Tory MP calls for end to ‘exploitative fees’ charged by letting agents

Last night, the Government rejected a bid to have letting agent fees capped or banned in a debate called by a  Tory MP who hit out out at letting agents charging “arbitrary and exploitative fees”.

Conservative MP for Lewes Maria Caulfield  called for the fees to be capped.

She made her views clear on the Politics Home website shortly before last night’s Parliamentary adjournment debate on the issue.

She earlier told Politics Homes that  fees charged by letting agents in the south east have become “unsafe” and claimed that they are forcing residents to leave the area.

The MP alleged: “This seems to be an industry of making money out of tenants. There’s such a disparity between the lowest and the highest fees. There doesn’t seem to be any rationale for why these charges are so high.

“Letting agents know that people are desperate to secure somewhere, so they take advantage of that. If you’re going to see three or four properties, that could mean money-down on each of them just to get a viewing. That feels very unsafe to me.”

She called for a code of conduct which she claimed would be “similar to the rules landlords have to follow”.

It was not clear what she meant.

She also said she wants to see regulation around the length of the tenancy, adding: “Six months works for some people, for others that want a longer tenancy, six months is just an excuse for letting agents to introduce another fee, and often review the rents and put them up. So I think there does need to be some work around that.”

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11 Comments

  1. pierce

    I am working on a project around this issue as we speak, so I was very interested to watch the debate last night.

    Whilst she was on the whole fairly well briefed, she mentioned that of 25 letting agents visited in her local area by CAB, only one was was compliant and advertised their fees. So my question is, of those that were not complaint how many were reported to the local trading standards? Because if the answer is none, then this only serves to contribute to the issue!

    “…that could mean money-down on each of them just to get a viewing…”

    That has been outlawed for quite some time so I’m not overly convinced this is an issue now

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  2. jeremy1960

    Tell you what if every MP agrees to be 100 percent transparent over their costs, expenses, claims , allowances and all hidden charges and they display all if these on their web sites, in their offices and on all correspondence such that if I am considering voting I am aware of exactly how much that MP will cost during their term of office then maybe they can ask every other industry to do the same. Seems to me more of a case of do as I say rather than do as I do at the moment!

     

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  3. Votta583

    Personally running a lettings business myself if I didn’t charge the tenant the fees that I charge I would make no profit as a business.  We are completely transparent and ARLA  accredited  however when your overheads are in excess of £20,000 a month  then fees are a must.  Especially if the client and the customer all want to receive a good service, in order to deliver on that service the business needs sufficient income.  The statement that people are moving out of the area because referencing fees are too high is another ridiculous statistic that’s been plucked out of the air.  I don’t pay the same amount of money for a loaf of bread that I used to, everything goes up  including costs  and staff wages  and training etc.

    All these regulations are put in place to protect people but nobody in enforces anything when the rogue agents are uncompliant so what is the point in the regulation?

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  4. jackoTLG

    I run a large letting agency outside of London and the SE. We are ARLA accredited and have transparent, competitive tenant fees. We don’t charge tenants an extension fee after 6 or 12 months and certainly don’t charge for viewings (I have never heard of this practice before).Trouble is (as with Labours election policy on banning fees) this lady is looking at the London and SE market only, alongside agents who are likely not accredited and without client bank accounts, transparent fees etc. London isn’t depicitive of the whole country. Surely the answer is to regulate the industry (a little bit) and stamp out the rouge agents.

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  5. Beano

    To be fair to the lady she has sensibly suggested a cap rather than a ban. I’m pretty sure most on here charge sensible fees as opposed to rogue-ish numbers plucked out of knowhere, so a fair cap wouldnt affect us.

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  6. seenitall

    Strange.  She wrote to me asking for our fees.    She is ‘our’ local MP

    How she gets the idea that you have to pay to view 3 or 4 properties is beyond me.      She is wrong. That is illegal to do that.

    We have worked in the Lewes area for more than 40 years and I cannot recall ever having a tenant say to us that they cant afford to live here becasue of agents fees.    People when looking are surprised at high high the rents can be in Lewes but thats market rent and nothing to do with us as agents.

    The demand is very strong,  some tenants cannot afford to rent here but that’s the same with any supply and demand area.      So for her to think that agents fees force tenants to move away from the area is not our experience and does not tie up with real life.

    Anyway for balance a copy of my letter to her.   Doest appear that she read my letter. Shame she didn’t want to have a talk if anything was not clear to her or wanted to understand the letting business a bit more.

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    Dear Mrs Caufield MP
    Re: Letting agent fees to tenants.
    Thank you for your letter 6.1.15.   Please find enclosed our terms and conditions for tenants which list all of the fees.  We are legally required to provide this and is also shown on our website.  
    We would highlight that we belong to NARLs – National Association of Residential Letting Agents,  The Property Omnibusman (letting),   The Safe Rent Scheme and  The Dispute Service – deposit protection.
    All of the schemes we are legally required to belong have a financial and time cost to us. Tenants have 2 redress schemes now that they can complain to if they wish free of charge to them but again at a cost to us as well as the courts.
    We would highlight that we believe that there is already enough protection for tenants in place. 
    To answer your question:
    Our fees for one tenant is £330                (£275 +VAT)
    Our fees for two tenants in total is  £450  ( £375 +vat )
    Tenancy renewal fee after 12 mths split between Landlord and Tenant each paying £60 +vat for new tenancy agreements/documents.
    The referencing fee the tenant pays represents half the cost of the Referencing/Tenancy agreements and Inventory.  The owner pays the other half.     With the legislation on tenancy agreements these are now 25 pages long of which 10 is of prescribed information.  This does not include the “How to rent “ booklet which we legally now have to give out as well.  The tenancy agreement and Inventory are there to protect the tenant as much as the Landlord hence why the cost is split. 
    We ask as many questions about a tenants suitability before taking any money so that we and the tenants don’t waste time or pay funds to us if they are not suitable.  Ie they have County court Judgements or bankruptcy’s, they don’t earn enough, they are not suitable due to the number of people living there, they have no Right to rent etc. 
    What we find is that a number of prospective will say they have no CCJ’s or are not bankrupt or have the right to rent and it is only with careful searches and checks on them that we discover the truth and that they have lied.    
    If there were no fees charged to tenants you would have tenants making multiple applications to rent properties but only proceeding with one, there would be no incentive for the tenant to tell us the truth, we would do a large amount of work to only find they pull out of renting a property as they have made multiple application or have lied to us or may then try and bargain a landlord down on the agreed rental price knowing that they have a couple of others houses they can move into if they don’t get a last minute reduction.  There must be a cost to the tenants to prevent this.     We also have a criminal and large civil liability for the checks the government require us to do or paperwork to give tenants which must be offset by some of the fees charged to tenants.
    There has been an increasing amount of legislation over the last 10 years regarding letting properties and protection of tenants which has a cost impact on us.  Some of the legislation is due to safety concerns and is of course welcome, but some is of dubious benefit to anyone but they generally relate to the overall mechanics of lettings.
    Where I believe it would be a step too far for Government is when it starts saying how much a business can charge for its services.   Business in a free market will grow or fail on its services and charges it makes.     I don’t think new legislation from a UK Government on what a business fee structure to tenants or landlords is justified or fair.
    Im more than happy to discuss any aspect of the above.  

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  7. MF

    Hmmmmm.  Well, the call is to cap fees that can be charged to tenants and I do agree with that.

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  8. Romain

    At the end of the day landlords are in the driving seat: The effectively decide how much their tenants are charged and the level of what can be charged depends on what the market can bear.

     

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  9. nbywater

    Cant say that I disagree with her though. Too many Agents Ripping off Tenants at Present. Interesting to see if there is a correlation to Landlords Fees? Do High Landlord Fees link to Lower Tenant Fees and Vice-versa? Do the Agents in your Town who charge peanuts Management Fees, overcharge the Tenants to compensate?

    Here’s another thought. Looking at this Lady she is About the Age (42) whereby a Son or Daughter might be looking to Rent a Place of their Own. Is there a degree of Self interest? After all, I’d never heard of her as a fighter for the Cause of Lower Tenant Fees prior to this………

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  10. Tuf Luv

    LOL, people raising h*ll about tenant fees being the worst of agency. Like ARLA never existed. Dude fees ain’t something you can easily run away from, like a hotel bill or a crying baby. Its better just to pony up that four fifty and change (looking at you Foxtons) and quit the guilt. There’s no guilt. Guilt’s just a buzzword that doesn’t really mean anything, like maternal or addiction so unless you paid cash to rent Pitch Perfect; a fair exchange is no robbery.

    Dude, not charging tenants something (h*ll anything) goes against everything good and pure in agency and I can only speak to my own sense of right and wrong but here’s a fact you just can’t drink away. If G*d didn’t want tenants to pay fees, why make tenants at all.

    Jeez if tenants don’t pay then who will? Ok landlords will but that ain’t the point. Dude when rents get hiked thirty bucks a month (‘reasonable’ fee over twelve months) the tenant pays anyway so its exactly the same thing. Except in every way.

    Shoot, I already forgot the extra bump we get from the higher rents because we’re talking tenant fees not landlord fees. Right?

     

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  11. GlennAckroyd

    Since we opened up we had a policy of

    – no tenancy application fees

    – No renewal fees

    – No tenant fees to inspect or move out etc

    The only fee is a move in admin fee (around £250) – So it’s only paid once and by a successful tenant.

    So there’s no risk of a tenant applying and not getting a house.

    Guess what? We get an average of 30 enquiries per property, 3.1 applications very quickly and our houses go like a flash and the landlord can cherry pick quality applicants.

    Our average tenancy length as a result is 5 years and 3 weeks (as of last week).

    Our philosophy is play the long game and understand the life time value of the customer (landlord).

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