Ban on buy to let agency fee's for tenants

ruggedtoast

The last property I rented I was charged a £150 reservation fee and told if the landlord decided not to rent to me after the agent had passed on the application it wouldn't be refunded.

I then had to pay a further £300 for Homelet referencing and tenancy. The agent was so cheap they didn't even use Homelet after I had filled in the form.

I had to provide them my own bank statements, and email my own referees and forward them the responses. No credit search was even done. Obviously the landlord was getting no protection whatsoever.

Weeks later and we still hadn't had the countersigned tenancy agreement back so I went into the office in my lunch hour and asked for it.

The girl glanced up from her computer and said

"We don't give tenancy agreements to tenants in case you lose them" and went back to typing.

This was the largest agent in the town.

GreatApe

The fees were never for referencing alone its about time and overheads.

Clearly the lettings and sales+lettings agent business is going to have to contract. I can see as many as 1/3rd to 1/2th of all the agents losing their jobs. These will primarily be the small time agents managing 20-100 properties with the hopes of glory in the future but never really managing to grow. Now they will have to throw in the hat and find employment elsewhere

One agent on another forum listed their tenant fees and they seem silly to me but they were complaining they were just about making ends meet. Their problem is too few properties for the overheads they had. They will go bust and others that remain will pick up the properties. Of course there will be an interim where the sector really struggles for profitability as it shakes out the excess

One possible hit will be to rightmove. They earn tons of money from tiny agents that list barely anything on their system. They maintain their £600pm rightmove subs as its a necessity even if you only have 1 property to list that month. Rightmove could lose two thirds of all their rental subscribers which means they could take a huge huge hit but then again they are a near monopoly so maybe they will just up their fees for those who remain from £600 to £2000pm

Moto2

If the fees charged were truly representative of costs incurred + overheads, I wouldn't expect such rounded figures.
I bill individuals and businesses for my expenses incurred whilst processing their order, the one I've just finished was £127.89

ViolaLass

westernpromise wrote: »

Would you let your property to a criminal?

That's why.

1. People have to be allowed to move on at some point, otherwise we may as well keep them in prison.

2. There are crimes and there are crimes (from a LL point of view). As long as they pay and behave, what's the problem?

westernpromise

ViolaLass wrote: »

1. People have to be allowed to move on at some point, otherwise we may as well keep them in prison.

2. There are crimes and there are crimes (from a LL point of view). As long as they pay and behave, what's the problem?

They can move on and live in yours then.

Personally I see having a criminal record as a pretty strong indicator of bad character. The chances that a criminal will "pay and behave" are lower than the chance that a non criminal will, so as there's no shortage of non criminal tenants, it's those I favour.

A criminal who gets banged up is not going to be in a good position to keep up with the rent.

Fella

Surely in practice most LAs will simply up their charges to LLs by maybe 1-2 % (in my part of Essex they nearly all quote 12%+VAT but happily settle for 8%+VAT). So I'm guessing they'll up this by 1-2%. Depending on their approach some LLs will immediately pass that on via increased rents, some may absorb a bit.

The landlords I know tend to work on the basis of what is the net amount they receive after LA fees so if that suddenly drops by maybe £25 a month I imagine quite a few will be increasing rent by that much (more) to recoup it as soon as they can.

The notion that all letting agencies are earning fortunes for doing nothing is as typically misguided as similar ideas about other businesses. For example, most of the population seems to think that banks & bookmakers are both licences to print money. But if they were we'd all be buying shares in banks, bookmakers & estate agents.

HornetSaver

westernpromise wrote:

I think the devil with this will be in the detail though. While today's vague and opaque fees should certainly not be allowed, I am not sure what stops the landlord simply requiring the tenant to produce in-date CRB, credit check and employer's references as a condition of letting. There is then no fee per se, and the landlord gets the same comfort as now.

The fact that individuals cannot apply for a DBS check, only employers and licencing bodies.

That aside, because there appear to be a couple of theoretical ways around it, why would a non-criminal pay a disgusting percentage of their income for a bedsit which requires a CRB check at their own expense and with a lead time of several weeks, when they can pay the same disgusting amount of their income for a bedsit which does not?

JasonLVC

Fella wrote: »

Surely in practice most LAs will simply up their charges to LLs by maybe 1-2 % (in my part of Essex they nearly all quote 12%+VAT but happily settle for 8%+VAT). So I'm guessing they'll up this by 1-2%. Depending on their approach some LLs will immediately pass that on via increased rents, some may absorb a bit.

The landlords I know tend to work on the basis of what is the net amount they receive after LA fees so if that suddenly drops by maybe £25 a month I imagine quite a few will be increasing rent by that much (more) to recoup it as soon as they can.

The notion that all letting agencies are earning fortunes for doing nothing is as typically misguided as similar ideas about other businesses. For example, most of the population seems to think that banks & bookmakers are both licences to print money. But if they were we'd all be buying shares in banks, bookmakers & estate agents.

What you post is what will probably happen, rents will go up £25 but I think the point of scrapping the up front fees is that to get the property a prospective tenant has to find £500+ just to fill in a form. If that same £500 is spread over the length of the tenancy then in theory, it'll make it easier for people to move property as they will more likely be able to afford £25 extra a month instead of finding £500 up front.

Also, the up front fee, I think, distorts the market for tenants in another way. You may have a bad landlord but you cannot afford to move to a better property/landlord because it'll cost you £500 just to start looking for somewhere else. Its a prohibitive cost that restricts choice.

With no fee holding tenants back, landlords better up their game in terms of service delivery or they'll find tenants moving around a lot more often looking for more bang for their buck/better properties/better service.

PasturesNew

And let's not forget that £75 every 6/12 months when it's AST renewal time and they write a letter to the tenant hinting that you either sign it or move out - and that's £75 thank you very much.

Phone up the agent to say "Oi, rolling tenancy mate ..." and they have a tone of voice that puts the wind up you when they say "Oh, we'll contact the landlord and see if they will agree to this".

I bet many people are on 6 monthly ASTs, paying £75 every six months for a new one to be printed .... because the agent leans on them to do this and puts the fear of god into them if they dare to ask/question their options.

westernpromise

HornetSaver wrote: »

The fact that individuals cannot apply for a DBS check, only employers and licencing bodies.

That aside, because there appear to be a couple of theoretical ways around it, why would a non-criminal pay a disgusting percentage of their income for a bedsit which requires a CRB check at their own expense and with a lead time of several weeks, when they can pay the same disgusting amount of their income for a bedsit which does not?

I and Mrs. Promise have both had to provide CRB checks because we were helpers on school days out. We applied and we provided the results to the school. Same thing. Simple process and once done you can present the same bit of paper more than once until someone says it's out of date.

I'm not in the bedsitter market so I've no idea of the thinking of people who let or rent out bedsits. If someone wants to market bedsits to people who, for all they can be asred to find out about them, may be criminals, that's their call. Me, I'd be looking for a very substantial risk premium for doing that.

For example, if I let my flat to a drug dealer, pimp, prostitute, or benefit fraudster, then even if they pay the rent, the money they paid it with are criminal funds and under the Proceeds of Crime Act 2002 I as landlord can be pursued for that money should they be convicted of any crime. If I can't pay it back I may have to sell up to do so. Letting to a criminal could cost me the property.

Where criminal money ends up is irrelevant if it was originally the proceeds of crime. Moreover, anyone I have ever let to in the past thus presents an ongoing risk to me even if they paid on time and even after they've vacated. I could be pursued for rent I took from a criminal years ago.

You want to take that bet, go ahead, it's your money and your property, until it's not.