Tenants' fees. Why tenants lose out
In the last two weeks, given the government’s plan to abolish tenant fees in the near future, I have looked at the fees some local agents charge and how these can add up into disproportionately high costs for tenants.
It is clear that the landlord is the client. In most walks of life, the client pays the majority of the charges for the service offered. But in lettings services, there are ways agents have, over time added on extra fees, some legitimate and consistent with the work carried out, but others seem to be a way to charge the tenant at every turn.
Below are examples of fee levels I have found online across a range of local firms:
Set up charge for single tenant: £0 to £300 plus £150 per additional tenant; another £348 for first tenant and £108 for subsequent tenants.
Guarantor Administration fees: From £30 to £120 per guarantor.
Administration fee, referencing, deposit handling to schemes, inventory check: From £175 to £210 charge to the tenants.
Tenancy agreement: From £0 to £210 per agreement. Many companies just make a Landlord charge from £90 plus VAT.
Tenancy amendment: From £50 for the whole property whilst others charge £150 per tenant change.
Tenancy Renewal with same tenants: From £0 per renewal to £120.
Aborted call out charge (if a tradesperson visits and the tenant is not in): From £0 to £48.
Early contract release charge (leaving the tenancy early): From £0 to £90.
Right to Rent check (to comply with 2014 Immigration Act): From £0 to £6 per tenant.
Periodic Tenancy Administration fee: From £0 to £75.
Contractors’ invoices: From 0% add-on to invoice to 10% of invoice cost.
This list is not exhaustive!
A big challenge for tenants can be to find agents’ fees at all when they look on an agent's website. In researching this article, it was sometimes almost impossible to find the tenant fee page, fees which, according to the Property Ombudsman, are meant to be transparent. How will naïve tenants, possibly with English not their mother tongue, ever get fair treatment? Where do they start?
Of course, we have a massive anomaly over agents’ fees to landlords too. This is a big part of the problem and where the government need to drill down and see what is really happening on the ground. Some agents charge Landlords a standard fee between 8% to 16% plus VAT of the monthly rent. Others charge very little, maybe 2-5% plus VAT. Those agents often have more properties because the landlords like the cheaper deal. So, as a tenant searching, you end up with those agents as they have the property you need...and there’s the rub. Someone has to pay the fees and if the landlord is getting a ‘too cheap’ deal, you know the tenants will be paying at every turn!
Brighton and Hove City Council has looked into this issue recently and it may be time for us, as a flagship city and community in the UK, to set a ‘Letting Fairness’ standard other towns and cities could follow, having ‘standard fees’ to tenants across the board.
Good letting agents do put in excellent work for their landlords and their tenants and tenants do not complain if the fee level is justified by the work. What people hate is feeling they have been ‘ripped off’. Would our Brighton & Hove Estate Agents Association colleagues raise the bar to meet this challenge? Time will tell but if agents don’t make the first move, the government is unlikely to bother to consult widely before making big changes.
Paul Bonett F.N.A.E.A. M.A.R.L.A.