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The timing of the consultation on the ban on letting agent fees in England, announced out of the blue in the Autumn Statement, has been given the chilliest of receptions by the industry bodies.
The consultation will take place in March/April, an exchange in the House of Lords yesterday confirmed.
David Cox, managing director of ARLA, said: “After almost two months of silence we are glad that we have greater clarity on timescales.
“The minister [Lord Bourne] has acknowledged the importance of a detailed consultation into the proposed ban on letting agent fees and that an impact assessment will be carried out.
“We cannot stress the importance that an assessment must look at the ban in a wide context which includes tenants, landlords, agents and the wider housing market.
“It is essential the Government is completely aware of the full range of practical implications the ban on fees would have both in the short and long term.”
Isobel Thomson, chief executive of NALS, said: “We’ll have to wait to see the detail of the consultation, but we would urge the Government to think very carefully about the unintended consequences of the ban.
“NALS believe it is crucial to have an independent review into the impact of a ban on fees, to ensure that ultimately any ban does not impact negatively on the consumer.
“We think the Competition and Markets Authority (CMA) are best placed to carry out a review, and with the backing of the Fair Fees Forum we will be requesting this is conducted as part of the consultation.”
Yesterday’s announcement of the consultation dates, in the House of Lords, follows a story earlier this week in the Telegraph.
Headlined “Don’t abandon letting fees ban, say tenants”, the story claimed that growing numbers of tenants were worried that the Government would quietly delay or drop its promise to “end the scandal of arbitrary fees charged to tenants in return for . . . often nothing”.
Why not look into making fees fair rather than banning. We charge a fair fee for referencing an applicant & only take one application at a time. The landlords won’t pay this fee so are we just going to give the first person who walks through the door a house! As a small independent agent, this will put us out of business, so that’s 4 people on the dole, why aren’t the government looking into that!
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Likewise, we operate an independent, single branch agency; charge applicants one, reasonably priced fee and only take one application at a time.
A significant source of tenant dissatisfaction must surely be aimed at (corporate?) agents that accept and process several applications on a property only for, possibly several, applicants to miss out despite passing referencing. For those applicants I can quite understand their view that the fees paid were for nought.
Surely the consultation should first explore banning multiple applications being taken by agents – of course, corporate agents would then be required to do a better job of picking the right applicant from those on offer!
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This whole issue of banning tenant fees by the government really shouldn’t be a case of rocket science, endless meetings and consultations, all they have to do is put a cap on the amount charged, it really is that simple.
We all acknowledge that there are very unprofessional and unethical companies out there who charge extortionate rates but for the vast majority of well established, licensed and professional companies like Sanders&Sanders, we charge a fair fee to represent the work involved, which is openly advertised on our website. Since trading we have not received even one complaint about the fee’s we charge because tenants understand that we offer a fair service.
We believe in keeping things simple.
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Explain how you £288 fee is fair for printing a tenancy agreement or getting a credit check that as the consultation points out is mostly outsourced and costs less than £10? Tenant’s don’t complain about your fees because they need somewhere to live.
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So if they ban fee’s …. does this mean that all admin fee’s no matter what the commerce will be banned? Tenant fee’s are nothing like some business’s charges, even taking into account agents that do over charge.
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People need to realise this is nothing but a vote winner. I’d love to think that it isn’t going to happen but the realisation is that it most likely is.
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wouldn’t it be wonderful if the industry bodies actually did something, maybe we would not be in this situation.
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Do you mean like the industry bodies that we pay a lot of money for each year, which we appear to get absolutely nothing from. They even have their email box full regarding this issue, so members cant even leave a comment 🙂
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Those are the ones!
Just do what we did and cut all ties apart from redress.
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I have been in communication with my local MP and he has now written to the Housing Minister for a response to my questions. Everyone should do likewise with their own MP as we cant rely on our industry associations to make our voices heard. A cap on fees is the only fair way forward. Also please sign the petition below if you think a ban is unjust.
https://petition.parliament.uk/petitions/173668
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The industry association sent an email out yesterday asking members to put their comments forward and guess what happened when I tried to put my comments forward? their email box was full and couldn’t accept any comments. Not really an association that you can put any faith in to represent us.
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i experienced the same problem with my reply to the email. Took the time to write it which turned out to be a waste of time..
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I appreciate we’re all entitled to an opinion but please enlighten me as to what prompted a dislike. Genuine question
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CLG is staffed by people with Generation Rent problems; working in Westminster on comparatively low wages for the area. You are being disliked by malcontents who will suddenly be able to compete for property when they have an extra £300 in their pocket through not paying fees.
Trouble with the plan, richer tenant get an extra £200 as well
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I wrote to my mp – the error strewn letter basically said its ‘landlords employ agents therefore they should pay’. The general response very much reads it’s coming in no matter what!
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This fee banning thing really is an odd one, and has come about from a few grumbles by CAB and Shelter, regarding what applicants are being charged when they wish to apply for a rented property.
The Government must think that agents with property in high demand areas are stupid. As there is high demand, they are charging accordingly on the supply and demand theory, but if those same agents just keep charging sky high fees, sooner or later applicants will vote with their feet and move to a cheaper agent, as will Landlords, as not tenants will be renting their property.
Equally the Government must think that agents in areas with less demand are stupid too, as they have to charge according to market conditions, i.e. cover costs, plus a bit of profit, as has been stated previously.
Is South Shields the same as Southampton – no, and as such one policy will not fit all!
I fear the discrepancies and discord occurs with multi branch national businesses, who in the main have a core set of fees that either not vary according to conditions, or only vary slightly.
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Would MPs vote to ban expenses incurred when carrying out their work? NO so why this ban to to stop agents charging when they incur costs, the house of commons is half empty most of the time but when it comes to voting through their pay increases there is not even standing room, hypocrisy of the highest order.
As an agent who charge very fair fees for our work and no multiple applications, we are part of the majority, but because of the actions of the minority we all get beaten with the big stick, would it just not be simpler to have a set of standard fees and let the good honest professionals stand out from the people who give the industry a bad name
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Why should a tenant not pay anything towards the process.
I have stated before that a cap on fees is the way forward, but that does not mean I agree with it, I just feel some agents are really taking the mickey. A cap just seems the obvious compromise to maintain reasonable control of fees.
The idea that government can dictate agents fees is a dangerous one that will create a wider road to go down as you can apply it to other types of businesses. Auction houses come to mind where they apply both seller and buyer fees; will the government ban these when the precedent has been set!
Landlords are the client and tenants are the customer, but that should not negate the need for tenants to contribute to the process and service the agent provides. Customers always pay whether directly (transparent) or indirectly (hidden) by the price reflected the running costs of the business. You buy a computer, the cost of which will cover an array of business costs.
Just a thought – Property buyers incur purchasing cost. Now I know property buyers do not pay the same estate agent for their purchasing costs, unlike letting agents, but agents do earn indirectly from buyers by referring them to solicitors and mortgage brokers whose costings for the service they provide will likely reflect the referral fees they have to pay to estate agents. These are hidden costs to buyers. As, in this situation, the estate agent is earning from both purchaser and vendor, should these hidden fees also be included in a ban!
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Well said.
in addition Motgage lenders also charge a fee for different mortgage rates, these can be on average £1000 – £1500. As this is a bank it will be overlooked no doubt.
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Currently applying for a mortgage and there’s a £300 admin charge! I asked what that covered and was told it’s to do the credit checks, background checks, previous lender’s checks (have mortgage with them already!) and to cover admin costs!
Sound familiar?? Well that could describe what we do as letting agents that Government think the landlord should pay for; when I suggested that perhaps the bank should pay those costs as it was to their advantage to know that I was “good for the money” they refused! Perhaps my MP would like to answer that one or baroness grim?!
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Will ‘impact assessment’ carried out during this consultation consider the huge amount of VAT lost to the Exchequer ? I think we should be told….
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Bit off topic I know but why do I have to pay to have a dentist checkup? Why do I then pay for treatments when we have an NHS and why are corporate dentist practices allowed to charge +1 scale for the charges once they have franchised the local dentist into their process?
If you own a business and earn not a penny you still pay national insurance and are classed as employed. and pay for treatments.
I still wonder why HMRC refuse to collect tax on all rent paid to landlords through SA105 L&P
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I wrote to baroness Grender regarding the House of Lords sitting in November where she asked her colleague for evidence that rents won’t go up – Naturally none was forthcoming – however there is irrefutable evidence they have gone up between 10 and 12% in Scotland which I included in my email
Despite reading the email being read some 2 weeks ago not even an acknowledgement – so any consultation will be fruitless in my humble and layman opinion
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So will I be able to send any prospective tenants directly to the referencing firm and only consider applications after seeing a report sent to me by the firm? The referencing firm can then charge the tenant what ever they like and i’ll take a kick back from them by the way of free rent guarantee insurance or something like that? No admin fee’s charged by me, shelter can pat themselves on the back, everyone’s a winner.
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Implementation of a ban
71.The Government also proposes to ban any letting fees charged to tenants by landlords and any other third parties to ensure that letting agent fees are not paid by tenants through other routes. Tenants should only be required to pay their rent and a refundable deposit.
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The letting fees ban is a brilliant policy. Even lettings agents may eventually come round to liking it.
The key advantage of the policy is that it shifts power in the rental market.
Currently, if a landlord decides to raise rents, a tenant has to decide whether to pay the additional rent or pay hundreds of pounds in letting fees if they have to move. Even if the tenant decides to stay, some agents change an extortionate amount just to change the dates on a contract which is unfair.
At the moment, if a tenant wants to live at a specific property, they have no choice but to pay letting fees – agents can charge what they like. With the ban, the costs will have to be passed to landlords, who can easily change agent if the fees are too steep. This will prevent agents from charging unfair amounts.
By scrapping the fees, it will be much easier for tenants to move and landlords won’t be able to increase rents at the same rate. This will allow the market to become much more efficient and rent rises across the market will be contained.
For agents, the hit they will take could be limited by the increase in demand from landlords who will need to find new tenants more often.
Most of the arguments for scrapping stamp duty also apply to banning letting fees.
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Gosh when you put it like that its really obvious.
Except perhaps it overlooks the fact that with no commitment financially from a tenant, the only time they can assume they’ve “found a property” to rent is when they have signed the contract and paid over the deposit and they had better be prepared to do that on the spot because otherwise someone else may well beat them to it.
Then of course you have the referencing, best they come back as a fist class A1 tenant because lets face it what landlord, with no money up front, is going to wait on a tenant to explain why there were questions on the referencing or why a guarantor was suggested,
Oh and then there all those thing pre-moving in they need to find out…the agent is not paid to do that so, well I’m sure they will suss it out.
Then of course they get to the property. The landlord has paid for an inventory so just sign it. You want a copy? Best you get your own done then, and likewise I suggest you pay for your own check in because when you move out you might need that for a dispute.
No fees really is beginning to sound like a great idea for tenants isn’t it. I can’t see any issues whatsoever.
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on that basis. We were approached last week by a couple looking to take a flat. They seemed respectable, both working for the police service as serving officers in the Met so we took a fee and started referencing. Both provided photo ID and wage slips up to current date along with proof of address for the past 4 years.
When our referencing company were unable to get her reference I phoned her and she admitted that she had handed her notice in; not a huge problem as his salary was well beyond the normal multipliers. On his reference form he gave his referee as a desk sergeant; now I’ve been around a while and police references always come from HR so I questioned it. Another admission, he’s also leaving the police but it’s okay he has a new job local to us as a bailiff!
I’m getting tired here but the landlord wants me to pursue so I ask for details of the new company and in return I get a personal email address and a mobile number! Now getting cross I ask for full details of the company and when I get them I search the internet to find it’s a single director company trading as a food-stall in Bristol – 2 hours away I cannot think why they might need a bailiff?? A trace on the director shows her up as his mother, a quick check on Facebook shows that both applicants are her “friends”!
My point? I have wasted almost 2 hours on this, I have incurred costs from the referencing company and we have wasted 8 days and still have no tenant for the landlord! If the tenant hadn’t paid a fee who would have? I can cover my costs in time and money with the fee but the landlord has no rent! I know agents locally that just do credit checks and take ID, they don’t do any further referencing; would you like this couple as tenants?
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I am in no way being rude or facetious but the landlord will have appreciated your efforts to find him/her the best tenant and you did all you could in this situation. This bodes well for future your future relationship with them.
The tenants have lied on this occasion and lost money. Your gain. Not every tenant application will be like this as it looks like this was an extreme.
In future, why can’t tenants reference themselves and provide a copy to letting agents, all complete and up to date? No fees need to be exchanged and it can all be done online. The tenant is even able to use the reference for other applications, with other letting agents, assuming it is fairly recent.
This is similar to me doing a survey on a property I want to buy. A second person doing the same survey on the same property. A third person doing the same survey on the same property.
The tenant is also able, if they wish, fund their own check out.
If they need more help either you are obliged to help them because the landlord has paid you for full management OR you point them in the right direction and make it clear the landlord has not paid for full management and would like you to speak to them directly instead.
I don’t get why some letting agents have to chauffeur tenants around, cut keys for them, reference them properly, tell them where the gas meter is – do not do it if you think it is not within your remit.
For me, it makes sense doing all of the above and more. My duty is to give the best service I possibly can to the landlord as he or she will be the one I earn a recurring income from.
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“In future, why can’t tenants reference themselves and provide a copy to letting agents, all complete and up to date? No fees need to be exchanged and it can all be done online. The tenant is even able to use the reference for other applications, with other letting agents, assuming it is fairly recent.”
76. Some tenants may choose to undertake their own reference checks and obtain a ‘tenant passport’ that enables them to demonstrate that they are financially and legally able to meet the terms of their tenancy. The Government does not intend to prevent tenants from doing so but intends to stipulate that no agent or landlord should require a tenant to carry out their own reference checks either via the agent or via a third party.
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When selling a property, agents are paid by the seller. They don’t get to charge fees buyers as well. Why should the rental market be any different?
Tenants can commit financially by paying deposits to landlords, before referencing. They don’t need to pay anything to letting agents.
Letting agents should charge fees to landlords, because they act in the interest of the landlord.
Landlords should pay for referencing because they’re the ones who are at risk if a tenant can’t pay.
Landlords should also pay for the inventory because its their furniture. Emailing a copy of the report to the tenants would be free and in the landlord’s interest.
Letting agents should answer pre-moving questions and help tenants, because its the landlords interest to keep tenants happy. This service should be part of the management fee charged to landlords.
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“When selling a property, agents are paid by the seller. They don’t get to charge fees buyers as well. Why should the rental market be any different?”
But they indiectly do, as I posted earlier, estate agents do earn indirectly from buyers by referring them to solicitors and mortgage brokers whose costings for the service they provide will likely reflect the referral fees they have to pay to estate agents. These are hidden costs to buyers.
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Excellent post hjc10431
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I had a visit from a referencing company yesterday …..
They have said we can have an approved panel of reference providers (ones we trust) We give the tenant a code to use on referencing and we can then be “compensated by the reference provider.
Whatever the government pass we will still get our fees.
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Explain the maths of this. Who is paying for the referencing for you to get your kickback? The landlord?
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As a small business (3 staff members) to have a blanket ban on tenant fees will put a massive strain on my business. Businesses are not free to run and unless we replace said losses then I will be in a position to have let go one member of staff, together with other tough decisions, like for example ARLA membership?
We already run a tight ship with high levels of customer service to both tenants and landlords. Landlords should not be responsible for some of the things we are asked by a tenant. Are we now saying that if a tenant has an unusual request that maybe time-consuming and outside of our landlord charges, that we now say sorry I can’t help you?
I will most certainly be rethinking my business format and service levels, for example we currently always meet the tenant at the property for completion.. For me it is the only way to do it in a proper manner.. Do I look into now asking tenants to come in the office to sign up and Han the keys?
So you see where I am going with this, the tenants are highly likely to lose out on a number of things and should they loss their key or lock themselves out out of hours, do I now just say, ‘Call a locksmith’? Or do I kindly take round a key?
For the government to think they can just make decisions about our business without even considering real world consequences is beyound me.. Many people for years have been saying to cap fees to tenants.. We charge a one off respectable fee to a tenant and provide a high end service level to them and I want to continue to do so..
Small independents that provide a more superior service than most big corporates will suffer the most here, the government are forcing change to our industry and seem to be focussed on banning fees and not looking at the bigger picture!
Making all agents a licensed agent for me will solve a lot of issues in the industry and where if I was in government I would put my time.. It will wash out all the agents that do not follow any kind of protocol and the fee issue should be address by the Body.
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I wouldn’t see leaving ARLA as a tough decision. Just do it. For more than a decade I was firmly of the belief that ARLA had to be on my window – binned it five years ago, along with NAEA, as I was fed up by it’s lack of real ability. Made no difference whatsoever.
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