The compulsory disclosure of fees has had very little impact on most industries. For example, Wonga have to disclose their APR in their advertising and yet people still take loans at stratospheric interest rates.
This has also been the case with the compulsory disclosure of tenant's fees. Many lettings agents I have come across bury these charges in the small print of their advertising or on a hard to find page on their website and if tenants do read them, it seems that they make no difference. For most tenants, the prime motivation is to find a nice place to live and the fees charged by their letting agent will only end up being a small percentage of the total annual rent.
Although the government stopped short of banning letting agent fees in May, agents now have to publish a full list of landlord and tenant fees as part of a clampdown on so-called hidden charges'. In my opinion, this will probably also have relative little impact, but any impact that it does have will be entirely negative.
I have run courses for letting agents on how to increase their fees for over 20 years and in my experience, there is a very strong correlation between the agents who charge the highest fees and the agents who give the best service.
On the one hand, the government tells us that it wants to clean up the letting industry and drive rogue agents out of business. On the other, it threatens legislation that could increase the market share of the cheapest and worst agents.
A good agent will have a mailing list of high quality tenants who can view the property immediately, will negotiate the best rent for clients and will reference tenants thoroughly for their landlords.
A good agent will employ knowledgeable and qualified staff who will ensure that every tenancy is set up and managed in a legally compliant manner. What's more, they will provide a photographic inventory and an attended check-in and check out to minimise disputes, whilst paying rent to the landlords promptly and properly. All these things cost money to provide and this is why good agents are more expensive than bad ones.
The principal issue is that the benefits of using a good agent over a cheaper one cannot be conveyed in a short advertisement or telephone conversation. Agency is not a commodity that can be bought on price and price alone. It is a service that must be bought on quality.
*Adam Walker is a business transfer broker, management consultant and trainer and has specialised in the property sector for more than 25 years.
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Comments
I have no doubt that for some a premium price really does mean delivering a premium service
but for way too long this industry has not been transparent on pricing, and that is clearly not in the consumers interests.Charging tenants and landlords opaque admin fees,drip pricing after the tenancy has started,silly prices for renewal fees the list goes on. To say the impact on disclosing fees would be entirely negative is far fetched. A transparent industry with clear pricing outlining what you get in return for what you pay is the norm in most consumer markets.In todays social,connected world you simply cannot get away with smoke and mirrors. The best with thrive and survive the rest will struggle,easyProperty is entirely supportive of transparency.