Opinion: Why more transparency is needed on letting fees to make sure both landlords and tenants are getting a good deal
There has been much debate in the press and both Houses of Parliament regarding the subject of letting agents’ fees and whether these are fair or reasonable. Unfortunately as far as I am concerned, they are neither.
The all-too-common practice of asking tenants to pay exorbitant administration charges, and a host of other overheads, to estate agents is inherently wrong. Many of the costs charged to tenants are part of the agent’s duties to the landlord. Given that landlords pay agency fees, are high-street agents essentially charging both parties for the same service?
Some agents are only able to compete in a chaotic market place by reducing the commission rate they offer landlords, making up the difference by charging tenants unjustified fees and, in some cases, also charging the landlord spurious administrative charges. Charging any amount of admin fees, which often are up to £500, to prepare a Tenancy Agreement is draconian. This practice is designed to hoodwink landlords into thinking they are getting a good deal.
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This isn’t to say that all charges made by an agent are unreasonable. Requiring a tenant to put down a holding deposit on a property shows commitment on both sides. The landlord is assured the prospective tenant is serious and the tenant is certain the property is withdrawn from the market while references are taken. It should also be noted that this deposit goes towards the first month’s rent so shouldn’t be classed as a fee.
Most agents will provide the landlord with an independent assessment of each tenant, carried out by a third party referencing agency. It is not unreasonable to expect the tenant to pay for this assessment and a cost of up to £100 per tenant would be expected.
Inventory checking out fees are another legitimate expense that tenants can expect to incur, as they will need to show that the property has been kept well. It is however completely unreasonable to expect tenants to pay for an inventory check-in as this is a cost that should be borne by the landlord.
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But expecting tenants to shop around to find the agent with the most reasonable fees is just not realistic. The shortage of property often means that the tenant doesn’t have the choice – if the agent has the property, the tenant must pay the fees.
In short, any additional fees that tenants can expect to incur should be presented upfront in a transparent manner. Letting agents across the industry should be working together to bring these unjustified charges under control – before our politicians do.