Did you rent from a rule breaking letting agent?

Our current letting agents stated "fees apply" in their online ad and in their windows. I asked exactly what fees would apply when I made an initial telephone enquiry and was told an application fee, but the amount would vary depending on circumstances. After we viewed we asked again about the fees and were told it was £250 for the application. We weren't ready to move for another 3 weeks so they said this would also hold the property and we could pay the deposit and rent up front later.
Two weeks later when going to pay the deposit we were told there was also a £150 "pet deposit" and a £50 "inventory fee". We were appalled as they already knew about our cats and had made no mention of any further fees. By this point we'd already paid the non-refundable £250 so were stuck and had to cough up. In total we paid £450 in "fees" as well as deposit and rent up front. This was last month.

Having looked recently at rightmove and various letting agent's websites I can see the situation hasn't changed. Not a single ad mentioned what the fees are. Most just say "fees apply".

I have sent a complaint about all the agents we have used to the FSA. These include Belvoir, Newton Fallowell (most awful LA ever aside from fees issue!), and Hunters.

A few points here , although I had been pressing and writing over two years ago that agents could be regulated simply ,not through legislation but a much easier way by the major portals insisting that fees are posted within their listings this has not happened .
However we do have a halfway house where portals state in listings that 'agent fees may apply' .

I work part time for private landlord directory which among other things lists landlord property , when we set this site up we were the first to have mandatory fields for listing of fees and costs as this is en and upfront . This said as with other portals we are not an agent we are just that a portal , a door leading to landlords adverts a very different thing.

We also have looked at many agents websites and I would say its about fifty fifty , this needs standardising to be effective similar to food labelling .

I also have noticed newspaper listings in local papers by private landlords like myself that do not mention fees or that fees may apply , I have said as much to people I know who run our local papers .
As I understand the ASA guidance it applies as much to us as agents ,at the very least print media should meet the standard of the large portals and inform that fees may apply.

This whole set of rules is being trampled it seems without sanction .

CreditCrunchie wrote: »

I have sent a complaint about all the agents we have used to the FSA. These include Belvoir, Newton Fallowell (most awful LA ever aside from fees issue!), and Hunters.

The FSA? Why ...?

TheCatCameBack wrote: »

You're paying for their time (in the way you would a solicitor), expertise (with most agents), referencing, credit checks, tenancy agreement & related disclaimers, inventory, schedule of condition & check in, advising utilities of their occupancy, sign up appointment, tea and biscuits (why not?). All this is costs my tenants £200 + VAT, and covers 2 tenants and a guarantor.

Who is 'You' in this? The landlord or the tenant?

TheCatCameBack wrote: »

Yes, I am an agent (shock horror). I don't rip off my tenants nor my landlords, because I don't want/need to. However, I don't work for free, like everyone else.

Surely you work for (are an agent for) the landlord, and that is where you should be applying your charges?
Love the £200+VAT by the way - in most B2C transactions VAT is included in the price - but £240 sounds worse doesn't it?

Tenant's choices of agent are limited by the property they are intersted in, but landlords can choose an agent based on the fees/service they will provide. As such it makes much more sense for an agent to load the fees on the tenant to be more attractive to the landlords.

You're paying for their time (in the way you would a solicitor), expertise (with most agents),

The agent works for the landlord, not the tenant. They have no responsibility towards a tenant, and certainly no professional liability (like a solicitor) and they have no expertise (as there are no professional standards and no significant contractual functions being performed for the tenant).

referencing, credit checks, tenancy agreement & related disclaimers, inventory, schedule of condition & check in,

Any tenant would happily rent a property without references being taken, without an inventory being made, without credit checks being done. These are exclusively for the benefit of the landlord.

The only reason tenants tend to end up paying for them (besides the warped market structure that gives rise to excess charges I will get onto later) is that it puts the cost of application on the tenant and discourages speculative applications.

advising utilities of their occupancy, sign up appointment, tea and biscuits (why not?).

I would never let an agent control my utilities, and nor can they. In fact some agents are well known for trying to force uncompetitive deals onto tenants to win commission. And when they have advised utilities of change of occupancy the reason they have done this is to end the liability of the landlord, not for my benefit.

Never had tea and biscuits either.

All this is costs my tenants £200 + VAT, and covers 2 tenants and a guarantor

I'm sure you are fairly reasonable. You sound like you care more than many. Let's just say that many agents aren't and don't.

But the basic truth of the matter is that the agent works for the landlord almost exclusively, and the only duties they really have towards tenants are those of very, very basic administration.

As for the whole market structure thing I referenced, the basic problem is that agents can act oligopolistically in an illiquid, heterogeneous market. A past post I have made explaining it is copied below.

I wasn't aware new transparency regulations had come in; it was one of the first things I advocated. But it is useless if it is not up-front, public, and most crucially landlords should be able to see what the agents are charging tenants.

Most landlords are under the impression that a charge for tenants is one less charge for them, but the truth is that they mostly come out of the accommodation budget and so they are ultimately paying for many of them. (Not all).

Illiquid - real estate doesn't trade very often. That means that in the typical 8 week window you have to find a new house (often practically less) you might only have a handful of rental properties on the market.

Heterogeneous - real estate is very variable in type. Crucially, this makes it hard to substitute one for another. If you need a 3 bed, you can't really substitute a 2 bed, and you probably can't afford a 4 bed. You might be restricted to a small collection of roads due to work/transport/school considerations. This means that of the handful of properties on the market in your window, only a couple might be suitable and affordable.

Sometimes these might even be on with only one agent!

So basically, the agent can act oligopolistically. This is not a true monopoly, but close to it, a market dominated by a small number of vendors (in this case, of agency services), which gives them bargaining power over customers.

They can then generate supernormal profits (i.e. price aggressively)!.

In other words, given the limited time window and limited choice in rentals, agents can screw you.

Which I think accords pretty closely to experience (not that all agents are bad, but every person I know in their 20s and 30s have suffered at least one bad one).

The thing is, I'm a free market capitalist in general. But what a lot of people (including many MPs unfortunately) forget or never realise is that some market structures do not encourage fair and efficient pricing by their very nature.

Many people have a pretty naive understanding of capitalism, thinking that a free market will be best in all circumstances. But in oligopolies and monopolies it's really not the case.

Unfortunately, designing regulation that avoids distortions and unintended consequences is hard, if not impossible. So I'm not a huge supporter of heavy regulation either, unless it's a very specific and good idea.

But the easy thing to do is improve competition by maximising transparency, and that's why I would back letting agents being forced to publicly display their charging plans and policies.