Letting agency fee crackdown
So, like a stopped clock being right twice a day, I do occasionally agree with something the Tory Government do, and I very much welcome the policy around restricting the ability of letting agencies to charge fees.
Now I think it goes without saying that this sort of stuff is just rearranging deckchairs on the titanic. And that the only real solution to our housing crisis is to embark on a large scale program of building affordable housing for ordinary people to rent, or buy at reasonable prices, in the places where the housing is needed. However the perfect should never be the enemy of the merely better, and this policy does I think makes things better, albeit by a very small increment.
I posted the link from the first paragraph and my friend Lynn commented, perfectly reasonably, that she felt it would make little difference because the cost of these fees would just be passed onto the landlords, who would in turn pass them onto tenants.
I however think that this is wrong on a few grounds. Firstly, as the original piece argues, that tenants seldom make these fee’s a price consideration meaning there is little in the way of competition for agencies on the basis of fees they charge to tenant, and certainly chimes with my experience of renting through agencies. It is always an added cost I didn’t expect when deciding on the house.
Secondly because I rather suspect that most landlords have very little understanding of, or interest in the fees the agency charges the “other side”. There is likely to be little visibility of this. Furthermore for your average landlord I expect that punitive fee structures to potential tenants is likely to be something of which they would active disapprove of. Given that it might put of potential tenants and make it harder for their property to be let.
Because neither tenants nor landlords are giving much thought to agency fees for tenants then letting agencies have few checks and balances on ever inflating their fee structure. Something that has clearly been happening. The fee structures are utterly obscene, (and don’t get me started on guarantors, my hellish experience with my step daughter, a letting agency and an utterly ridiculous guarantor agreement is probably a topic for a whole other blog/rant!).
So anyway back on topic, if landlords start factoring the exorbitant fees agencies currently charge tenants, then their properties will go much less quickly than those that don’t as potential tenants will be less likely to view them because of the higher rental costs. And I am sure it goes without saying that one thing all potential tenants pay most attention too is the headline rent figure.
And more than that whilst renters are likely to be price conscious about the monthly rent first and foremost (with fees at best an afterthought) landlords considering who to use will be very conscious of any and all charges and fees payable by them that the agencies want to charge them.
This should create deflationary pressures of letting agents fees for tenants. Which is a market working as it should and a good thing.
Also it is pretty outrageous that agencies charge from both ends. At the end of the day they are providing a service to the landlord, in some respects I think it is a conflict of interest when agencies are making money off both the landlord AND the tenant. Heck in football they banned agents working for both player and club for exactly this reason.
I get that it isn’t unreasonable that the variable cost on a per potential tenant such as a pre contract credit check might legitimately be the responsibility of the prospective tenant… Though the rip off charges that agencies use to do this needs to be reigned in. A credit check costs about £15-£25 quid on the open market. The referencing fee I got charged by the agency for my flat was £175 quid! I’d suggest that if this remains the responsibility of the tenant then tenants ought to be able to shop around for cheaper referencing.
But the majority of the fees, paid once, are really part of the service that agencies are offering to the landlord. And it is only right that it should be the landlord that pays this. And therefore not inflating these costs for a quick buck will actually form part of how agencies make a competitive offer to potential landlord clients.
One of the many problems with private renting for relative poor working class working schmucks like me is that private letting is the wild west. There is virtually no regulation, everything in the deck is stacked against you (and I realise it can often be difficult for amatuer private landlords too, but that is a different topic).
Agencies get away with what they can. Most of the time when private tenants are moving it is out of necessity, most of my moves have been due to the place that I was currently living in being no longer available. Then you are over a barrel, if the clock is ticking to homelessness one isn’t really in a position to get picky about fees.
Anything that levels the playing field a little for tenants is a good thing if you ask me. This move is baby steps, but it is better than nothing.
Also published on Medium.