Letting agents in England avoid blanket ban on fees | Discuss

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Letting agents in England avoid blanket ban on fees
13/05/2014
8:01 pm
News @ Tenant Referencing
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MP's have voted NO to banning letting agents from charging fees to tenants in England - votes NO: 281 to votes YES: 228.

The Government are also planning on implementing changes so that agents will face a new obligation to display full details of their fees - both on their website and in their offices.

Following calls from Labour's Harriet Harman to back her party's plan to ban agents from charging fees to tenants, Deputy PM Nick Clegg has said that there are "virtues" in their push for longer tenancies but warned that the fee ban could increase rents in the long run.

Trade bodies have also voiced their concerns that any blanket ban on all fees would just increase rents further.

In today's 15th Consumer Rights Bill Sitting, before the vote, Stella Creasey (Labour & Co-operative MP for Walthamstow) said:

Because we still do not agree that the Government are doing enough we are calling a vote. It is not a small minority of letting agents who charge excessive fees and landlords do not want more fees charged, as they can't afford them. ...In the last hour of this debate I have heard of a fee of £1,300 being charged by a letting agent for two tenants to change a name on a tenancy agreement.

...Are we on the side of the consumer or on the side of business?

Clegg said:

"We will be announcing today that we will be placing new obligations on agents to publish in full transparency what kind of fees they are charging so people can shop around and get the best deal available."

He concluded:

"The fundamental problem… is that we are simply not building enough affordable homes."

More details on the government's policy were provided in a statement from Housing Minister and Conservative MP Kris Hopkins:

"The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service," Mr Hopkins said.

"Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.

"Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent."

LandlordReferencing.co.uk believe the main point here is that

  • If letting agents had properly complied with the ASA ruling last year then there would be no need for further regulation.

Currently, the Advertising Standards Authority only requires letting agents to list compulsory charges to the tenant upfront in the process - facing little more than being "named and shamed" on the ASA's website.  But if the Government go ahead with their plan this will require all letting agents to publish a full tariff of their fees - both on their  websites and clearly in their offices. And those who failed to comply would face a fine.

RE:  Landlords and Agents | Are you ready for November 1st? ... - Click for the full story.

The Labour Party are not going to let this go, especially with the impending General Election, so the answer here is very simple :

  • Regulate yourself to avoid further legislation.

This week at LRS we are celebrating SAFEagent Awareness Week as it is essential that landlords check that their chosen agent is regulated and has client money protection.

We also advise our landlord members to only use letting agents who are members of LRS ;

CLICK HERE to check out the #LRS10 Top 10 Lifestyle Referencing Agent Leader-board.

As well as new legislation requiring all letting and managing agents in England to belong to an approved redress scheme, coming into force later this year, other measures in the pipeline include:

  • a new code to set standards for the management of property in the private rented sector - with a view to making it statutory.
  • a new “how to rent” guide, which will help tenants understand what they should expect from their rental deal.
  • the introduction of a voluntary, model tenancy agreement, which landlords and tenants can use for longer tenancies, which will provide extra security and stability for families.
  • extra guidance for local councils on tackling rogue landlords, protecting tenants from illegal evictions and how best to push for harsher penalties before magistrates for housing offences.
  • increasing investment in house building.
  • increasing institutional investment in new PRS accommodation, via Build to Rent.

The government said its own amendment to the Consumer Rights Bill would be brought forward at a later stage in the legislation's passage through Parliament.

Ministers also propose to review how well the measures work after they have been operating for a year.

  • Do you agree with this?
  • Is banning fees on the side of the consumer or on the side of business?
  • Do you think fees should be banned?

Whatever your views are please share them with the LRS community, below.

 

Related topics:

Shadow Housing Minister says tenants are not an agents client - 100 Posts from landlords and agents - Please read on! / Page 1 - Page 2 - Page 3 - Page 4 - Page 5/

Labour Party write open letter to letting agents

Private Rent Arrears decreasing as Social Housing debt rises

13/05/2014
8:07 pm
Mary Latham
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"Regulate yourself to avoid further legislation"

hahahahah Two great minds think alike I have just posted the same thing on another discussion before reading this.

 

I agree 100% this is not going to go away and if Letting Agents don't want to go through another round they MUST begin to comply with existing regulation, get themselves up to speed on legislation and compete on services that save landlord time and worry and build confidence among tenants

Follow me on Twitter @landlordtweets

13/05/2014
8:43 pm
Adam Hosker
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"If letting agents had properly complied with the ASA ruling last year then there would be no need for further regulation."

This has NOTHING to do with agents being naughty; they charge a fee and Labour want to stop that fee due to "cost of living" issues.

For instance "I have heard of a fee of £1,300 being charged by a letting agent for two tenant" - has nothing to do with rouge agents. This is an letting agent that has a £1,300 fee. Its not value for money but have not broken no laws or ASA guidance.

"Regulate yourself to avoid further legislation" works but "stop being stupid with your fees" can avoid Labour trying again.

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Innovative letting agents should rejoice at such disclosure. A fee comparison between you and your competitor with leaflets trough the door at the rented property - should yield some good results! .. Especially against those with excessive fees to match there high expenditure.

I do support full disclosure to encourage a competitive marketplace; BUT playing Devils Advocate:

Is this proposal not a "race to the bottom"? putting quality agents with substantial fees out of business as their cheap counterparts take business of savvy landlords cutting costs in order to increase yields.

13/05/2014
8:51 pm
Katherine
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I agree that letting agents should be allowed to charge referencing fees BUT they must be transparent in all fees. Locally there are still agents advertising on websites and don't show their fees. I hav'nt seen any additional fees advertised eg renewal fees and these I do find unreasonable. Tenants don't believe there is an alternative to signing a new AST for which they are charged.

I have had many tenants stating they must move by a certain date or they will have to sign a 6 month tenancy. Most tenants take the agents word as gospel and and their main concern is they will be homeless.

I find my own tenants and do charge £50 per tenant for referencing. the main reason is I find only commited tenants pay this fee so saves being messed about. Tenants also believe you take referencing seriously if you charge a fee. 

After the initial 6 months all tenancies become periodic and tenants are reminded at this time that if i want them to leave I will give 2 months notice and they are required to give one months notice. I don't want to charge additional fees and I don't want tenants forced to stay in a property.

 

13/05/2014
9:11 pm
Katherine
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The Government are also planning on implementing changes so that agents will face a new obligation to display full details of their fees – both on their website and in their offices.

All public houses must display a lprice list at the bar. How many of us check the prices before we order a drink?

13/05/2014
11:13 pm
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As an ex letting agent I am relieved that this is the case.  What other business faces challenges such as this?

However, I do believe that a dam good letting agent, who knows their stuff, is experienced etc, can be the landlord's best advocate and advisor, and will look after their tenants.  However, the problem is that most landlords and certainly most tenants dont know the difference between a good letting agent and a bad one.  In fact, the only time most landlords and tenants ask really searching questions of a letting agent, in my experience are when they have been well and truly let down by an incompetent/inexperienced/rogue letting agent (delete where applicable).  

The best letting agents will have a legal knowledge approaching that of the average property lawyer, will act in their clients best interests, and will even turn business away if necessary, if it does not meet their business model.  They are also ethical, honest and very, very hardworking.

There are some fantastic letting agents on this forum, those which I am aware, the likes of BRPL, oakhill, markr  (if I have left any names out, I apologise) etc, and I am sure there are plenty more on there, who are hiding their lights under a bushel by not posting in their companies name.  We really should allow them to shine and show landlords just how good a job they can do, and just how they can steer their landlords and tenants through the lettings legal maze.

Cathy

14/05/2014
9:56 pm
LyndonBaker
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Well said, Cathy.

Unfortunately as we all know the pendulum has, for some time, swung in the tenants' favour for eviction, failure to pay rent and even deposit protection. Can someone please explain to me why it is fair that a landlord should pay to protect a deposit that we are constantly told belongs to the tenants? Why are they able to challenge any and every deduction at no expense to themselves, causing landlords and agents to spend more time and money.

Unless the NLA, RLA etc together with NALS, ARLA, NAEA, RICS etc get together and fight back, tenants will again be favoured over the landlord. Make no mistake, unless landlords and agents work together on this, we will both suffer in the long term.

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