A new Bill has been introduced in Parliament, which is seeking to abolish letting agents’ fees charged to tenants. The Renters Rights Bill had an unopposed second reading in the House of Lords recently.
One of the aims of The Bill is to amend the Landlord and Tenant Act 1985 by stopping letting agents from charging tenants or prospective tenants set up fees, inventory check-in/out fees; credit checking fees or renewal fees.
Well intended as this may be, the reality is that these costs won’t go away so landlords will have to bear the brunt of these costs initially and are likely to pass them on to tenants through higher monthly rental amounts. There is a wide range of fees being charged by agents and we recognise that the intent behind the Bill is to make letting easier for applicants by lowering the initial costs involved. With the tenant set up fee for example, at McCarthy Holden we charge tenants £390 including vat per property which includes not only credit checking of tenants but the associated paperwork and tenancy agreement. Having looked at other letting agency websites this is extremely competitive when some other agents are charging significantly more.
The tenant set up fee is contributing to the costs of a vitally important job which has to be undertaken before a tenancy is finally agreed and entered into. It covers referencing tenants (identity, immigration and visa confirmation, financial credit checks, obtaining references from current or previous employers/landlords and any other relevant information to assess affordability) as well as contract negotiation (amending and agreeing terms) and arranging the tenancy and agreement.
The new Private Member’s Bill would apply in England only and has been introduced by Baroness Grender, a former director of communications for Shelter. It appears that at the heart of her argument is the belief that Letting agents should not be able to get away with double charging fees – imposing them on both tenants and landlords – when in fact it is only the landlord that is the client and therefore the one that should be paying. There is, of course, some logic in this view, however, don’t be misled in to believing it will reduce costs for tenants, because if the logic is followed and the landlord has to shoulder the pre-tenancy costs then you can be sure of one thing and that is the landlord will pass these cost on to the tenant by way of the rental level.
We believe a recent counter view was taken by Government spokesman Viscount Younger of Leckie who said: “The Government is clear that the vast majority of letting agents do provide a good service to tenants and landlords and that most fees charged do reflect genuine business costs.” (Source Eye).
McCarthy Holden lettings director Nicola Bremner believes that it is imperative a balance is reached between reasonable charges for the work carried out by Letting Agents. ‘it is not just a matter of printing out a tenancy agreement and allowing people to move into a property, with an ever-increasing amount of legislation that must be adhered to, the service provided by your letting agent is increasingly important to ensure both landlords and tenants are aware of their obligations.”
If you are a landlord or tenant and need professional insight into the residential lettings market legislation then contact our experienced lettings agent team.
