So for a while now it has been on the cards that there will be a ban on Estate Agents charging Tenants fees for rental properties and caps on things such as dilapidation deposits.
My thoughts on capping a Deposit at one month (which is in question) is that this does not leave any money for dilapidations if the Tenant leaves the property owing the last month’s rent, this sometimes happens.
The cost for repair works and materials have certainly risen and even at 6 weeks rent (which is what I currently charge) can sometimes not be enough. I also think it’s fair to charge extra if Tenants have pets as properties at the end of tenancy need fumigating for hygiene reasons and possible allergies for the new tenant.
According to the DPS over the last year, 63% of landlords who made a claim against their tenants’ deposit stated it was for cleaning.
I think the ruling on the Tenant fee ban is rather narrow minded and the long term effect is not being taken into consideration. As a Landlord, An owner of a lettings agency and my past experience as a Tenant my thoughts on the possible ruling are as follows.
Firstly, there is no question that there are some agents charging astronomical fees to tenants which cannot be justified at all and are simply not fair. For this I believe there has to be some sort of regulation on the amount charged and a cap to stop this happening. But, I am going to base this on good practicing, regulated Agencies who are on average charging approximately £200 per Tenant.
There is a huge amount of upfront work required when letting a property and we charge a Tenant fee to carry out administrational duties, costs towards referencing and other fees such as inventory costs, check in fees etc, some of which are shared with the Landlord depending on how the agency operates. Agents also charge this fee to show the Tenants commitment to rent. At the point of taking this fee the agent should not show any other Tenants the property, this secures the property for you until your references are complete and confirmed.
If for any reason the Tenant decided to pull out or failed referencing this fee is normally non-refundable.
Agents do not generally charge anything upfront to their Landlords until the Tenancy starts so at this point we would have lost all money and time in carrying out all the referencing and paperwork, how do we recover this? We can’t if the ban is there!
The ban may result in some agents charging their Landlords upfront for the extra risk and also higher letting fees which I can only imagine will result in Landlords increasing their rents. If this happens the ban in the long run would mean the Tenant is a lot more out of pocket then the initial £200 they save.
The other issue with not taking an admin fee from a Tenant is they could potentially secure several properties to keep their options open resulting in the landlords and Agents losing valuable marketing time and creating longer void periods for Landlords.
I think the work of a letting agent can be very down valued and misunderstood. For example when you purchase/sell a property you pay the agent and you pay a solicitor who progresses it and fees for this are normally in the thousands. The Letting agent lets the property and progresses the whole tenancy from start to finish, hours of admin/legal work goes into each and every let.
I feel to make the market fair to all that there should still be a charge to Tenants but at a capped amount.
This would avoid rent increases, make it fair to the work the agent carries out, deter time wasters and hopefully regulate agents charging silly amounts.
