A fee-cutting war, precipitating lower standards, could be sparked across the whole of London by Ken Livingstone’s proposed not-for-profit lettings agency.
Eric Walker, managing director of London agents Bushells – a founder of the SAFEagent scheme – said: “The idea of a not-for-profit lettings agency is an interesting, but flawed concept. ‘Not for profit’ is not the same as free and will still attract charges.
“Factor in the words ‘affordable rents’ and see how many landlords will look for low fees when they can get better rents elsewhere. If the industry were just about low fees, then the cheap agents would be market leaders rather than those who actually are.
“Further, there are not many agents who are actually making a profit. Low fees are often associated with unregulated agents who can afford to be cheap because they don’t have the financial burdens of Client Money Protection Insurance, PI Insurance and costs associated with membership of regulatory bodies.
“We have been campaigning for landlords to use properly trained and regulated agents who protect tenants and landlords’ money.
“If a new service appears which undercuts professional agents as a result of the inevitable subsidies provided by the taxpayer, then standards will be affected.
“Further, it appears that some wish the demise of lettings agents in their entirety at a time of rising unemployment. Most lettings negotiators do not earn huge sums of money and work extremely long hours.
“No, the key issue if Mr Livingstone wishes to make rents more affordable is a simple one, if only in theory. Price is determined by supply and demand. More homes would reduce the shortage which has led to tenants outbidding each other to secure a property.”
Walker said that “ridiculous planning restrictions and onerous requirements” made many schemes unaffordable for developers to proceed with. He said that on one development of 22 flats, with an average value of £265,000, the local authority wanted a payment of £700,000 to pay for social housing. On top of that, the bank wanted £60,000 simply to renew its funding.
Walker said: “Times are tough. Local authorities and industry need to work together to raise standards and protect consumers, and to provide much-needed stock – not enter into a fee price war. It will not help.”
Matt Hutchinson, director of flat and house share website SpareRoom.co.uk, said: “Imagine the funding and manpower required for a not-for-profit lettings agency, not to mention the red tape.
“Ken Livingstone’s pledge is more a pipe dream than a deliverable strategy for London renters.
“However, Ken’s verbal attack has highlighted how London’s rental sector is in dire need of some level of regulation.
“While there are certainly rogue landlords, at the same time there are countless honest landlords who are solving a problem in the housing sector, namely that would-be first-time buyers simply cannot afford to get on to the property ladder.
“Any regulation in the rental sector needs to support honest landlords as well as aiding tenants.”
.png)
Comments
Lets just make EW mayor. Sorted.
Well said EW.
Ken's idea, save for regulation of agents, is ill-conceived, impractical, and bound to result in falling, rather than rising, standards.
If rent caps were introduced, negotiators would only be needed in dealings with landlords, since landlords would no longer be prepared to negotiate rents with tenants. After all, they'd all be able to argue that 'Ken says it's a fair rent'.
Back to the drawing board for Mr Livingstone!
Excellent comments - Ken needs a reality check and not simply make what are simply sensationalist headlines when he wouldn't even have the power to deliver what he promises - thats an empty promise. I dont know the writer, but someone needs to talk to this loony lefty.
Knowing EW as I do, I would love to see him debate this with Mr Livingstone - it would be very, very funny. It may not be productive, but it would be a laugh
Some good points well made. When will Commie Ken realise its the private landlords not the agents who rent the slum properties. If rents are capped, they will spend less on fixing properties.
Headline grabbing nonsense designed to win votes despite him not have the power to introduce such measures. This means that without a change in legislation - it wont happen and lets not forget, even the Labour Government considered him a liability so he wont get much support from Coalition.
EW is absolutely correct about supply being the key and the affect of ridiculous planning conditions which force developers to build cheaply or overprice other larger schemes are not viable.
Supply & Demand is always the final regulator of prices - sale or rent..
Get as near to balance as possible and all will be well.
How? That is the question.
We have a land and new homes division and Eric is spot on - most schemes which have a s106 requirement are either uneconomic or force the developer to ask higher prices which means they are harder to sell.
20% of one scheme as social housing reduced the value of the other flats and as such, there was no profit - so it remains a crap quality rental block in appalling condition.
EW is as usual spot on - well said and well observed comments.
I think we all have far more important issues to worry about and, unlike Ken's credibility that disappeared years ago, this scheme's viability which will also rapidly disappear.
I agree with EW - stock is key. If Ken forces rent caps, then investors will sell as yields will collapse at a time when capitol growth is so poor.
He is clearly as mad as a brush and as mentioned, looking at policies to win votes.
Its hard enough to find good negs as it is - imagine who would be employed in Ken's venture.
There is not much profit around at the moment and this idea is utter ill thought out, communist nonsense designed solely to win votes off the back of Boris's plans to address the PRS.
Wise words from EW. Its an insane concept and I agree, its stock which will resolve the issue through supply and demand. If there remains a shortage of properties and rents are capped, I can see 'one off payments' and back handers resurfacing.