Rip Off Letting Agency Fees and Tenants
Banning landlords and letting agents from charging fees to tenants simply highlights the fact that many tenants don’t know their consumer rights. Government and local government should be doing more to help tenants and landlords know their rights instead of introducing unnecessary new legislation says David Lawrenson of www.LetttingFocus.com
Often tenants are charged for referencing, credit check and inventory costs and it is sometimes claimed that the charges frequently bear no relation to the real cost to the vendor for providing these services.
After a campaign by Shelter in Scotland, a Scottish Government consultation exercise has resulted in a decision to ban letting agents and landlords from charging any tenant fees.
Charging a fee to tenants in order to grant them a tenancy or for access to a list of properties has always been outlawed. But now all tenant charges, other than rent and a refundable deposit will be made illegal. The new law is likely to come in for Scotland in November 2012.
So, what does LettingFocus.com think of this change?
Well, Scotland has generally had a tougher regime as regards the private rented sector than England and Wales, (the only exception being protection for tenants’ deposits for assured shorthold tenancies which was only recently made law in Scotland but which has been mandatory for most ASTs south of the border since 2007).
The issue of the level of charges levied by letting agents has long been a running sore for Shelter and other campaigners for the whole UK for quite a while.
I am a private landlord myself and for my own properties, I usually use an online letting agent to advertise to find tenants at Rightmove et al, and then do all the reference checking, move in, inventory, tenancy signing, deposit management etc myself.
Right up front, I always point out to the tenant applicants exactly what my fees are and I don’t charge them big fees for these services. Indeed, we charge much smaller fees than the typical letting agent charges.
The fact that my charges are low and reasonable generates much goodwill with people who we hope will become our customers and rent our properties. (Often, clued up tenants actively seek out landlords who don’t use an agent for these services specifically because their fees are lower).
Double Charging – But is It Really Double Dealing?
Of course, a letting agent’s real client is the landlord – who they are also charging for the provision of letting services.
And given that the agent is also being paid by the landlord, some would argue that letting agents should not even be charging tenants anyway.
And that’s a fair point.
But there is a fair answer too.
Checking a prospective tenant’s references and running a credit check on them is there for a reason. It is to see if they can comfortably pay the rent, or not.
If the references and credit score come back with an indication that the tenant cannot afford the rent, then the effort of everyone is wasted and the agent and / or landlord has incurred costs.
So, I can see no good reason why reasonable fees cannot be charged by the agent or landlord for carrying out this particular part of the service.
As to other fees, the key issue is surely that no charge should come as a surprise to the tenant.
These are Your Rights – So Use Them
If you are buying any product or service, as a consumer, you are well advised to find out the price before you walk to a till or engage a contractor. And if the sum is significant to you, you ought to ask to have it put in writing too.
Tenant applicants as well as landlords who use agents, can and should ask any letting agent who they deal with for a statement of what fees they will be charged in connection with all the other activities that agent will perform for them – right up to signing a tenancy agreement and moving tenants in.
And the letting agent or landlord should be ready to explain clearly exactly what their fees are.
These are basic consumer rights.
Surely, the real question should be – why do tenant-applicants need special protection as they will now get in Scotland.
Government Has Failed to Tell People their Rights
The real reason is the failure of the government to tell people what their rights are: which is that tenants, just like anyone else, have a right to ask what fees they will be charged before they take out a service from a letting agent.
If they don’t like what they hear, or the agent or landlord is vague about fees, then they can just walk away and go to a more honest trader. (They may want to report the trader too.)
So, my response to government is this: Do your job and tell tenants what their rights are.
And whilst they are at it, the government should be asking the local authorities why the kind of information that I have set out here is absent from most local authority websites.
As I have said many times before – most local authorities are poor in the information that they provide to both landlords and tenants in the private rented sector.
We have consulted with and helped some local authorities to improve things. Others must now up their game.
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