The old and eternal debate over whether or not tenant fees should be banned continues to rumble on.
It’s a major concern for tenants and many of the campaign groups love to keep this topic front and centre – and why not? There is little rhyme or reason to what and why agents charge the fees they do.
With Generation Rent’s www.lettingfees.co.uk showing a disparity in fees (based on two tenants) in Tower Hamlets varying from £0-780, is it any wonder that renters and campaign groups alike find this an easy topic to pick our industry apart with?
Let’s not forget our industry is changing rapidly in the range of services and products available to us and the shrinking costs of many of these.
It's now easy to get references done for around £20 (or considerably less) and most agents create tenancy documentation at the click of a button using an agency software package – so can we really justify ANY charges for these anymore?
What's more, by fulfilling our duty to our landlords can we really justify additional charges for referencing and contracts?
How can we actually fulfil our duty to let a client's property if two of the most important elements of the process are not included in the service fee?
Interestingly, what the letting fees website does not cover is how many of the agents also charge an admin fee to their landlords.
Can any agent justify hundreds of pounds in fees to tenants and landlords alike for a job that can take seconds?
One of the issues that faces this debate is the fact that landlord letting fees across the UK vary so much.
An agent can earn anywhere from a few hundred pounds to thousands of pounds per let with very little difference in workload.
In fact, it is my experience that the lowest priced properties producing the lowest fees are often the most time-consuming.
In light of this, is it fair to lump together all agents in to one over-riding rule? Is it fair to stop an agent charging £200 for a contract when they only earn a £700 fee?
Likewise, is it fair for an agent earning £3,000 to let a property to charge nearly £1,000 in fees to tenants and landlords for rudimentary paperwork?
Can we really treat these two businesses the same?
If anything, I think Scotland has shown that this would be a poor approach. The banning of tenant fees appears to have resulted in higher charges to landlords which, in turn, is passed on to the tenants.
I remember reading an article which advised that before the law change tenant fees averaged around £200 however after the law change rents had, on average, increased by £500 per annum – essentially doubling the cost to tenants without them really knowing it.
So what really is the solution? Personally I think transparency is key – but it is only as good as the regulators ensuring it is enforced.
Of the 165 agents surveyed in Tower Hamlets, 24 or 14% did not display fees in line with current regulations.
More worrying was the fact that 31%, nearly a third, of the agents surveyed did not display a redress scheme membership.
If we want to know why we are always bottom of trust lists and top of most hated lists alongside the likes of politicians and parking wardens – this is why!
Far too many of us duck and weave and deceive people in the knowledge that we are dealing with homes and, when confronted with a last minute decision to pay up or lose out, agents know the reality is nine out of ten will pay.
Ultimately, any company is entitled to charge whatever they think is a justified fee or cost – however, if it is justified, then you should have no problem having any and all such fees set out for all to see.
Personally I would love to see fee transparency enforced across all areas of lettings so that any and all tenant and landlord fess are detailed in full on every agent's website.
So many agents rant and rage about the threat of online agents – the longer we obfuscate our industry and the more time we allow fellow agents to rip-off tenants and landlords within our sector, the more we drive them away to an open and transparent model.
My agency charges fees, but these have been openly stated on our website since 2012 (along with landlord fees) and have remained unchanged since we opened our doors 12 years ago.
Depending on whether the lettings fees site includes VAT or not (this is not clear) we would sit at 7th or 14th in a list of 165 – I can live with that.
We continue to secure new tenants and landlords alike – who're actually attracted by our open and transparent methodology.
So, if you want to help shift the public perception of our industry and protect yourself from the perceived threat of online agents, maybe you should take a good hard look at your fee structure and revise it to a fair level considering the work involved and the fees you already charge your landlords – and then share this, openly, on your website, social media and all marketing.
What’s more, if you know of local agents that aren’t complying and don’t display their fees and aren’t redress members then maybe it’s time to start shopping them to the authorities and help clean up our industry for the good of everyone.
*Kristjan Byfield is company director and co-founder of base property specialists