Agent’s Fees – Are you sure we’re all rip-off merchants?

If you switch on the news, read a paper or peruse your twitter feed at the moment you may have noticed a lot of a fuss over agency/tenancy fees. Proposals have been put forward to eradicate these fees and make the situation fairer for tenants. While regulations should certainly be put in place to protect tenants from extortionate fees, which at time can price tenants out of the market, removing fees altogether may not prove fruitful in the long run.

Landlords are generally in the market for two reasons: either to cover a mortgage on a buy-to-let investment or as means of generating income. As such, any extra costs they incur will be passed on to the tenants invariably. If tenancy fees, charged by most agencies to cover referencing and paperwork costs, become the responsibility of the landlord the worry is that this will simply lead to increase in the rent. This would then negate the benefits that the proposals are shaped around. There is, however, a need for regulation within the industry. Some agents are charging upwards of £400 at this stage - a huge cost for most tenants, especially for those looking at smaller properties where this could equal half of their monthly rent.

 Not all agents charge exorbitant fees however – at Hornsey Agencies we charge £108 per person including VAT. We also don’t charge a renewal fee for landlords and tenants, as we don’t see why they should be charged again when the relevant work has already been done. Part of the reason that these charges are in place is also to vet out serious applicants. Without the tenancy fees some unscrupulous tenants may falsify information regarding their earnings or credit history, the landlord will pay for their referencing and then they will of course fail. At this point, a huge cost has been incurred by the landlord that will eventually be passed on.

Regulation would, by all good agents, be welcomed. Perhaps a cap on fees and some sort of regulatory body could be implemented – ensuring a fair deal for everybody. The powers that be should be careful not to act too hastily in providing a solution that seems good on paper but ultimately raises cost and confusion amongst landlords and tenants. It is also strange that this issue is so prominent, given that of the 8.5 million renters out there in the UK – the OFT analysed 4,000 complaints 30% were regarding fees. By our maths that is 1,200 complaints from 8.5 million tenants. 

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