A letting agent is calling for industry support in organising a national forum where the issue of letting agents’ fees can be discussed.
Jonathan Morgan, of Morgans in Leeds, would like to hear from all agents who would be interested in attending to discuss the issue.
The forum would be held in either Leeds or London, most probably in the third week in January.
Morgan said that the lettings industry in England will be decimated if it doesn’t tackle the growing calls for a ban on all agents’ fees head-on.
He said: “What has happened in Scotland is staggering.
“To totally ban all letting agents’ fees makes no sense at all. There is a substantial cost associated with running a lettings business and staff can’t carry out viewings, inventories, check references and complete other administration tasks for free.
“The Scottish media is also claiming that lettings fees charged have been illegal and they are pushing for PPI-style payouts, which is just absurd. These fees have not been ‘mis-sold’ – they are simply part of the lettings process.
“It’s essential that our Government doesn’t panic and feel forced into restructuring the entire lettings industry because of a media campaign.
“Any reputable letting agent would agree that a fair and transparent approach to fees charged is required, but unfortunately there are unscrupulous operators in this industry and their bad practice is tainting everybody else.
“The Government needs to consult with letting agents and those campaigning for a ban on fees to reach a mutually beneficial outcome.
“Letting agents have to make a profit in order to employ staff, service landlords and find and manage properties for tenants, and of course those tenants must be given a clear and simple explanation of any fees they are paying.
“At the moment all agents can do is voluntarily sign up to RICS or ARLA, but as the Which? report has proven, the majority of tenants and landlords don’t even know who these bodies are or what they do.
“The only way forward is a consultative approach that provides an outcome that will protects tenants, landlords and agents.”
He added: “We are already in discussion with Leeds MP Hilary Benn, Shelter, and one of the UK’s biggest firms of lettings agents – Countrywide – and hope to arrange a forum in which we can all talk openly and honestly to find a solution, and I am keen for any agents who want to be involved to get in touch.”
Morgan’s email address is:
J.Morgan@cityliving.co.uk
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Comments
Agree with previous poster.
The idea that tenants should only pay rent is naive.
Most landlords borrow from banks and have to pay for arrangement fees as well as interest. So why should tenants pay only rent when some fees such as referencing are exclusive to them.
Why should a letting agent or landlord pay a fee for a tenant with bad credit, who can't afford a flat or who has behaved badly at a previous rental.
At the start of referencing a landlord will not know this information but the tenant will. That is why it is fair that the tenant pays this fee.
A fair and transparent approach to fees makes good business sense if nothing else. Quite frankly, I cannot see how this business differs from any other. If you do not operate in this way, landlords and tenants will simply go elsewhere.
You are always going to get tenants that will try to attempt to avoid financial outlay but landlords will not generally dispute 'reasonable' fees.
There is a perfectly good reason why fees are charged and why landlords and tenants are prepared to pay them. If my garage starts to charge me ridiculous labour fees and ups the price of parts, I will simply stop using them, how is this business any different?
The 'fee' which a tenant pays is called rent. He is paying the landlord for occupancy of the property, and for management of the property as per their agreement.
If the landlord doesn't have the ability to manage the property he can outsource that responsibility to an agent. The agent is providing a service to the landlord, therefore the landlord should be paying for the service.
I think people need to recognise that the lettings environment has changed.
The anti landlord lobby are on the ascendency and the threat to letting agents is real.
In Scotland letting agents did not get organised in time as they didn't really want to work with each other and they have paid a heavy price losing 5-7% of their income practically over night.
My advice to letting agents would be to get organised quickly lobby mps, get a representative on government committees, get a PR company on a retainer to fight the negative spin of Shelter etc. and don't expect any of the existing umbrella organisations to do anything to help.
@ sceptical as always on 2012-12-20 15:22:27
You advocate submitting to blackmail then?
Here here, I'm sure we're all reading this because we are industry professionals, as aforementioned TOBs are signed by both tenant and landlord prior to a let moving in, or in our case even before we take money from a tenant.
It indeed doesn't stop tenants from complaining, asking us to justify our fee and so forth. Like getting to the til at tesco and asking for a full breakdown how the apple price is derived, it's mad.
However commercially you will have to (annoyingly) beware of such complainers. If they ask for a reduction I always ask them why? In fact you are being hard work and taking up more of my time, I should charge you more, after all.
But ask yourself this... How much time money and energy are you going to spend to justify that fee? Commercially your time is better off chasing the next one and keeping that moaner off the various review sites... A small price to pay a you know they will. The happy customers are all to difficult to get a review off!!
Fees are justified but sadly we are in an industry that people love to hate, and we will be taken advantage of!
Ray - I haven't missed the point - I AGREE with you. BUT if all charges were flagged, then ammunition diminishes. The problem remains that the all agents are tarred with the same brush when some agents later start billing for previously unknown charges.
THEN Shelter can again focus on the Homeless and leave Watchdog and Which? to champion the consumer.
@ The Frank Knight
You've missed my point; it doesn't matter to the average tenant if the fees are flagged up or not, or drawn up in their own blood and witnessed by Lucifer himself; the sort of tenant who will complain - and we've all had them - will always find something to argue about and Shelter will always give them a hearing.
It all takes up our time for which we are expected to earn less money. If people were educated more about what to expect from being a tenant or landlord, we would all have less problems.
My personal view………..
1. ALL (ALL) agents charges for the landlord – up front – during – and at the end of a tenancy should be explained and included in the TOB’s for the Landlord and NOTHING should be started until agreed and a copy signed.
2. ALL (ALL) agents charges for tenants – up front – during – and at the end of a tenancy should be explained and stated in a standard letter and agreed and a copy signed BEFORE any preparation for the tenancy is embarked upon.
An agent should not be tempted to ‘short cut’ this procedure – ever – no-matter any protestations from landlord or tenant.
Many will probably disagree with me, but providing legislation is complied with and fees/charges are fair I know this works. Subsequently there are very few queries.
Being at the reciving end of the Scottish legislation the issue is not the payment of fees but who pays them. We found that we were losing more and more instructions due to competitors undercutting fees to the Landlords and then making up their margins by charging ridiculous fees to the Tenants. Their business model relied on Tenants fees not on Landlord fees.
The current position is simply a realigning of the responsibility to pay fees back onto the Landlord which historically was always the case. In my opnion we now have an even playing field were we can compete on value for money and service.
I would also point out that the current trend of Online Agents in England actively promoting "FREE LETTING" to Landlords (by charging the tenants fees) will do your cause no good whatsoever with Shelter and the Government
I have some interesting theory into the impact of removal of fees, and the type of questions and measurements of homeless rates we need to ask shelter now. Basically we get Shelters prediction on homeless rates in Scotland in 12 months time, and then see if it is higher as agents encourage rent increases of 10% to then increase their management fees by 1% to off set the loss of admin fees (a market force reaction). The lower rent properties will see the middle banding properties increase and follow suit just as the housing benefit changes come into force to lower rents.
Then prove the link between Shelters drive to drop tenant fees has made more people and families homeless, and on a national level ask for their reaction. I recommend this study is done by a university for an independent assessment.
Ray - tenants can complain all they like - but of these charges are flagged before binding, then there is no issue.
It's the hidden charges which remain rife in the unregulated world which are of concern.
If the HM Govt wont regulate, which the wont, then this an area of attack which would be benefit.
Trying to advise the general public is like nailing jelly to a ceiling; its futile and no one appreciates it.
We have transparent fees, have had for years, but does it stop tenants arguing or disputing them? of course not. The amount of the fee, when they are due, why they are due, where does it say they are due, it doesn't matter.
Anyone who thinks transparent fees will solve the issue is deluded; you might have a defence if they are transparent and fair but it won't stop tenants or even landlords for that matter complaining.
Now, if a group of agents wants to get together to discuss how we might educate the general public into what they should be looking at in terms of a good agent, we might all get somewhere.
Will the industry forum spend any of their fees on educating the public? I'd like to see it happen
The real truth is that any attempt to abolish fees will ultimately increase rents as agent will charge landlords more - the last thing Shelter want to achieve.
Agents should be compelled to issue a statement of charges at first contact - any fees not included which are later charged to a tenant should be reported to TSI and be invalidated.
Secret commissions from suppliers and contractors should be declared or repaid to the tenant or landlord as appropriate - especially in the case of those agents who also charge a supervision fees for works.
I know of one case where a £1000 boiler was charged at £1100 so that the contractor could cover the 'commission' to the agent. The agent billed this at £1210 to include their 10% supervision fee (+ VAT).
Just a thought
Good effort, but respectfully, NO ONE is going to listen to a group of agents discussing their own fees.
A) You try and persuade everyone to charge less - they wont
B) You offer clear terms as all regulated agents do anyway
C) you defend fees and consumers say "Well they would, wouldn't they"
I think the 2000 members of SAFE agent are a few steps ahead - they have already had an industry forum which included ARLA, NALS, NAEA, RICS, all deposit scheme providers, UKALA, Shelter, etc. They have support from Govt and the London Mayor, CML, TPOS etc.
Even with their momentum - its like wading through treacle to get everyone to join in a united front. You would be better joining them rather than starting another group. They have done a huge amount to raise awareness but need more people like minded people to join a non political non trade association group