Cutting our massive fees is bad for you, say estate agents

Cutting our massive fees is bad for you, say estate agents. And the Tories believe them.

And the Tories believe them

In Scotland, tenancy fees have been abolished and, should Labour win next year’s General Election, Ed Miliband would like to do the same this side of the border.

Good news for tenants then, eh? No more eye-watering £250 ‘administration fees’ for five minutes of paper pushing.

Unsurprisingly, some estate agents don’t like the prospect of the abolition of these highly profitable levies, and have reacted to the prospect of them coming to England by complaining to a receptive right-wing media.

What’s more remarkable is how easily the Conservatives have accepted the special pleading of estate agents as evidence that the abolition of tenancy fees is causing higher rents in Scotland.

In response to the news that there has been a 2.7 per cent increase in residential rents in Scotland over the past year, Tory housing minister Brandon Lewis said today that it was ‘now clear that Labour’s plans for the private rented sector would force up rents for tenants’.

It gets a little Orwellian, too. Quoting Gordon Fowlis of the letting agency Your Move, an article on Conservative Home today claims that in Scotland the banning of fees has ‘heightened the financial strain on tenants’.

That’s right: stopping estate agents from charging exorbitant fees has heightened the financial strain on tenants.

This is apparently because landlords and letting agencies are recouping lost revenue by imposing higher rents.

So what does the evidence say? Are rents going up in Scotland because of the ban on letting agency fees? And if England does follow suit, are we likely to see similar consequences here?

Well in a word, no.

Extensive research, released in June of this year and carried out by the housing charity Shelter, found that:

  • Tenants in Scotland had not reported higher rents than two years ago when the legislation was introduced.

  • Nearly 60 per cent of letting agency managers said the ban had not impacted on their business.

  • The lettings market in Scotland has actually grown in the 12 months prior to the survey.

  • Over half of letting agency managers (54 per cent) said the ban on fees was positive for the sector.

  • The majority of landlords who use agents (70 per cent) had not noticed an increase in the fees they pay.

Could it be (perish the thought) that Conservative Home has taken at face value the special pleading of certain vested interests?

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7 Responses to “Cutting our massive fees is bad for you, say estate agents”

  1. Chris Roberts

    I was once asked to pay a £250 “Administration fee” by the Letting Agent Ludlow Thompson (their Oval branch in South London) This requirement was despite the fact that we were already “clients” of said agency because we’d been tenants in one their managed properties for 2 years. I presumed that all our details, including the fact we’d never missed a payment in 2 years were in the office and easily retrievable. The agent said….and I quote: “This is quite reasonable, some agents charge £500” *as if I should be somehow grateful for their lower fee* I responded that this was not an adequate response and that instead of comparing his “service” to some random other agent, he needed to demonstrate why that fee was payable, what did they need to *do* that necessitated that price. I then added that the mythical “£500 was akin to punching me in the arm then telling me I should be pleased cos some other people would punch me in the face” He didn’t like that and insisted we pay it. We didn’t pay and lost the flat as a consequence but at least tweaked his nose a little

  2. Bold Captain Rover

    “Good news for tenants then, eh? No more eye-watering £250 ‘administration fees’ for five minutes of paper pushing.”

    Having worked in an Estate Agent myself, I think you should do some research into this. Jumping on a Daily Mail style bandwagon is not a good thing to do. Why on earth do people think that things should always be free? A letting agent actually does a lot of paperwork and carries a lot of the legal responsibility especially if they are ARLA members.

    If you go to a professional person for a professional service you have to pay. It’s like complaining about paying a mechanics bill for five minutes of tinkering.

    £250 is not massive. It is a fee. Life is full of fees I’m afraid. Estate Agents are just fair game.

    People are dying out there and you’re complaining about this. I would suggest growing up and looking at the real issues.

  3. Dave Stewart

    But the letting agent already gets piad through the fees charged to landlords usually taken as a percentage of the rent. Why should they get paid twice to do the same thing? Also many people get charged hundreds of pounds for reference checks which usually takes the form of copying details someone has provided on a paper form into a website and hitting the go button usually at a charge of a few 10s of pounds. There is no way data entry should cost that much.

  4. Jack

    When he sells a property, the estate agent doesn’t charge the buyer. He charges the seller only. But when he rents a property he charges both landlord and tenant. How do you reconcile that? And how do you explain that these fees are a relatively new practice? 20 years ago, they didn’t exist. Now we’re told they’re essential.

    I’ve rented a property out to tenants myself and I can tell you that credit checks cost about £25. Drawing up a contract is as simple as filling in the blanks on a standard tenancy agreement and printing it off. It’s not a specialist service you’re paying for , like consulting a solicitor or an architect or a private doctor. Its just blatant rip off charging, because they can get away with it. It’s exactly the same as when banks used to charge £1 for using a competitors cash machine.

  5. Guest

    So rents increased by far less than the recent average….and that’s bad. Hmm.

  6. Guest

    Great, you can be paid for your time spent – so 10 minutes. At, say, 2.x minimum wage.

    You then whitewash the massive fees from a rich person’s perspective, as you laugh about the people you want to die, since you’re big into denying the poor shelter. You are indeed the real issue.

  7. Letting Agent

    The confusion is that, at the point of finding a tenant, the ‘landlord’ is not really the agents client yet, they tend to market with more than one agent and have not paid the agent yet despite the agent bearing significant upfront costs that do not occur in the sales side of the industry, such as referencing, having qualified and competent staff to draw up contracts and paperwork (not cheap), computer systems, advertising, etc etc. when selling, most administration is passed to solicitors and mortgage advisers, so buyers DO pay for the administration one way or another – and it’s a lot more – FACT. Prior to the move in, the tenant is really treated as the agents client – or should be, we do provide a service to them believe it or not. Even with tenants paying an upfront admin fee we still have a large number pull out a few days before the move in date for no reason, costing us and the landlord money and lost rent. I can’t imagine how much more that would occur if tenants had to make no financial commitment, we would definitely have to cover the additional costs and risks somehow. Also some agents are not making huge profits, the smaller more family run agents will feel it the most and some may not survive. If you think tenants have a hard time dealing with agents, who have huge amounts of legislation to comply with, good luck dealing with half the dodgy landlords I meet on a daily basis! as a side issue, maybe regulating the rogue agents out of the market would be wiser than cutting the throats of the good ones.

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