"Rip-off" tenancy fees - Fight back!

Notoconsumerapathy

Hi all

I am new to this forum but recently experienced for the first time myself the "rip-off" tenancy fees some estate agents charge and felt that the Consumer Rights Act's transparency clause did nothing to assist me all because the estate agent told be about the fee upfront. Total fees for me, not including tenancy renewal fees are circa £900 – the cost of a mortgage product.

It's not exactly as if you can shop around and use another estate agent for the same property. If you like the property then you are stuck with the estate agent. Crucially, I have privately investigated and discovered that the difference between the true cost of the service being purchased / offered and the actual fee charged to the consumer by the estate agent is considerable and in my opinion completely unethical and unjustified. Surely estate agents earn their profit from the Landlord?

Not all estate agents are like this but certainly all the major players seem to be. There is virtually no competition and the tenant is treated as a cash cow.

I would certainly urge anyone interested to sign SHELTER's campaign to end letting fees (broken the link below as a new user I cannot include links)
http:// england.shelter.org.uk/campaigns/fixing_private_renting/letting_agencies/sign_our_petition


Does anyone have any thoughts or experience they would like to share?

Cheers

His_Dudeness

You're saying that if you like the property enough then you knowingly accept the deal on offer.
What is the problem? That's the way it works for every single service or good that you buy every day.

You're also saying that you were shocked by the difference between what you think is the actual cost and what you are charged.
Again, what is the problem? You would probably be equally shocked to know the same for most of the services and goods you buy.

Lastly, it is not that there is no competition, there is, but rather that in many areas the demand for properties outstrips supply.

All these campaigns are plagued by a serious lack of understanding of how business and the economy as a whole work.

Mallotum_X

Ever eaten in a restaurant

The cost of the food in a meal is usually well under 20% of what you paid.

Outrageous

Notoconsumerapathy

Dear Sir

Thank you for commenting.

I would disagree that "that's the way it works for every single service or good that you buy every day".

We enjoy a raft of law and regulation in this country that protects consumers precisely because, left freely, the market is prone to unethical and harmful behaviour at times.

On this issue of the product in hand - renting a home, it's not a free choice like for instance buying a television or a lap-top, etc. The estate agents in the UK, on the rental side, act for and are agents of the Landlord and provide a service for the Landlord only, unlike the US system. My father is a Landlord and he has choice. He can choose from a variety of estate agents, shop around on price and service, etc or do it himself. When renting a home there will not be many in the end that suit one's exact requirements, i.e. number of bedrooms, location, distance to schools, distance to transport and shops, state of repair, etc. It is a delicate balancing act both conscious and sub-conscious for a prospective tenant to decide and sacrifices are always made. Now whilst the consumer can discriminate against a wide selection of properties available on the market, and based on their their own criteria of individual living requirements, they cannot discriminate based on one of the most important factors and that is the estate agent. One is effectively held to ransom. This is particularly true of the commuter belts areas where rental properties available often outstrip demand.

Whilst the government has already recognised the shady practices of estate agents and passed legislation to combat this and created redress schemes, etc there are still gaps. Of note is this particular gap. If one was to agree with your opinion on the matter then I would suggest to you that legislation and regulation protecting Landlords from estate agents due of unfair practice would not be in place.

In my personal experience of the private rental market, demand does not outstrip supply; however, one appreciates that I am one person out of approximately 11 million renters. With little competition there must come regulation to force the market to change. Either to force it to change competitively or restrict its behaviour. Take for instance the Which? campaign regarding debit and credit card processing fees. The actual fee charged and the fee charged to the consumer were greatly different with no justification. One super complaint later and the market has been forced to change. The same is true for mobile phone roaming rates in Europe. The regulator forced the change for a reduction in fees. They did not accept “that's the way it works for every single service or good that you buy every day". There are countless other examples.

I do not believe that "all these campaigns are plagued by a serious lack of understanding of how business and economy as a whole works". To which campaigns do you refer to? Some of my personal findings would even suggest a fraud is potentially being committed here - both a civil and criminal offence. There is certainly dishonesty in the presentation of fees, double charging, double dipping and / or the charge is not commensurate with the service being provided. If there was such a lack of understanding why would Scotland go as far as to ban letting fees altogether? And why would a specialist charity such as SHELTER, start such a campaign in the first place? I would suggest that it is because they have collated hard data and can measure the harmful impact such practices have on consumers.

I would like to thank you again for sharing your thoughts with me. Whilst I cannot agree with you I respect your opinion and I am grateful to you for joining the debate.

mrsbee17

I totally agree with you, while the majority of things we purchase have a mark up, the prices in which are often charged by letting agencies is horrific. When I first moved to England from Wales, we had a day to find a place to live due to work absence etc. and we had to jump on the first property which was some-what suitable. The fees then were £260, which I thought were a lot considering in Wales, my rented flat there cost my £80 in fees, but I found later that £260 was actually very cheap!


Since then, we found a more suitable place for us to rent and we were lucky that it came with "no fees", not sure how it worked but we only paid the background check fees and since then, I've thought about moving to a bigger place but held back on the basis that it is now common to be charged a fee 'per person', so a couple could end up paying within the region of £900 - £1000 just for happening to want a property with a certain estate agent.

Dan-Dan

Mallotum_X wrote: »

Ever eaten in a restaurant

The cost of the food in a meal is usually well under 20% of what you paid.

Outrageous

Crap analogy , and you know it

Notoconsumerapathy

Dear Mallotum X

I do not believe the example of eating out at a restaurant is analogous to the complexities of the housing market. There is a free and wide choice available when dining out to suit almost every taste and budget. The industry is cut throat with many new ventures lasting less than 12 months. Despite this, one does not even have to dine out if they so choose. One does not have such a luxury when it comes to renting especially if outpriced from purchasing a home. Everyone needs a place to live.

But to use your analogy, and following my own findings with estate agent fees, the situation I, and others find themselves, is in respect of some of the charges akin to paying for a meal twice when only eating it once and / or to be charged for someone else’s meal despite the restaurant having already received payment for it. With reference to one particular charge, the tenancy arrangement or agreement fee, this would be akin to unknowingly paying for a meal in a restaurant when it is made entirely of the leftovers of other diners meals - but at least it is served on a fresh clean plate!

This is the current state of affairs when it comes to estate agent letting fees.

booksurr

whilst one can hardly knock you for supporting a campaign for change, me thinks you doth protest too much - stating that is it fraudulent just because you do not like the level of fees charged is ridiculous

A letting agent is a business which is independent of both tenant and LL. As such why shouldn't they charge both if the market allows them to do so. There is no fraud in that.

as for your lack of choice you are free to choose another property with another LA/LL combination. Your obsession that the charge should be commensurate with the service belies a lack of understanding of monopoly markets - if your campaign was about that then you would have a stronger argument than merely moaning about the "unfairness" of your experiences. i am sure and agree with you that the letting market is ripe for change, but suggest your language is inappropriate to convey the complaint

Notoconsumerapathy

mrsbee17 wrote: »

I totally agree with you, while the majority of things we purchase have a mark up, the prices in which are often charged by letting agencies is horrific...

Mrsbee17, if you have the time and inclination I would encourage you to sign Shelter's petition. Whilst I am not opposed to fees in general they should be commensurate with the service. I certainly believe the tenant should pay the credit check at least. Through Rent Shield, used by many Landlords and Estate Agents, this cost is £25 plus VAT. Yet estate agents can charge £100 plus per person and you’re the one who completes the form and provides the relevant documents!

I have gone as far as to write to my MP on the matter who has written to the Minister of State for Housing and Planning on my behalf. I understand that the government has committed to reviewing the transparency clause in the Consumer Rights Act which forced agents to be more upfront about fees. I have urged my MP to act to ensure that the review takes place. In my opinion such a review should demonstrate that transparency is not working.

His_Dudeness

Do not take that the wrong way, but you seem to indeed lack knowledge on economics, the private rented sector, and politics.

The issue with simplistic and demagogic campaigns like those against letting agency fees is that they are difficult to counter because people do not really want to think issues through but want quick and simple solutions, ideally putting the blame on a group that they already do not like.

Basically, if you ask someone if they want to pay less they are not likely to reply 'no', especially when the people they pay to are seen as fat cats.


By the way, the letting market is absolutely not a monopoly market, and is actually not concentrated at all with many small landlords and small agencies. In fact, it should stay that way for the benefit of tenants.

Lastly, a letting agent is not acting independently of landlords and tenants. They are taking instructions from landlords and acting on their behalf.
It does not mean that tenants cannot be charged but landlords must agree.

DandelionPatrol

booksurr wrote: »

A letting agent is a business which is independent of both tenant and LL. As such why shouldn't they charge both if the market allows them to do so. There is no fraud in that.

I would agree that it is not fraud. But in these days of markets and competition, fees for tenants are anti-competitive. It is not as if a tenant has open choice of agent to go to for a particular house or to meet particular housing needs.

Scotland has got this right, in making fees to tenants illegal. Landlords are able to take advantage of competition between agents for the placement of property to let. Come on Engerland as someone would say.