to agree with) at nearly legal

             

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            1. Woodentop

              I do and as it happens not everything he says is law but opinion. There is Commercial Agents Regulations 1993 and case law so I beg to differ.

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              1. Ding Dong

                Woodentop

                The commercial agents regulations relate to goods NOT services.

                i dont always agree with the tone and styles of Giles of Nearly Legal (as he appears to hate agents) but he is bang on

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                1. Woodentop

                  Sorry to hear you have taken the wrong end of the stick. Not intentional and I did say I beg to differ and my original comment was “Possibly Not”. You see there are many regulations to fall back on as a precedence and case law. That is why we have higher courts of appeal, differing interpretation for differing circumstances. Nothing today is actually set in stone, if one can put up a valid argument.  Law of Agency is about liability:

                  A consensual relationship created by contract or by law where one party, the principal, grants authority for another party, the agent, to act on behalf of and under the control of the principal to deal with a third party. An agency relationship is fiduciary in nature, and the actions and words of an agent exchanged with a third party bind the principal.

                   

                  So what is your point, that the tenant is never my customer! They are when they freely sign my reference contract and give me the authority to take up references in the full knowledge that data protection is covered and the fee is reasonable. If not they are free to walk away and find another property and will not breach my landlord contractual agreement.

                   

                  As to Commercial Agents Regulations 1993 which the UK adopted to comply with a 1986 EU Directive. It is about service of agents.
                  A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract where he has an exclusive right to a specific geographical area or to a specific group of customers and where the transaction has been entered into with a customer belonging to that area or group
                   

                   

                   

                  Your last paragraph states he is no lover of agents and he may be bang on from his perspective, but not from others.

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                  1. simonh

                    So if the tenant is not our client/customer then how does CPRS apply to our business?

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                    1. Tim Hall

                      The tenant is the client/customer of the Landlord – we, as his agent, represent the Landlord. The tenant can never be our client as that would be a conflict of interests.

                      We reference the applicant (NOT the tenant) on the instructions of our client, the Landlord.

                      If the reference proves the applicant is not suitable to take a tenancy you can charge that to the Landlord – as you can if the reference proves the applicant is suitable. That is your choice as a cost to your business.

                      The only part of the process the tenant should contribute to is the preparation of the tenancy.

                      Arguments about who is the client are pointless. The important factor is who BENEFITS from the service, and the only part which is of actual benefit to the tenant is the tenancy which, as I have said before, benefits both the landlord and the tenant and it is not unreasonable therefore to charge both for the service.

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  15. Eamonn

    CAN ANYONW HELP ME WITH THESE QUESTIONS?

     

    The ban on letting agent fees will not change the public finances Or add to the treasury coffers.  SO WHY was it suddenly brought  up yesterday at a  ‘budgetary meeting’ as against a normal announcement in the commons.  It seemed very out of place?

    Is this ban linked to the white paper being passed through the House of Lords re tenants Rights

    Is it legal for the government to them tell private Business how much it can and can’t charge for providing a service.   After all it’s nothing to do with the public finances.

    why is the government so insistent on making life harder for private landlords, and so supportive of Build to rent.

    How much of the £3BN will go to support builders who are building to rent not to sell.

     

     

     

     

     

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    1. Woodentop

      I think everyone is asking the same questions, hence why no-one was consulted.

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  16. ringi

    ARLA could have required their members to display ALL charges CLEALY on ALL adverts, e.g. keep to the law.   ARLA chose not to do so…….
    ARLA could have limited what their members charged to renew a tenancy they did not……
    ARLA could have expelled members that charged unexpected fees to tenants, they did not……
    ARLA could have stopped one animal destroying it for the rest of their members but did not…..

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    1. Ding Dong

      100% agree

       

      Foxtons, Townends, Romans spring quickly to mind in fee levels

      actually from my visits to agents, it is the corporates and the multi branch companies which are generally the culprits

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      1. Woodentop

        The law is there to be enforced … the regulators did not regulate ……. that is where this really all fell down. Its quicker to ban, stuff the fall out and cost the people they say they are trying to protect, to end up paying more.

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    2. Votta583

      Unfortunately ARLA do not have the same powers as the likes of government or shelter and policing what you’ve stated is difficult with a lack of income and resources although plans are in place to monitor these as well as all the behind the scenes work they do already which unless your a representative you wouldn’t know about.

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  17. James

    I left ARLA for another regulatory body a number of years ago. The reason? Far too much influence from the chains and the ‘bigger players’ in the industry. I found this to the detriment of the smaller business. That’s why ARLA have had their pants pulled down in the last 24 hours; in my opinion as it has more often than not been these ‘bigger players’ charging excessive the tenant fees that has put us where we are. It’s now up to them to get us a fair deal? I won’t be holding my breath!
    Tenants should not have to pay extortionate fees, I absolutely agree but Tenants will still pay.
    They will have to self reference and pay the referencing agency direct.
    Deposit protection was brought in to safeguard Tenant’s deposit and Tenant’s will pay an inventory clerk direct.
    And abortive costs? Essential or we might as well shut up shop now.
    There is no such thing as a free lunch; there never has been and there never will be.
    The biggest flaw in the ‘complete banning of fees’ is that this will hurt the tenants who need the most help and support. An agent will spend far less time helping tenants who might not quite meet referencing criteria, becoming far more ‘selective’ about whom they agree to put forward as a prospective tenant.
    Some landlords will pay more, others will find the additional costs, coupled with their new increased tax burden, too much and just sell up.
    This will inevitably lead to reduced supply and greater demand. Suffice to say those who need housing most will have far less choice and pay more rent for that.
    Rent caps will only serve to drive more Landlords away from the PRS. There is no question in my mind that this will lead to a ‘rush to sell’ and a market crash.
    The real problems in UK housing are created by the lack of new affordable housing and a lack of a consistent, cohesive, long term plan by successive governments dating back over 45 years.
    In the world of globalisation we live in it’s a pipe dream to think the any Goverment is going to solve this problem. Just look at shared ownership and successive Government Schemes? All vastly over priced housing which has exploited the very same people It’s supposed to be helping.
    Everyone wants a fair deal for the normal working person but the whole world is set up to exploit those who can least afford it. The housing industry is a mere fraction of a fraction. It’s just my opinion from what I’ve seen but, the majority who fight for the less privileged, are lining their own pockets as they do so.
    Property has replaced a pension for many Landlords. After the disgrace that continues to befall the working person’s pensions (BHS just the latest of a long list), this is a prudent, effective way of securing a private individual’s future in retirement. This will assist in reducing the UK pension burden…and I might add the only safe and workable solution in which to do so!!…So it’s incomprehensible as to why the industry is under constant attack?
    Cap fees, introduce compulsory Client Money Protection (a far more important legislative necessity), life ban / prosecute the non compliant. Do all of these but be very careful not to ostracise all the decent landlords and agents at a time when they should be encouraged to increase their portfolios and support housing needs.
    To do so is going to make the current housing crisis the tip of the iceberg in the very very near future…..

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  18. NickTurner

    Rather like Brexit/Marmite you either love the decision or hate it.

    Lets all stop moaning, look at the situation and see how we can as UK Plc  work within the new laws to the benefit of landlords ( who as a client pay our fees) tenants ( who without them there is no business) and ourselves as agents. Perhaps the tenants will be expected to have their own ‘approval certificate’ paid for in advance by them?

    On a slightly different tangent why should tenants pay fees to rent a property when if we are selling a property to a prospective buyer a selling agent has never charged the prospective buyer fees for all the, often, abortive works finding out about the prospective purchaser?

     

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    1. Eamonn

      It’s show a fundamental lack of understanding drawing parallels of the processes in selling market and letting market.  They are completely different and need to be,    People who don’t understand that are a total heads gone and  shouldn’t even be in the business.

       

      The only thing that’s similar is It revolves around property.

      Step aside

       

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    2. inthefield

      Nick Turner. Some valid points you raise but the truth is the letting market has evolved like this and I (we) have built our businesses on the back of the norm.

      The reason, I believe its a very different system to selling is that when a buyer enters the process to buy a house he employs a lawyer to do the legal work – which he pays a fee for, a mortgage broker to arrange the mortgage – which he pays a fee for, the lender to “arrange the mortgage – which he pays a fee for, a survey on the house – which he pays a fee for and finally the bank to transfer funds – which he pays a fee for. All of these “fees” would generally add up to upwards of £2500/£3000 depending on price of property etc. Look at the letting agent and he has to do ALL of the above including the legal tenancy agreement, all the prescribed information, lodging the deposit, arranging the inventory, checking the tenants background, show them round the property, prepare an inventory, make the phone calls, pay for the light, heat and rent of the building, pay the staff member for their time to do this AND a proportion of their pension.

      Not quite the same is it?

       

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      1. VoiceofSanity72

        In simple terms a buyer pays for a survey and pays a solicitor and mortgage company

        A tenant pays for a check in, pays an agent to do the paperwork and gets a reference check.

        I have been a tenant, an agent and a landlord. I try to be the agent I would chose to use when I was either of the others.

        I don’t shop at places that rip me off and manage that without legislation.

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  19. Neilw

    The Scottish Government held a consultation period but what happened to the RICS and ARLA lobbying then. Like Brexit they thought the unthinkable no fees would never happen.

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  20. pierce

    It is not all bad news, I have identified a glimmer of hope but we will have to wait until the “Fine Print” is published before we can decide if it will wok or not.

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    1. inthefield

      Pierce, do tell?

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      1. pierce

        inthefield, I would share here but I don’t think it is the right forum

        If you want to email me please do and i will let you know – PIE will have my email address

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  21. VoiceofSanity72

    To clarify the important point – not all agents charge rip off fees. We charge at cost, therefore whilst there will be no direct change to our income stream lets look at it from the landlords perspective when the uncreditworthy apply and you get back the no they are bankrupt and never paid a bill in their life report – they have had their money wasted.

    I find it hard to believe that either side will argue that this is unfair but this is the result of legislation OR a landlord will say ‘if you want to rent provide me with references from this company’. It doesn’t stop the check, it doesn’t change who pays so mission failed. The big boys who add £400 to the fee lose out – good from a professional point of view imho

    All that said when someone gets stabbed the government doesn’t ban knives, the logic of this ‘kneejerk’ legislation is sadly on that thinking. Ironic when house builders are making huge increase in profits over the last years they put the boss of a building company in charge to see what the problems are, also they make legislation when councils who have tried their own lettings agencies have failed miserably and wasted taxpayers money doing so.

    Those who know how to do things do, those who don’t go into Government.

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    1. docklander52

      There is a third option, you know VoiceofSanity. At one of the spectrum is charging at cost, at the other, so-called rip off fees. Somewhere in the middle is charging a fair fee and (maybe say it quietly) making a profit.

      Show me a business that charges at cost? Can you think of one? Of course not.

      Why should we make a profit on these poor, unfortunate tenants claim the naysayers? Why not. Let’s look at referencing. Apart from the actual cost of getting the references done, we then have the time spent on checking the references, advising the tenant on other options should their reference fail, perhaps negotiating a remedy to enable them to still move in. All of this takes time and costs my business actual money. Not to mention, of course, the 20+ years experience that is often used to resolve problems that pop up in the process.

      Remember though, that nothing has been formalised yet so this all just conjecture. We don’t know what fees are being banned yet or even when. I would say this is probably 12 months away from being implemented. In the meantime,I suggest as an industry, we lobby government to abolish;

      debit card fees levied by shops

      booking fees levied by theatres

      admin fees levied by insurance companies for documents

      and so the list goes on……

       

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      1. BrandNew

        I’ve already written to Hammond asking him to speak to his posh auction house friends such as Christies’s, etc., who charge both the seller and the buyer exorbitant amounts……….

        Somehow I doubt I will get a reply.

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  22. Damian

    OK, I might get shot down from both sides here, but in for a penny!

    My main occupation is that of an IFA, which is very heavily regulated by the FCA and regulation is needed within Financial services, and to be honest is needed within the Lettings Industry to a certain extent.

    I started a small one branch Lettings Agency just over three years ago and it’s been incredibly successful so far. This is mainly due to the excellent experienced staff (not me) that I employ who have many years in the industry. From day one I wanted the company to be transparent in our charges both to the tenants and our landlords. If a landlord pays us to manage a property for a monthly fee then that monthly fee is all they pay o hidden extras. We do not double charge our landlords! If they want rent guarantees then we sell this at cost as in my opinion they are paying to protect my monthly fees as well. Market forces allow landlords to shop around and they ultimately will judge us all on how much bang they get for their buck.

    Tenants, however, are in a slightly different situation. they often don’t have the luxury of shopping around for an agent because their needs are driven by the property/location. So is it fair that agents can charge what they want for a tenant to apply for a property? In my opinion, it is not! Is it fair that agents take multiple applications on one property? again, in my opinion, it is not! no doubt I will get shot down on my last comment. Do landlords ask agents how much they charge tenants for applying for their properties? Again in the main, I guess not. Well, perhaps they always should have done.

    All the above said, do I think tenants should not pay to get into a property? No, I do not but I do think the fees should be reasonable and justifiable.

    My personal opinion is that tenants should approach the referencing companies directly. they should pay for the financial checks, employers checks, previous landlord checks and right to reside checks. this would, therefore, be their information that they could take from one agent to the next and use for more than one property if unsuccessful in their application. This would no doubt need to have a time frame. If a landlord did not trust the information being supplied he would always have the right to pay for his own referencing and checks. As agents, we would store this information as we do now on a client file. Job done time saved.

    So what else would need to be paid for as an upfront fee? I’m guessing agents will never charge someone to view a property, but following an initial visit from a potential tenant should agents then charge for a second visit if required (to measure up and so on)? At the end of the day, a professional person is taking time out to provide access for a potential tenant? Time costs money and a service is being delivered. Completion of a tenancy agreement, again this is delivering a service and not an upfront fee. Do solicitors charge you a conveyancing fee and disbursements when buying a property? Yes, they do! they charge for their time.

    The biggest issue I see is tenants making multiple applications as they see no cost to themselves. So can we take a deposit on the application that is refundable if they are unsuccessful in their application but can be kept if they withdraw? Would this not give some protection to landlords and agents from time wasters?

    As I said when I started, I’m new to this and do not work within my agency on a daily basis. I am however regulated by the FCA! MY industry had commissions band in 2013 by the regulator. However, most IFA’s I talked to are all better off because of it. My clients know my fees upfront and they can agree to deal with me or not, that’s their choice and market forces dictate what I am worth. As a result, I spend far less time with time wasters, I don’t get to the end of the process and have them change their mind because if they do I bill them for time spent. My retention rates have only increased as clients see better value for money. The FCA has no issues on fees as far as they are fair and transparent. So let’s look at what’s happened yesterday, let’s wait for the time frames and let’s wait for the detail. Good agents will survive and prosper, trust me. The rogue agents that charge far more than they are worth will vanish and look for another quick and easy buck to make (well good riddance). This is exactly what happened within the IFA market. Let’s get rid of the cowboy’s, let’s be proud of what we do, let’s continue to offer a quality service to both tenants and landlords but let’s make sure fees whoever pays them are fair, reasonable and above all transparent.

    Shoot me down when you’re ready!

     

     

     

     

     

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    1. Woodentop

      Penny well spent. Some common sense appraisal of the situation and confirmed by just about everyone posting on EYE who are respected agents. They charge a fair price for work done and reasonable to ask for.

       

      I have mentioned so many times now, Communication or lack of if often  ones downfall. This has led to the mess we the industry are again in, created by the few, poor leadership from within the industry than can get things done and no policing by regulators. I did wince at the tenant HIP though. Some unscrupulous agents tried and probably still do somewhere offer a tenant pack. They were between £250 to £500 some years back. When we read them …. well we couldn’t stop laughing (out of sight of tenant) and then had to tell them it was worthless. Where do all those really so called wonderful shelter tenants move to when they get evicted through the courts, having wrecked the landlords property through lifestyle (no reference company makes any checks in that area that I have ever come across). They are not sleeping on park benches and councils refuse to house them (you should be asking them how many tenants they have evicted and black listed!!!!!!!!!!). Where are they, in some unsuspecting private landlords property with a nuclear bomb timed to go off soon. Before I forget someone said Immigration checks are only the responsibility of the landlord …. err no they are not. It would depend on your contract with the landlord and if not confirmed the landlord could infer that it was the agents responsibility as “they were referencing them” … ooops Law of Agency popped up again?

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    2. Eamonn

      Won’t shoot you down.  A balanced picture

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    3. Tim Hall

      Damian, you are quire correct.

      I am not sure the issue of multiple applications will be that bad though – do you not tend to have more than one person chasing after your properties when they come available?

      I agree with Woodentop also – there is no landlord, or rent protection policy, who would accept the tenant providing their own references.

      The cost of referencing is minimal though – if we have to do it in house and lose the £10 or so per applicant it costs us to undertake a credit reference check that is easily manageable.

      And yes, applying for the other references will take a bit more time, but in the grand scheme of things it is not that big a worry.

      I personally think that, as long as the eventual legislation is policed properly (now there’s another discussion in itself!!), you will find the agents who have historically not charged a lot will gain many more instructions as their fees to landlords will not have to go up as much, or even at all in some cases, to make up the shortfall and we will therefore be able to compete with the “cut price” agents.

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  23. dave_d

    Call me crazy, but what if every estate/letting agency across the country stopped offering referencing as part of their service but insist that tenants must be referenced to move into the property. Tenants take it upon themselves to get referenced before they start looking for a property to let. When they have been referenced they then start looking… they present the letting agent with a report which shows they have been checked, they can then take a property there and then… in fact, if they have their first months rent and deposit available they can agree check in dates on the day they secure the property.

     

     

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    1. Woodentop

      And what is the content of the references you refer to? Are we talking the basic employment, previous Landlords (most lie to get the bad tenant out of their property), credit check and immigration check? Maybe the odd friend reference (who ever goes to someone who will not give you a glowing report!). If that is the case, you have only done 1/4 of the work required to reference a tenant. The biggest mistake agents and landlords make with tenants is no lifestyle checks which is streetwise labour and time consuming, to be effective. There is a time and cost involved. When they wreck a landlords property, it isn’t because they had a late pay check or even lost their job or because they had to take out some credit. That really is linked to rent arrears. It is the damage that cost £k’s and yet I hear so many agents over the years not even look at it but have many a skip delivered after the tenant has done a moonlight flit. I have also seen may agents not care about references as they use the reference company as the fall guy, meanwhile rubbing their hands knowing very quickly they will get a second bite of the landlords and tenants charges for a new tenant.

       

      It costs to do the job properly but not expensive, we charge £90 per tenant for considerable more effort than any reference company I have come across in 30 years. The point during those years we have had 1000’s of tenants and only ever had to go to court 3 times to fight shelter and win each time hands down. We have another one looming as the council are insistent the tenant stays put until we get a court order. You want to see the house at least £25ks needs spending on it and before anyone asks, we didn’t put the tenant in, someonelse did and took no references. The council have confided they don’t want them!

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      1. Tim Hall

        Woodentope, I assume you have seen this:- http://www.propertyindustryeye.com/councils-told-to-stop-tenants-in-process-of-eviction-to-stay-put/

        Sorry dave_d, I will have to call you crazy (well, you did say …)

        Any reference an applicant provides for us at present we have to check to make sure it is valid – we may as well do it ourselves to start off with.

        There is no way a landlord, or more importantly an insurance policy, would accept a self-reference tenant.

         

         

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  24. pierce

    This decision has far reaching consequences, not just for agents but for referencing companies, insurance companies as well as tenants.

    I can see most if not all of my landlords just absorbing the cost IF we decide to pass it to them but I do know some agents landlords have already started to say they won’t pay for the tenants to be referenced etc.

    So that has the knock on effect of tenants who are less than truthful when applying for properties, getting those properties and end up being evicted. The courts will have their workload increased without a doubt.

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  25. Votta583

    Would anyone on here like me to email you my spider diagram which shows the detrimental impact on banning agent fees for those of you that are pleased they are being banned?

    Those of you on here that cannot understand why fees are applicable whether they are £70 or £500 are just like the people that thought this was a good idea. it’s all relative to the business itself and the way it will change the industry stands to hurt the very people the ban was imposed to protect.

    Unless youve run a lettings business I wouldn’t expect anyone to get it but as always there are millions of keyboard warriors out there that profess to be self proclaimed experts on the industry because of reading from a few google searches.

     

     

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    1. Tim Hall

      And there you have it.

      The industry will never speak as one voice because the industry thinks it is reasonable that one agent should charge a fee of £70 but another can charge a fee of £500 for exactly the same thing.

      Votta583 you have no idea which commentators do and which don’t run a lettings business, but everyone is entitled to their opinion, even you!

      If the fees being charged were reasonable then tenants wouldn’t be up in arms and we wouldn’t be facing a ban.

      My son has recently gone to university in Middlesborough – the agent charged no fee to him.

      My friend’s daughter has just gone to university in Birmingham – the agent there charged over £400.

      Yes, they are two different cities. I do not believe the cost of running an agency is THAT much more in Birmingham though.

      And why do I think my opinion is valid – because my father was in the industry for over 50 years, I have been in the industry for nearly 30 years and have run my own lettings business for over 10 years.

      I charge £30 up front per applicant for referencing and £72 incl. vat for a tenancy agreement (in total, not per applicant – and only charged at the point at which the tenancy is actually signed).

       

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  26. MrSerious

    As a mature, responsible and caring Landlord who does not use Letting (or Management) agents at all, I just want to explain some truths to the supporters of this ban, who seem from comments never to have worked on the Landlord, property ownership or agency side of the equation (as I have extensively):

    >  Residential Letting and Management Agents will never get rich from their business; resi is known as a loss-maker
    >  The vast majority of excellent landlords like myself are (again) being penalised because of the actions of a few
    >  Governments should not interfere with micro-economics like these Fee Bans, as it always backfires
    >  Landlord Investors expect a certain Net Yield from their properties, they need to recover costs; this Law will reduce the NY, so rents will go up, maintenance investment will go down, and other non-up-front charges will be introduced
    >  Tenants must be reminded that an AST grants the Tenant an Estate in Land, exclusive protected legal possession of property for a period.  It is a serious business, not like buying a sandwich from the deli, and has high level Rights and Responsibilities, and has associated costs
    >  Fees have to be declared clearly up-front before signature, I agree that is good;  but if Tenants do not agree with the fees proposed, get advice, negotiate or rent somewhere else; there is always a choice.  If you are a good prospective Tenant the Landlord will want you and be prepared to negotiate
    >  As others have stated, there are huge amounts of AST admin paperwork and legal responsibilities now placed on Landlords (not the Tenants) by legislation, and many Landlords have to call in expert help, most of which time and cost is not charged on to the tenant
    >  Private Rental Accommodation is crucial to the Rented Sector as Councils, Housing Associations are not good enough:  the Public Sector are poor Landlords with poorly maintained properties and poor service and response to issues

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