Tenants' campaign group Generation Rent says banning letting agent fees to tenants won't push up rents.
The group made the statement after claims that rents would go up if Labour's plans to scrap letting agent fees to tenants become reality.
Generation Rent director Alex Hilton wrote the following blog post on the group's website:
Supply and demand.
Oh you wanted more than that Ok.
There is short supply and high demand for homes to rent. The balance between these forms a price that a tenant is willing to pay a landlord. So far not controversial.
However, that is not how the relationship between tenant and agent is characterised. At the time of signing a contract, the agent is the gatekeeper to a single home with any number of keen tenants. The agent is not an actor in the market for homes to rent but a creator of micro-monopolies for single homes.
This is the reason why letting agent behaviour, hidden fees, discrimination, poor customer service etc. is so rife, and indeed why these behaviours are rarer in areas where supply and demand for homes is in better balance.
The relationship between agent and landlord on the other hand is vastly different. The landlord holds the home and agents are many in number, requiring no great skill and no qualifications at all. The agents have to compete with each other to win a monopoly over the tenancy of a landlord's property.
So agents won't be able to hike up fees to landlords because the landlord will just go to a cheaper agent. This will lower agent fees until they are more reflective of their cost base, at which time they will have to start competing on other grounds, such as professionalism and customer service.
By banning letting agent fees to tenants, less money will go to agents, that's true. But landlords should expect lower costs and a better service as the effects play out. And more professional agents will be of benefit to tenants beyond the absence of exploitative fees. In fact, if this were implemented quickly and the market effects on agents flowed through quickly, that could radically undermine the case for mandatory licensing of letting agents.
This is such a classic market solution to a social problem that I'm surprised it's not Conservative policy.
So like I said, it's supply and demand.
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Comments
But you haven't responded to my point. The 30% you keep quoting has absolutely nothing to do with agents fee's does it
The level of non-compliance with publishing fees is untenable What are you basing that claim on You're just making it up!
You're full of hot air and you haven't answered any if my points directly.
Glad to see labour lost the vote on their amendment on banning fees anyway. The outcome is much more sensible - make agents publish their fees.
We keep saying its a minority. But 30% is a large minority! and about a million people each year. All getting hidden fees already outlawed by the ASA. Most agents clearly are advertising their fees appropriately, but the scale of noncompliance is untenable.
"30% of tenants are being ripped off "
I believe you are referring to you own poll where you asked the question "In general, I feel that the property I live in is a rip off". This is not a specific question on agent fees.
You did ask the question "Have you ever found you have had to pay an unexpected charge or fee to a landlord or letting agent" but the resounding majority in every age group responded "No, Never".
"Your industry has failed to stop it voluntarily."
Stop what High fees My job is to let property not to police other agents or dictate their fee structure. You haven't even provided any relaible statistics to prove there is a significant problem.
"It's now at a scale where intervention is legitimate and necessary. "
What is at a high scale Fees You sure
And you know this based on what evidence Your dodgy statisitic of 30%
Show me the reliable evidence of these widescale problems on agents fees.
"I'd be interested to hear if you have an alternative approach."
Yes I do. Let agents charge reasonable, transparent fees for the work that they do.
You seem to be completely confusing the separate matters of agency fees, rent levels and industry regulation as a whole.
Perhaps you shuold go back and look at your own poll properly. It actually seemed to have very positive responses to nearly all the questions asked. So much so that I'm even happy to provide a link to it here:
http://www.comres.co.uk/polls/Generation_Rent_Private_Renters_Poll_March_2014.pdf
Of course the professional well qualified agents that have to pay shop rent, rates, portal, phone, website, IT, legislation, training and staff costs before we even talk about marketing and doing numerous viewings (in cars that run for free) for prospective tenants (if they turn up) should do this all for free. The tenant gets no service at all when we change the check in time, viewing at short notice, help them with their utility registering etc.
What do these agents do for these poor down trodden tenants that then ask you to change a light bulb or help them apply for a resident parking permit - nothing.
Next we will ban burger vans charging for ketchup!
Yours sarcastically annoyed at people's lack of knowledge and understanding.
Yawn. How can fees be "hidden." It's a free country. They can choose to enter into an agreement or find something else. If they would like to take the property the fees are clearly stated PRIOR to anything being done.
Once they commit, fees become due (which have been explained prior).
The tenants have the option, before parting with any money, to decide otherwise and go elsewhere.
Once again, industry regulatory bodies insist that all fees are declared up front. Which they are. And always have been. Only recently have we had to bow to the morons of society and add "plus fees" to all adverts to indicate we won't work for free. When Kwik-Fit advertises an MOT for x price do people assume they get the light bulb for free when they find it's bust no. Why do tenants assume when they call up about a flat for 500pw we do all the running around and paperwork for free
I think we have been victimised here, who is standing up for us poor agents
30% of tenants are being ripped of to the tune of hundreds of millions of pounds each year in hidden fees. That indicates a minority of agents, but your industry has failed to stop it voluntarily. It's now at a scale where intervention is legitimate and necessary. I'd be interested to hear if you have an alternative approach.
"But what element did I get wrong
Your assumption that agents create a monoply on individual properties.
As you have admited to having a poor understanding of the industry and haven't spent any time doing any actual research, you have failed to realise that your base assumption is inocrrect and this is where your argument falls apart. Unlike estate agents, most letting agents operate on a multi-agency basis and don't insist on sole agency.
I've got a job for a junior photocopier if you're looking for honest work.
"What percentage of agents have tech award 3 or 4"
I don't know exactly but 'ARLA has over 7,200 individual members, representing 3,500 member offices.' So quite a lot.
"This is the reason why letting agent behaviour, hidden fees, discrimination, poor customer service etc. is so rife,"
If it's 'rife' in your article, why are you now saying it's only a minority of agents who exploit tenants
If agents are doing something wrong then get Trading Standards to police it properly. A few agents charging unreasonable/hidden fees doesn't mean we should have a blanket ban on all fees.
What percentage of agents have tech award 3 or 4
But what element did I get wrong And clearly none of the minority of agents who exploit tenants would take me for a day.
From your Twitter feed: "Lots of letting agents complaining about banning of fees to tenants. None explaining what skills it takes beyond photocopying."
That's simply a downright lack of professional respect. I suggest you go and sit the ARLA technical award level 3 or 4 to find out.
"I did think it might be interesting to spend a day with a letting agent understanding the job better."
Do you not think that perhaps you should have done that [i]before[/i] sending out a totally misinformed piece of PR
That's an unexpected response! Public Matters went under and the administrator put me in charge once the owner was no longer able to run the company. I was a labour member for 21 years but left 3 years ago after david Cameron quoted me at PMQs after I wrote an article addressed to Ed Miliband on the nature of leadership. I get five votes this May, two of which will be going to labour.
I find it hard to see how a piece on how to make a market function better can get me labelled a communist! That said, I'd like to hear your thoughts on what you think I have got wrong. I did think it might be interesting to spend a day with a letting agent understanding the job better.
Alex
Alex says "[i]The agents have to compete with each other to win a monopoly over the tenancy of a landlords property[/i]."
How many sole agency lettings instructions do you get Most are on with several agents and tenants know this. I have shown tenants round a property who have gone through a less reputable firm to save a few quid. This agent may not undertake the checks we undertake and invariable has no client money protection insurance and is not a member of redress scheme.
Alex Hilton was a previous Director of a company called Public Matters Limited, a company that went into administration. He does not currently hold any open Directorships. interesting link https://www.thegazette.co.uk/notice/L-59621-1256001
Update!
There is no Alex Hilton (currently) registered as a Director of Generation Rent Ltd at Companies House!
Perhaps his Directorship has not yet been registered with Companies House
Perhaps his 'Generation Rent' is not Generation Rent Ltd
I better get back to work - advising Letting Agents, Managing Agents, et al.
No rest for the wicked (solicitors!)......
Generation Rent Ltd is a company registered at Companies House, under number 07746734.
Its registered address is 46 Syon Lane, Isleworth, Middlesex, TW7 5NQ
There are no registered charges against at the moment (as far as Companies House is concerned).
I've ordered a free report from Companies House re the list of registered Directors, etc.
Us solicitors can get access to a wealth of information.
Mwaa Haa Haa......
[i]Alex says, "People aren't forced into food banks because of the price of food, they are driven there because of the cost of housing".[/i]
I wonder whether Labour's handling of the economy may have contributed a tad Or perhaps their ridiculous section 106 requirements which has prevented many developments for being viable further starving the shortage of much needed homes. Or the crazy stamp duty thresholds Perhaps its all the fault of letting agents after all.
He's affiliated with Labour/Communists what a surprise I've just fallen off my chair...
Anyone can be a 'Director' of a lobby group requiring no great skill and no qualifications at all, yet still they feel at liberty to critique those with many years of industry experience.
Alex joined Gen Rent in March - here is his write up.
[i]March 02, 2014
Director
Alexander joined Generation Rent from the blood cancer charity Anthony Nolan, where he was most recently Head of International Strategy. Prior to that he spent five years as a political communications consultant working on projects as diverse as rights for children in care, Crossrail and employment skills, after a background working for the Labour Party and in Parliament. Asked what motivates him as the Director of Generation Rent, Alex says, "People aren't forced into food banks because of the price of food, they are driven there because of the cost of housing".[/i]
Not seen many poor letting agents in my time!!! There needs to be some discussion about the fees being charged which in some cases are bordering on insane...100 for a tenancy renewal....most agents are still not completely upfront about fees on their website or adverts
oh dear, yet another fantasist who believes this all stems from agent's fees. If the agent doesn't reference the tenant - and why should he if he's not being reimbursed the cost and time of doing that - then who will the landlord he will definitely want to reimburse his cost in doing that by adding it to the rent.
Just the comment of agents "requiring no great skill and no qualifications at all" says it all about their understanding of the rental industry; that's exactly what we DO need in the industry.
Interesting that their website carries no information required by the Business names act, no legal T&C's, no privacy policy, no cookie requests - in fact, as asked, who the hell are they, A Labour advert
Who/what is this "generation rent" anyway Just looked at their website, and there is NOTHING about who they are! Not surprised really given the ramblings of an ill-informed so called "director". Why are they hiding I'd suggest this is 100% politically motivated. It's probably one of those Moribund brothers. Websites are clever and it's surprising that there's very little legislation governing content. If this person is a "director", that means it's an incorporated legal body, and therefore surely subject to Companies Act legislation Is "Generation Rent" a trading name What is the Ltd co name, registered office and No Without any of this information, I don't see that this company has any legitimacy. However Jo Public who wants to hear this stuff will consume their blog/website etc with delight!
yawn yawn utter drivel I must concur. All raise your hands who is prepared to lose tenant admin fees and not make them up elsewhere Right, nobody. The fees will simply be added to elsewhere. Guess that leaves Mr. Landlord then... He'll have to put prices up in the short term to compensate, or use one of the brilliant online agents that we hear so much about. But what if things go wrong, he suffers a void or gets fed up of deadbeats not turning up for viewings Mystic Meg and her Crystal Ball tells all.... they come back to the agent with their tail between their legs...
@Scotland - Rents went up following banning of tenant fees in Scotland.
http://www.propertyreporter.co.uk/view.aspID=10882
Were they cant charge tenants fees - but many still do - thats Scotland
I have just one word to offer in reply... SCOTLAND.
@Alex Hilton. Utter garbage.
Guest (EW). Excellent logic and I couldn't agree more.
It seems that Alex believes that fees are the key issue. This belief that "the landlord will just go to a cheaper agent" is unbelievably naive. If that were the case, then explain Savils, Knight Frank or Foxtons You see Alex, we may charge a little more than some of our competitors because we train every member of staff, have in house legals and compliance to assist a landlord or tenant with any issue they may have. We have regular audits and compliance checks and pay lawyers to ensure every piece of paper is compliant with current legislation.
Your comment about agents "requiring no great skill and no qualifications at all" is ridiculous when discussing fees. Be it lawyers, builders or footballers, the better you are, the more people are prepared to pay for your service.
There are many agents reported in the press which have folded leaving consumers out of pocket, Typically, these were agents who undercut competitors but found that they couldn't run a viable business. Rarely are these agents members of a regulatory body with the protection it affords consumers.
When we ran a pilot in London where we charged tenants no fees at all, it made no difference to business and tenants still rented through agents who charged them fees as they had the property they wanted. Likewise, Landlords will chose an agent they trust and rarely go with the cheapest option. Far better is continue to quest for transparency and give consumers the choice.
As Stella Artois say "reassuringly expensive"... but I suppose you are more of a Tesco Value man. Afterall, why pay more.
Utter drivel I am afraid from a person who clearly have never run a business. Perhaps he may reflect on the fact that agents are commercial entities many of whom dont make huge sums of money and struggle to make profit. Cut their income, they will have to cut corners to survive. Some will fold and consumers will lose money. Richer agents will be able to put smaller rivals to sword and create a less competitive market.