The housing charity Shelter is calling on the Government to ban letting agents from charging tenants for their services, which means the entire bill for letting a property will have to be picked up by the landlord.
I don't think that's unreasonable. After all, when you sell a house you don't expect the vendor to split the estate agency fees, do you? I have been embarrassed to discover just how much letting agents have charged my tenants — sometimes for services they haven't even provided such as drawing up a tenancy agreement that I have supplied myself. I find it astonishing that when an agency has charged me in excess of £2,000 to market my property, it has also had the cheek to charge the tenant several hundred pounds on top.
Shelter says that when it "mystery shopped" at 58 letting agencies across England and Wales, it found that on average they charged tenants £350 in fees on top of deposits and rent up front, and almost a third charged over £400. Seven agencies expected tenants to cough up £700, the equivalent of a month's rent in some places. That can't be right.
However, it's perhaps not surprising that letting agents charge tenants such high fees. They used to make a fortune out of landlords by sneaking hidden charges, such as renewal fees, into contracts in the hope they wouldn't be spotted until it was too late.
In 2009 they were told that practice had to stop. So now they have to find other ways to pay for their champagne-swilling and weekends in Marbella.
I think many landlords aren't aware of how much letting agents are charging their tenants. If letting agents were forced to tell landlords ALL their fees and charges, including any they expect the tenant to pay, landlords would be in a better position to get these charges reduced before entering into a contract.
I wouldn't be unhappy, though, if agents were told they couldn't charge tenants at all. And I dare to disagree with the Residential Landlords Association that such a move would significantly drive up costs for landlords and, consequently, push up rents.
Landlords don't have to agree to pay exorbitant fees. In my (albeit limited) experience, these are always open to negotiation. I never agree to renewal fees and one-off charges and I never pay commission of more than 10 per cent, which I think is reasonable. My local letting agent charges landlords only five per cent commission and doesn't charge the tenants a penny. If he can make a living out of those fees, surely other letting agents can survive on the same fee structure? The Residential Landlords Association argues that a similar move in Scotland to outlaw fees to tenants has put some letting agents out of business, but I think there are too many rogue agents in London and I'd happily wave goodbye to the bad guys.
I read a quote from the Association of Letting Agents that tried to justify agency charges, saying "matching prospective tenants with suitable properties is resource-intensive and can be extremely costly". Oh please, let's not turn this into rocket science. You advertise a property, you show people round — end of.
Perhaps it's okay to charge tenants for credit checks and referencing, to make sure they haven't put offers on lots of properties at the same time. But this should only be at cost price. Some agents charge £50-plus for a service which costs only about £15.
Personally, I always refund the cost of the credit check if the tenant takes the property, but that's because I'm nice. Honestly.
What these agents do is not rocket science. They advertise a property, show people round — end of story
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