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Editor’s note: Agency fees cost us all

Every time stats are released on housing transactions or house prices, we receive comments from industry folk calling for a boost in property supply and an improved housing policy to give first-time buyers a better chance.

And right they are to call for such things: the lack of affordable property is one of the biggest hurdles for would-be homebuyers in the UK. But it’s not the only obstacle.

Of course, the majority of those hoping to get a foot on the housing ladder are renters, many of whom use letting agents to find a property. Now, I’m not in the habit of using this column to vent on personal matters or pedal an agenda of self-interest, but I happen to be one of thousands trying to save for a first home while also facing extortionate letting agent fees.

When one first takes on a rental property via an agent, charges include individual reference fees, guarantor reference fees, corporate reference fees, tenancy agreement fees and inventory fees. Then, if one chooses to stay, there are extension-of-tenancy fees and change-of-tenant fees. These are on top of an admin deposit, up to two months’ rental deposit and the first month’s rent – all expected in one big, lump sum.

How is it possible to justify this level of charge for ‘administration’, particularly as tenants aren’t receiving any extra care and essentially do all the admin themselves?

The ban on fees set out in the housing white paper was welcomed by tenants but we haven’t heard much on it since and, while the consultation on the matter closes on 2 June, speculation is that it won’t be passed through Parliament for another two years.

Don’t get me wrong: I don’t believe the fees should be shifted to landlords; the buy-to-let market has suffered a big enough hit as it is. But fees of this proportion applied to those saving for a mortgage deposit equally stall the market, because saving becomes ever more unlikely. If agencies made the housemoving process smoother and less stressful in some way then fees might be warranted, but I have yet to come across one that does.

Government figures show that 57 per cent of landlords don’t use a lettings agency, and I expect that to increase once the ban on fees is passed if agencies transfer the fee to them.

On a separate note, a huge thanks to all of you who offered your support for our forthcoming transition to a monthly magazine and a new, improved website. You really are a kind bunch and we look forward to delivering our exciting new proposition.

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  • Ben 3rd June 2017 at 12:01 pm

    Interesting article but what makes you think that everyone renting is trying to save for a deposit to buy? That’s not actually the case at all. Many renters prefer or need to rent due to their work commitments, for example, city contractors. Also the presumption that all renters are looking for long term tenancies is also wrong. 80% of the tenants we rent too request 6 month tenancies. Essentially they prefer the flexibility! The simple fact is that completing inventories, reference checks, running viewings and completing contracts all costs money. This is especially so since the government is putting more and more responsibility on agents landlords e.g. ‘right to rent checks’. In a job you take on more responsibility and you get paid more! Taking on more responsibility and saying ‘oh sorry you cant charge to do that work’ is plain wrong. Surely the tenant should pay for their own ‘right to rent checks’ as they would pay the government for other paperwork to enter a country. These services need to be paid by someone. There certainly isn’t enough margin for many lettings agents to simply absorb these fees. Basically a ‘cap’ on fees would have been fairer for all stakeholders involved in providing private rented accommodation.

  • Chris Hulme 1st June 2017 at 5:05 pm

    Indeed Rebekah such fees charged by letting agents arent reserved solely for the tenant as a cross to bear. Letting agents have their hand firmly wedged in the landlords wallet as well both at renewal and inception time as well as on a monthly basis. It seems we all need to take stock together of where the letting agent fits into the rental market and the value they create versus the value they derive.