Shelter says all letting agent fees must be met by landlords

Shelter says all letting agent fees must be met by landlords

Shelter has launched its widely-expected campaign to get all letting agent fees charged to tenants banned throughout England.

The lobbying organisation wants the practice outlawed by MPs, and in future only landlords charged – something which has angered the Residential Landlords Association (see next story).

The high-profile launch of the campaign included a piece on Radio 4’s Today programme, flagged up by presenter James Naughtie as “Are letting agents out of control?” and a mass email send-out inviting Shelter followers and supporters to sign a petition.

The launch in England comes after Shelter was instrumental in getting fees banned by law in Scotland.

In England, Shelter is aiming just as high and its petition calls for politicians to act.

The organisation claims that letting agents’ fees are now “truly out of control” and that tenants are having to go without food or heating to cover the costs.

Shelter completed a mystery shopping exercise of 58 letting agencies across England and found that they charged tenants on average £350 in fees to set up a tenancy, on top of deposits and upfront rent. Almost one third of agents charged over £400 and seven charged over £700.

In some cases it investigated, says Shelter, the agents did not refund fees, sometimes hundreds of pounds worth, when the tenancy did not go ahead through no fault of the tenants.

Speaking on the Today programme, Campbell Robb, chief executive of Shelter, claimed that agents were charging landlords and tenants for the same service, although the contract was with the landlord.

Ian Potter, managing director of the Association of Residential Letting Agents, said that an upfront payment was necessary as “that is where the costs are incurred”. He said that if all the costs were transferred to the landlord, it would simply put up rents for tenants.

Potter and Robb disagreed as to whether rents had risen in Scotland as a result of the ban on fees.

The Shelter research claims that one in four people who have dealt with a letting agency in England in the last three years had to borrow money to pay for fees, and one in six had to cut down on food or heating to meet the cost. One quarter said that letting agents’ fees stopped them from being able to move to a new home.

The Shelter report, Letting Agencies: the Price you Pay, said that charging only landlords is a “fairer way of doing business”.

Robb said: “Anyone who has tried to find a rented home in the past few years knows that affordable, decent places to live are in short supply, and often snapped up within hours.

“The high demand for rented homes means that renters can’t shop around, but instead have to deal with the letting agency their landlord has chosen: they have no choice but to swallow their anger and stump up their cash.

“People often forget that the landlord is the real customer of a letting agency, but the fact that renters also pay fees leaves both expecting the agency to act in their interests. This adds up to a confusing situation that leaves landlords in the dark and renters powerless.

“The only way to fix our broken lettings market is for the Government to stop renters being charged for the costs of setting up a tenancy.”

Caroline Kenny, executive at the UK Association of Letting Agents (UKALA), said that it was not “always appropriate” for only the landlord to be charged pre-tenancy costs.

She said: “Matching prospective tenants with suitable properties is resource intensive and can be extremely costly.

“The bulk of any agency’s costs are covered by the fee paid by their landlord client. However, it is not always appropriate for the landlord to meet pre-tenancy costs, particularly when they are associated with proving the suitability of an applicant.

“It is therefore appropriate for a prospective tenant to contribute towards the administration and referencing process before a tenancy begins. This demonstrates commitment to the prospective tenancy, safeguards against an applicant securing multiple properties simultaneously to then reject all but one at the last minute, and protects agents and landlords from applicants who provide false information.
“Tenants ultimately benefit from these processes being carried out professionally. Proper process such as the inventory check-in and check-out helps to protect the tenant.”

Kenny also pointed out that letting agents will shortly have to obey new rules when they advertise properties, after the Advertising Standards Authority banned a Your Move advert that showed the rent but not the fees.

The Committee of Advertising Practice (CAP) is expected to publish its guidelines shortly.

Kenny also said: “As an industry, we must continue to push for minimum standards to be adhered to, including the provision of Client Money Protection and Professional Indemnity Insurance, a commitment to professional development, transparency of all terms, conditions and potential charges, and most of all, excellent customer service.”

She emphasised: “At UKALA, we are completely against overcharging.

“Unfortunately, however, there are unscrupulous agents operating within the industry who are overcharging tenants and damaging the industry with their dishonest practices.
“Within any market place it is important for consumers and providers to find a price-point at which businesses can succeed and consumers can receive value for money.

“In order to achieve this, UKALA believes that agents should ensure that any fees and charges are made clear in advance of entering into any business relationship.”