Shelter should step back and consider the damage it has done in Scotland before trying to bring its campaign on tenancy fees down south.
The warning comes from Sue Hopson, Martin & Co’s brand standards director, speaking out yesterday afternoon.
Martin & Co has 16 offices in Scotland, and while Hopson said that they themselves had experienced only a handful of tenants going in to their branches to demand money back, they all knew of worse-affected agents.
Hopson said: “Agents cannot provide tenancy referencing and other services for free, so they will have to charge landlords more, and landlords in turn will have to put rents up.
“Shelter may think it has been on the side of tenants, but tenants could well think exactly the opposite and believe that Shelter has done them no favours at all.
“Our biggest concern is that if, and when, rents rise, the Scottish government will be under pressure from Shelter to step in and take control of rents.
“So, on the one hand Shelter will be saying that we must not charge tenants fees, and on the other that rents are unaffordable. You just can’t win.”
Hopson said that the main difficulty for Scottish agents is that the Government has issued no guidance as to whether tenancy fees charged in the past should now be refunded.
She said: “The Government has kept very quiet. We are using a letter that ARLA has prepared for agents to send to tenants, saying that pending clarification about retrospective fees, we will not be making any refunds.
“However, Martin & Co will be stopping taking fees – the writing is on the wall. The question about retrospective refunds remains a grey area.”
She said that some Scottish letting agents are planning to get together to go to court to challenge certain tenants’ claims for refunds, in the hope of establishing a precedent.
Hopson said that Shelter would have far more difficulty in England in achieving a ban on tenancy fees: “Unlike in Scotland, where there was existing legislation, Shelter would have nothing to hang its hat on south of the border.
“It would have to do some extensive lobbying of the Government, and face a huge backlash from agents. We have a new housing minister, but I am sure he has more important things on his plate than looking at letting agents’ fees.”
Hopson confirmed that in Scotland, letting agents, including some well-established firms, are already closing as a result of the twin whammy of the ban on fees and the need to place tenants’ deposits, both new and ongoing, in a custodial scheme by November.
She said: “The ones who are closing now are just the tip of the iceberg. Others have their heads in the sand and are hoping against hope to be able to find the money.”
Comments
Unfortunately there seems to be no middle ground.
If the agent carries out the negotiations, references the tenant, pays a clerk for an inventory and creates and sends the agreements in good faith, only for the tenant to withdraw at the last minute, is it fair that the agent or landlord bear the cost?
Having only charged £35 inc VAT for my references and no other tenant fees whatsover over the last 12 years this new legislation is a breath of fresh air.
In Scotland we now have an even playing field and no longer will my business require to compete with 5 & 6% management fees charged by unscrupulous Agents. Why....because they can no longer make up their margins by charging ridiculous fees to Tenants.
Finally Landlords will require to select their Agent by quality of service, professionalism and integrity...not whose the cheapest by the way. Good luck to them all along with those who have illegally spent their Tenants Deposits. It's their landlords I feel sorry for.....but then they were the cheapest in town "were they not"
Apostrophes are clearly not Robyn's things - note "your" when it should be "you're" :-)
Robyn, your comment about renewing a tenancy agreement being nothing more than printing something off and signing it is a typical remark from someone who sees nothing more than the end product and knows naff all about the lettings industry (NB this is primarily a trade forum).
Read the excellent (though very wordy) posting from Rooster on the other article about this topic on LAT.
Stonehenge,
It is actually illegal to ask the tenant to pay for a rental warranty/guarantee anf if this is part of your normal practice or something you are being encouraged to do by LetsXL then it is little wonder agents are getting a bad name.
A rental warranty/guarantee is for the benefit of the agent/landlord and the fees should reflect this.
See the recent FSA statement with regard to warranties and how they should only be used as part of a managed service etc...
I use LetsXL as a referencing agent (as a landlord) and recently it cost £104.40 including a 12 months warranty to reference one tenant for a new let property. Do you think I am going to stand this cost, especially as the tenant could withdraw or the application fail. If it failed there would only be a £24.00 cost for the credit check as the warranty cost would not be incurred and the applicant would have had a refund.
The answer of course is.......................but you know already don't you?
Robyn 'securing fee's' tut tut! THERE IS NO APOSTROPHE as it's a plural of a noun. Please read 'Eats, Shoots & Leaves' to improve your grammar and punctuation.
Robyn- I would be very careful with what you say. Those comments are quite libelous and could get you in some serious trouble.
We are all talking about agency fees here but If I were you I would be careful about the legal fees you could soon be facing if someone decided to take action!!!
Maybe if agents like Martin and Co didnt charge over the odds rates for initial expenses and call them 'admin' or 'securing fee's' then they wouldnt be in this situation. I see no problem in paying the fees for credit checks etc but when your charged a lump sum which is well over the odds for those sevices it becomes a little ridiculous. £45 to renew a contract? You print the paper and ask us to sign it....how exactly does that cost £45??On top of this, at Martin and Co directly, you are a shocking letting and managing agent and do not deserve any fee's from tenants or landlords I have never come across a letting agent with such shocking practices.
IO - whilst some agents might make unreasonable charges and get away with it, the majority are simply making a living in a difficult and competitive market.
I'm mid-range on tenant fees in Leicester and I think I offer my tenant clients good value for money. Some tenants choose to pay our fees, some choose to go to agents that charge even higher fees, whilst some choose to deal directly with a landlord and pay nothing.
That's the point - lettings is a heavily fragmented industry sector, which means the consumer has boat-loads of choice. If they think the service from my company warrants it they'll pay the fees we charge - if they don't they'll go somewhere else. (And anyone who thinks our "service" is nothing more than handing out a list of properties knows diddley-squat about lettings)
For what its worth I think there SHOULD be restrictions on what I call "captive audience" fees, such as renewals where the tenant has no choice but to pay up if he wants to stay in his home. But anything clearly stated and charged upfront is fair game - the tenant customer makes an informed choice and takes it or goes elsewhere.
Time to forget the hypothesising and have a reality check. The hard fact is that if I were faced with having to pay all the tenants fees back that I'd charged over the past five years my company would go bust in quite spectacular fashion, as would, no doubt, many others. Letting agents are not banks repaying PPI fees who will be bailed out by the taxpayer if they have no money. That's be a pretty hollow victory for Shelter.
Thankfully there could be no retrospective issue in England as there's no pre-existing legislation.
As I said on the other story
one wonders with all your experience why you haven't run your own agency.
Have you heard the old saying Those who can't, Teach!!!!!
You really don't understanding the costs to do a job properly and £60 for a renewal is more than fair!!!
@YAOO
I trust you read my post below Rooster's you so admire?
Just because they charge the same as you doesn't make it right - does it? I can drive at 100 mph like the clowns that overtake me on motorways. If I do does that make it right?
The debate here is who pays - though how much is clearly relevant too.
Industry Observer or should I say Belvoir Observer, your comments clearly show you don't work on the ground within the industry.
Hard working decent agents who deliver a good service should be paid for their time and it is only fair and reasonable that tenants, who do get a service, should contribute towards this. At the end of the day we are not charities!
This legislation will lead to higher rents, lower levels of service (to both Landlords and Tenants) and landlords facing more tenant problems than before including increased arrears and dilapidations. How does this really benefit anyone?
Whilst the topic of outrageous charges is being discussed should the Office of Fair Trading be allowed to charge a sole trader £575.00 to apply for a credit license and £1215.00 for a company or partnership?
How much work is involved in typing some ones details on a standard form and clicking "save"? Who inspects the inspectors?
The lettings industry does not need lectures from M&Co making themselves self appointed champions of agents - what a laugh that is.
Perhaps the fact 7% of their Scottish offices income is derived from these illegal charges has stung them into these comments.
But if M&Co think Shelter are going to be frightened by any "huge backlash from agents" then they are being more naieve than usual.
Don't you all get it?
How can any agent possibly justify what they are charging to agents when one of M&Co's own southern offices I know of charges £400 for referencing 4 joint tenants - and that is just for the referencing.
It will be impossible for agents to do anything but start charging landlords as the fees in the vast majority of cases are simply scandalous and out of all proportion to the work done to earn them.
Which like it or not is the usual "reasonable" measure of whether a charge is reasonable (note banks and their fees for returned cheques etc and the scrutiny that brought them followed by opprobrium rightly heaped on them).
My advice would be make sure your tenant (and Landlord) charges are reasonablee, fair and sensible and get used now to a lower income stream from that source i.e. don't do a Foxton's and charge for nothing.