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ARLA wants agents' fees spread over six months, not up-front

The Association of Residential Letting Agents has repeated it call for the government to ban up-front letting agent fees at the start of a tenancy and instead spread the cost across the first six months of a rental agreement.

New research conducted for the association reveals that 42 per cent of letting agents expect that a full ban would result in reduced staff numbers in the medium to long term, while 62 per cent of agents think that a full ban will cause the quality of rental properties to decline.

The research, completed by 1,008 letting agents, explored the impact that a full ban will have on tenants, landlords, agents and the wider housing market. The analysis also looked at the purpose of letting agent fees, which cover a huge range of tasks, checks and legal requirements; such as conducting credit checks and collecting references which can take up to eight hours on average.

The findings show that letting agents expect the condition of properties to worsen, and 61 per cent also expect property management standards to drop. 

By spreading the cost of fees, rather than banning them entirely, letting agents will be able to maintain current service levels to tenants. The spreading of fees will also make tenancies more affordable to tenants, as it means they will only need to find the deposit and the first month’s rent, ARLA insists. 

The association also claims that tenants would only pay for fees over the first six months of a tenancy, rather than subsequent years, meaning that there would be no additional cost for renewing a contract.

ARLA’s research shows that letting agents overwhelmingly expect rents to rise if a full ban comes into force. 

“When the Chancellor announced a full ban on letting agent fees in the Autumn Statement, we called the measure draconian and a crowd-pleaser. We stand by that. Nonetheless, we believe that ARLA’s proposal to spread the cost of the fees across the first six months of the tenancy will guard against the numerous unintended consequences of a full ban while also finding a solution that works best for the consumer” says David Cox, ARLA managing director. 

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    Except for tenancies under 6 months which we've always allowed because our low (under £150) start-up fee covers the additional work and dedicated staff member. Without this we'll need to insist on full 6 month tenancies where many tenants only want 8-12 weeks while working away from home and need "all-inclusive rooms" they are happy to pay for. Where services are included and for under 6 months stay fees should still be enabled but capped.

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    If it's an AST you're issuing, the shortest they can be for is six months -of course you can mutually agree to terminate.

     
  • Kristjan Byfield

    8 hours doing contracts and references? Are they carving them in stone? Come on guys!

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    I am a landlord moving down to London. I am still astounded at the kinds of fees that estate agents charge to landlords. Why can't I be the one who references myself with the referencing agency that is recommended by the agent? Then I can be the one to prepare my bank statements, employer reference and full reference and just hand it over to the agent. I will then also be able to use that said reference with another agent if this particular agent rejects me or just decides to go with someone else.

    I will be paying £480 in fees and also a further £25 from my old agent who I requested a reference from.

    Shame on London agents like this one https://www.aaronjbarclay.co.uk/fees

    £480 is my weeks wage.

    Bring on the fee ban.

    Northwood Estate Agents

    Hi Maya,

    I can understand your concern. The arrangement you describe can certainly be provided, it'll just depend on the relationship you have with the Estate Agent in place. Many agents expect there to be some negotiation in fees, so will display their standard fees at the highest possible rate they can advertise.

    We at Northwood Dulwich would be more than happy to provide a service like the one you describe - not all agents are the same! Have a lovely day Maya.

    Don
    Northwood Dulwich

     
  • Claire  Empson

    The trouble is a letting agent would still have to spend time verifying the information - as it could be forged easily - so to take it on face value, having been handed it, would not be doing due diligence for our landlords.. and this takes time.. which someone has to cover. There is no reason as you say why tenants couldn't get referencing done by a third party themselves and pay for it directly, if say they went to the preferred referencing agency used by the letting agency however I think, but then the agent has no control over the timescale of this and will spend more time chasing the tenants to do it and the referencing agency I suspect. Also as agents, doing volumes of transactions on a monthly invoice, they get better rates than an individual tenant, so it may end up costing the tenant more - although I appreciate that would depend on the agency's mark up currently! I don't think spreading the fees over 6 months is the way to go - unless it's built into the rent being higher for 6 months, and the agency charges the landlord the fee instead up front. We haven't got the admin time spare to be chasing up everyone we've ever referenced over a previous 6 months - every month - for money if they don't pay it - as I suspect there will be a lot of tenants who don't pay up and will need chasing.. small agencies don't have direct debit facilities. It would be a full time job for someone to do this in a medium sized agency - it's not financially viable for the agent to take the hit and also employ someone extra who's not revenue making - it may work out better to not have charged the fee in the first place.
    It's interesting to hear some agents expect tenants to negotiate on fees.. as an agency who've always charged lower than most I haven't experienced this more than maybe twice - and I was quite baffled that they thought there was room for negotiation - so that explains it! If all agents just charged fair fees in the first place, advertised them and stuck to them, rather than operating like cowboys out for the most they can get so no one trusts their fee structure, the whole tenant fee ban would not have come about I'm sure. I'm annoyed its come to this and that some large greedy agencies (and some smaller less scrupulous ones I'm sure) have muddied the waters for the decent small businesses out there. I don't think the government will back down, they are after a crowd pleaser and after landlords, agencies are the next easy target. When I started out as a landlord 14 years ago everyone loved to hate an estate agent, lettings was ok, it was cool to be into property. Now we have less respect than the estate agents thanks to the bad apples and general negative propaganda and the government not thinking things through before actually gaining the advice of the industry. Morning rant over!

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