MSE News: Plans to ban letting agent fees unveiled

parkrunner

Victor_the_Gink wrote: »

The market determines price, not the LL.

Not round here, the difference in rent charged for similar properties can be very wide. Apart from that even if you were correct the price would still rise as most LLs would be charged more meaning the market would adjust upwards.

LKRDN_Morgan

Miss_Samantha wrote: »

It is very relevant: You are complaining that the amount you are charged does not represent the 'true costs' involved.

You forget about all the associated costs.

The associated costs of renewing a 12 month fixed tenancy is what exactly? Changing 2017 to 2018? Or the time spent attaching the document in an email and pressing the send button?

Miss_Samantha wrote: »

Then I have just pointed out your complaint should apply to every goods and services.

But I'm replying to a post specific to LA fees. I'm not complaining about how much it costs to manufacture a sit on lawnmower compared to what B&Q sell them for

Miss_Samantha wrote: »

Complaining that fees charged do no represent 'true costs' is simply disingenuous.

Of course. If my reply was aimed at all goods/services ever purchased which it clearly wasn't.

Victor_the_Gink

parkrunner wrote: »

Not round here, the difference in rent charged for similar properties can be very wide. Apart from that even if you were correct the price would still rise as most LLs would be charged more meaning the market would adjust upwards.

It's pretty settled economics that it is the market that sets price, not the vendor/purchaser. If you were right, and LLs could just decide to charge more, why aren't they already? If the market could bear it, it's pretty foolish not to. Or, to put it another way, if LLs and not the market determine prices, why not just charge 10k?

If EAs try and push these exorbitant fees on LLs, I doubt rents will rise. Remember, this exact thing happened in Scotland, and rents did not rise as a result.

https://england.shelter.org.uk/__data/assets/pdf_file/0010/834832/6636_Scottish_letting_fees_report_v9.pdf

In practice, I think what will happen is uncompetitive EAs will be forced out of business. I wonder how some of the one man band EAs near me make any money at all, a few of them have 0 properties on their books!

parkrunner

Victor_the_Gink wrote: »

It's pretty settled economics that it is the market that sets price, not the vendor/purchaser. If you were right, and LLs could just decide to charge more, why aren't they already? If the market could bear it, it's pretty foolish not to. Or, to put it another way, if LLs and not the market determine prices, why not just charge 10k?

If EAs try and push these exorbitant fees on LLs, I doubt rents will rise. Remember, this exact thing happened in Scotland, and rents did not rise as a result.

https://england.shelter.org.uk/__data/assets/pdf_file/0010/834832/6636_Scottish_letting_fees_report_v9.pdf

In practice, I think what will happen is uncompetitive EAs will be forced out of business. I wonder how some of the one man band EAs near me make any money at all, a few of them have 0 properties on their books!

The market is set by supply and demand. At the moment demand outstrips supply so a small increase on the rent to cover the fees will not stop renting.

As for Scotland it's very unclear,

https://www.theguardian.com/money/2016/nov/23/rents-unfair-letting-fees-tenants-charges

Housing charity Shelter has carried out detailed research on the impact. It found that landlords in Scotland were no more likely to have increased rents after the ban came into force than landlords elsewhere in the UK.

But Scottish letting agent groups disagree, arguing that rents rose when fees were banned. A House of Commons select committee decided the evidence was inconclusive.

Don't get me wrong I'm a tenant as both my daughters are, so I'd be delighted if it happens without rent increases but I can't see it as the tenants still pay the same amount just in a different way.

Miss_Samantha

LKRDN_Morgan wrote: »

But I'm replying to a post specific to LA fees. I'm not complaining about how much it costs to manufacture a sit on lawnmower compared to what B&Q sell them for

Surely you must have the same complaint for everything you purchase... Otherwise it would be rather incoherent, wouldn't it?

Murphybear

Victor_the_Gink wrote: »

It's pretty settled economics that it is the market that sets price, not the vendor/purchaser. If you were right, and LLs could just decide to charge more, why aren't they already? If the market could bear it, it's pretty foolish not to. Or, to put it another way, if LLs and not the market determine prices, why not just charge 10k?

If EAs try and push these exorbitant fees on LLs, I doubt rents will rise. Remember, this exact thing happened in Scotland, and rents did not rise as a result.

https://england.shelter.org.uk/__data/assets/pdf_file/0010/834832/6636_Scottish_letting_fees_report_v9.pdf

In practice, I think what will happen is uncompetitive EAs will be forced out of business. I wonder how some of the one man band EAs near me make any money at all, a few of them have 0 properties on their books!

Here in the rural south west I have seen many properties on Rightmove where rents are reduced. Make of this what you will, but one reason is probably that they are overpriced.

Pixie5740

parkrunner wrote: »

Don't get me wrong I'm a tenant as both my daughters are, so I'd be delighted if it happens without rent increases but I can't see it as the tenants still pay the same amount just in a different way.

I've been a tenant in Scotland when LA did charge fees and then when they couldn't. I didn't notice any significant difference in my rent. Even if rents did increase as landlords passed on the LA fees, tenants still wouldn't pay as much as they currently do today. Landlords are in a better position to shop around because they're selecting the letting agent whereas tenants are looking for a property. Do you really think landlords will agree to pay £100+ for a credit check they could do themselves for less than £20, then more money for collecting references, and even more money from administrating the admin? I don't think so.

Letting agencies operate with pretty high margins. Foxtons have a 22% margin...that's huge. Plenty of scope for letting agents to trim fat in order to make themselves competitive when negotiating fees with landlords.

Pound

My LA charged £240 for an employment reference and credit check. I thought about asking if I could pay my term up front thus removing the need for them to do referencing. Not sure it would have washed.

Money_maker

LKRDN_Morgan wrote: »

These are the fees charged by my current LA
Admin fee - £360 per applicant
Key cutting £12 (this is non negotiable unless we want to climb in windows for the duration of the tenancy)
Renewal fee £120 per applicant (for changing the date on the contract which is all done electronic. There isn't even the cost of stamps involved!!)
End of tenancy check out fee £175 per applicant
End of tenancy reference request £65 per applicant (because god forbid you might end up having to move and needing a bog standard copy and paste reference)

How any of the above is a true cost of the work they actually put in is beyond me. The sooner they ban them the better for renters

Have a look at Foxtons, £420 admin fee per tenancy (think this has changed as it was per tenant) https://www.foxtons.co.uk/let/fees_and_terms/ and they still emailed through contracts with the wrong dates/names on them. They collected over £2200 from 3 students renting a house for just admin charges, checks, guarantor agreements. Deposit was additional on top of this.

zerog

parkrunner wrote: »

At the moment demand outstrips supply so a small increase on the rent to cover the fees will not stop renting.

So then why haven't the landlords already increased the rent, if it wouldn't stop people from renting?