House of Lords slams ARLA Propertymark for opposition to tenant fee ban

ARLA Propertymark has been criticised for continuing to oppose the tenant fees ban as legislation to prohibit charges to tenants passed the latest stage of the House of Lords this week.

The Tenant Fees Bill passed its second reading as peers debated whether agents and landlords should have to keep a paper trail of holding deposits and whether this charge should be capped at three days rent or £50 rather than the one week proposed.

Baroness Hayter questioned why ARLA was still arguing against the Bill.

She said: “I am sad to see ARLA, which represents letting agents, still arguing against the Bill, claiming that it will harm the private rented sector.

“In fact, it will do the opposite, partly, as I have said, by keeping funds within housing, rather than with agents, but also, vitally, by increasing tenant trust in the private rented sector.

“David Cox, the chief executive of ARLA, really ought to know that distrust in agents is not just apocryphal. It is based on hard evidence.

“He should also recognise, as I have long argued to him and his members, that the inherent conflict of interest within tenant fees is unethical and unprofessional.

“No service provider should have both parties to a transaction as clients.”

Baroness Grender also addressed concerns that the lettings industry will be jeopardised, citing online agent OpenRent which has never charged tenant fees.

She highlighted research from OpenRent showing that 64% of landlords support the tenant fee ban, adding: “That begs the question: why are those who represent landlords lobbying against this Bill when most landlords want to do the right thing?”

Sam Hurst, spokesman for OpenRent, said: “The letting industry has fought this policy all the way, but now it’s clear that in doing so, they do not represent the sector’s real stakeholders – landlords.

“Anyone could predict that tenants support a ban on fees. But this survey shows that a large majority of landlords do, too.

“Various groups have warned that a ban on tenant fees will be ‘bad for business’. But OpenRent has grown to become the UK’s largest letting agent without ever charging tenants these huge admin/agency fees.

“All the key players are ready for positive change in the sector. Government, tenants and landlords are all behind a tenant fee ban.

“Lettings companies can’t ignore this.”

The Bill will now move to the committee stage next month.

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43 Comments

  1. Robert May

    Excessive repeat fees and unwarranted fees should be banned and those who are heavily reliant on them will have to get used to their banning  however I believe there is an intelligent solution that is based on 24 years experience providing practical, industry standard solutions to the industry

    The problem is  as a privateer who has been subject to the most appalling discrediting by some on the Propertymark board getting anyone to listen is difficult.

    Faithfully yours.

    THAT!!! Robert May  (persona non grata)

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  2. jackoTLG

    She really is a moron with no clue and she should respect letting agents standing up for themselves. Using Openrent as a success story is hilarious – they were propped up with £4.4millon of external investment last year. Their survey results are also absolute tripe.

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    1. Robert May

      Do you think a them and us slanging match and personal insults is going to lead to; Soz everyone, my bad, as you were?
      The people campaigning for change are educated and articulate, even if they aren’t correct their argument is better presented than the industry’s as presented by Propertymark and posts like yours. That hands  them a massive advantage, the people being insulted (who have the power to legislate) won’t listen to your view point

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      1. jackoTLG

        I’m quite content with my point of view thanks Robert.

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        1. Robert May

          I know that, I’m just saying those lobbying  for the fee ban  are keeping their personal views to themselves and focusing on the getting the ban through.

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  3. Jrsteeve

    Hang on a minute, how many agents have been embroiled in expenses scandals, exploitation, incompetence, sexual crimes etc etc, she does know she’s part of our diabolical political system doesn’t she? But of course we’re the untrustworthy scoundrels here.

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    1. The_Maluka

      Probably about the same number as MP’s involved in expenses scandals.

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  4. The_Maluka

    I am neither for nor against fees.  I am for the freedom to run a business as I see fit and not as government dictates.

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    1. Property Poke In The Eye

      This is now the problem with most Industries.

      They are being dictated by government policy what a business bananas can’t do.

      I thought we lived in a free market economy.

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  5. Gromit

    Typical heavy handed Government approach. Bannjng agents charging fees OK, but exclude Landlords from the ban and/ or cap fees.

    Politicians needs to to be educated starting with Business Economics 101the customer always pays. Banning fees means higher rent – simples (except for politicians).

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    1. DarrelKwong43

      Landlords are banned from charging as well …in theory anyone in relation to the granting, continuance and renewal of a tenancy

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    2. CountryLass

      I think most of the industry, except the unscrupulous bottom-feeders, were in favour of a cap, rather than a ban. The greedy, selfish and immoral who have been fleecing tenants for decades have caused this, but it’s those of us who have split the costs between both parties are the ones who are going to suffer. As are the Tenants, as Landlords will just increase the rent, to cover the increase in what we will need to charge to just cover costs.

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      1. Will

        You will probably will not agree with me, but ultimately tenants set the rents.  Landlords and agents merely market at a specific rent and see if there are any takers. It is called a market and we all seem to forget this! The market is driven by supply and demand and if tenants will accept a higher rent then that is where the market settles.  With Government capping benefit payments to tenants they hoped to control the market but this failed as there were many others without the government constraint which has left people on benefits further disadvantaged.  In normal business those of a higher risk would have to pay more so those taking a higher risk have a reason for that decision; a reward for accepting higher risks. None of this, of course, is liked by government, shelter etc etc and they regard business decisions as discrimination because it is more emotive and tugs at the heart strings.  If this was not the case we would all pay the same for car insurance no matter what group the car is in or the age of the driver – in shelter’s world insurer’s discriminate unfairly against new drivers wanting to insure a Ferrari. OF course shelter and the likes manipulate their arguments for their own political ends.   Do I see the world differently???? or is this just an interesting view of the world not understood by the politicians?

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        1. CountryLass

          I don’t entirely disagree with you, but as this move has the potential to drive away landlords, then as there is less supply, the demand will increase, and people will offer higher to secure it. But in a general everyday sense, yes, the consumer sets the price. It changes when it is a necessity though. If there was only one bottle of milk left in the shop and you and someone else were desperate for a cuppa, wouldn’t you offer a bit more to get the shopkeeper to sell it to you?

          You are right about the insurance though, high risk has to have higher rewards, or what is the point? If you wager £10 on a 50% chance of winning £5, then most people are happy with that, but if its only a 25% chance, then you would want it to be at least £10 back.

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        2. Peter

          What I suspect to happen is that rents will initially increase, setting the benchmark from which pricing will fluctuate depending on supply and demand.

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        3. Gromit

          Sorry but the market sets the rent. Yes it includes tenants but it also includes the housing providers. It’s supply vs demand.

          Fewer houses to rent (less supply) results in higher rents. If tenants cannot afford the higher rent then they move to a smaller cheaper property or to a different cheaper area. It is not a homogenous market.

          if a supermarket increases the price of all baked beans then if you can’t afford the premium brand any more then you buy a lesser brand, if you were buying a lesser brand then you buy the own brand , and if you buy the own brand then you but the ‘value’ brand. If you buy the value brand then you’ll have to buy the smaller size.

           

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      2. Gromit

        Totally agree.

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  6. PossessionFriendUK39

    There are reasonable fees to tenants, and Very exorbitant fee’s.

    Pity the  government didn’t work with the industry to settle on what was reasonable, listening to their reasons for the levels that can be justified, and put a ‘cap’ on fees ( to be reviewed bi-annually ) – apologies if that sounds a little reasonable and sensible.

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    1. DarrelKwong43

      sadly the horse had bolted IMHO……if ARLA had introduced their own cap a couple of years back when some ARLA agents were charging fees that bordered on unjustifiable then I think GOV may have just listened to a reasonable solution.

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      1. paulelowe

        I disagree. This government enjoys legislating for the sake of it and irrespective of whether ARLA had capped fees or not, they don’t shout as loud as Shelter.

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        1. DarrelKwong43

          sadly we will never know, but I think ARLA had the chance to do so and missed the opportunity 
          Agree they have been vocal since it has been proposed but too late 

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          1. Peter

            I don’t feel ARLA should dictate what agents charge, but if they had, we would still be in the same situation as we are now; it only takes a few bad apples for the industry to be reviewed.
             
            Those that charge excessive fees and/or double charge will be the ones to suffer most.

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            1. CountryLass

              To some, it could appear that I double-charge. However both my tenant and landlord fees are amongst, if not the lowest in my area, because I split the costs of the inventory and administration between both sides. Then the inventory is not biased, and it’s fairer in my opinion. The inventory is there to protect the Landlord’s investment, and the Tenants deposit. They both have a need for it, so why should only one side contribute?

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              1. Peter

                As long as you state the total charge and what each parties proportion is, it is not double charging.
                 
                There is a national agent that notes on their landlord charges for a tenancy agreement is £300. They also note the same for the tenant. That is double charging, but if they said the charge is £600 and the landlord and tenant share 50/50, that is not double charging.
                 
                It is making both parties aware that the charge is shared.

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                1. CountryLass

                  I state on both the invoices that it is a contribution towards the inventory and administration, as well as verbally making the Tenants aware when they apply.

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  7. Peter

    “research from OpenRent showing that 64% of landlords support the tenant fee ban” I would be interested in knowing the questions asked in this research.
    If I asked our landlords – should agents charge tenants as well as landlords, I suspect I will get either don’t knows or no.
    If I asked – would you be happy if the tenant fee ban results in higher landlord charges, they will say not happy.
    If I asked – would you be happy if the tenant fee ban resulted in higher rents, they will say bring it on.
     
    From my point of view, a lot of agents take the mickey on tenant fees, but I am very concerned that it will swing too far the offer way; and this will adversely affect tenants.
     
    For example, if the landlord agreed to a tenant’s request for a pet, our charges, yes a charge as it requires paperwork to amend agreements, could no longer be applied to the tenant, so we would charge the landlord and suggest their agreement is based on an increase in rent. This rent increase will very likely cost the tenants more than our small fee.  

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    1. CountryLass

      I’d say it’s more than very likely. Some Landlords of mine to a bi-annual rent increase of 3%, so if we use that figure as a base;
      Current advertised rent £650.
      3% increase after ban £19.50 = £669.50.
      If a Tenant stays in a property for a year, then that will be an extra £234. £34 on top of what I charge. 2 years will be £468, and then we have the bi-annual increase, £689.59.
      So in ‘saving’ the Tenant £200, the government have in fact cost them an extra £268 in just 2 years… Genius.

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  8. RosBeck73

    Baroness Grender is opposed to free speech. She’s in the wrong country then. I celebrate the fact that we can all have our own views on subjects and not somehow be forced to toe a party line that isn’t yours.

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  9. Lettingagent21878

    I once said how Shelter reminded me of my ex wife

    Now Baroness Grender reminds me of my ex wife

    I do not miss my ex wife

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  10. Peter

    As for Baroness Grender using Open Rent as an example, They are volume player, so their pricing reflects this. What Open Rent offer is not comparable to the personal service a high street letting agent can offer to both landlords and tenants.

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  11. CountryLass

    1) Have the Landlords been made aware that their fees and costs are going to increase as a direct result of this?

    2) Have they been made aware that Deposits are going to be affected by this, and that they may be unable to make reasonable deductions from the Deposit if required?

    3) Are they aware that a prospective Tenant can pull out and the Landlord will still be responsible for the referencing costs?

     

    And how is this going to be good for the economy? This is less revenue for the Agents, so less VAT, less advertising spend etc…

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    1. qweasdzxc

      1) Yes, we have but have tenants been made aware that rents are going to increase.

      2) We know that the size of deposits will be limited. The draft bill I have seen allows me to make deductions from the deposit as set out in the contract. This is the same as I can currently do.

      3) I’m lucky that my rents are high enough that the one week’s rent holding deposit will cover the cost of the reference. I am allowed to keep this if the tenant pulls out or they have provided misleading information (i.e they have lied when providing information which has been sufficiently good for me to take out a reference). I would have thought that most properties will rent for more than £200pcm.

       

      You are already expecting to make the money back by charging landlords (see Q1 in your post) so your revenue/VAT aren’t going to drop. It is going to be bad for HB tenants as they will find properties are even more unaffordable as well as more employed tenants falling into rent poverty.

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  12. JWVW

    The Conservatives promised us again and again, when in opposition, that they would reduce red tape on business. They have done quite the opposite in the housing market.They are such a bunch of liars, willing to do anything at all to stay in power and fill their boots at the same time.

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    1. Gromit

      This is not a Conservative Government in any historical sense as in reality they are left of the last Labour Government.
      They are in my opinion a “faux Tory” Government

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  13. Will

    GOD HELP US ALL.  If those in the house of Lords base their decisions and opinions on comments from one commercial company. What open rent does works for them – fine. I worry about our politicians and our civil servants who guide the politicians! Some elements such as detailed referencing should be at a tenants expense. As should post tenancy agreement changes requested by a tenant otherwise there will be no changes!.  In future I will have to wait until I have 3 or 4 potential tenants and decide for myself which one I am prepared to invest in by paying referencing them. All this is going to achieve is a slower and more difficult filtering or risks. Of course those in parliament be it commons or lords seem to have difficulty in comprehending how the real world is and prefer popularity of those of vote them in.

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  14. MarkT

    Does everyone actually reading these posts realise that these changes are happening and ARE going to change next year ?

    Changes need to made, whether you like them or not and surely all Letting agents and Landlords time would be better spent considering what they are going to do in the “new world” instead of bemoaning the changes.

    Hot tip of the day read “Who moved my cheese”

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    1. Property Poke In The Eye

      That book is a good read.

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  15. HITMAN

    Simple!

    Does this ban include tenant referencing agencies??

    If not, insist that the tenants supply there own referencing and insist on only accepting reports from legitimate credit referencing, you could supply the tenants with a list of referencing agencies that some of you use. Better still introduce the tenant to an agency, you may even get an introducers fee from the insurance and referencing fee!.

    Then you should insist that the tenant pay the max deposit, increase the rent bi-annually and increase the rent by further £10 per month for each pet.

     

    JOB Done!

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  16. Claresheffield78

    I believe asking the tenants to pay a third party in order to grant or extend a tenancy will also be banned.
    A landlord must not require a relevant person to make a prohibited payment to a third party as a condition of the grant, renewal or continuance of such a tenancy
    In this Act “relevant person” means a tenant or any person acting on behalf of a tenant.

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    1. HITMAN

      Thanks for clarifying that, I thought it might be the case, the act seems pretty water tight.

       

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      1. Peter

        Water tight act! Very funny.

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  17. Property Poke In The Eye

    I predict a third of agents to go out of business, the remainder to increase their fees to landlords to cover costs and or loss of income.

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  18. docklander52

    This is the same OpenRent which allows scammers and con men to pose as landlords and sub-letters right?

    It would probably be more accurate to say that 64% of landlords have no idea about tenant fees. Or that 64% of OpenRent PR is designed to further erode traditional agents margins. Or that…..anyway you get the idea.

    I presume that OR are prepared to show their data?

    Lies, damned lies and statistics.

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