May 13, 2014 10.01 am This story is over 119 months old

Should politicians interfere with private letting fees?

Letting fees: As the government debate ending letting fees, Kate Faulkner look at why these fees are valuable to landlords and tenants.

We have an interesting dilemma today: a vote in Parliament on whether to ban letting agents from charging tenants any fees.

The reason for this is a campaign, predominantly by Shelter, is to help social tenants and low paid workers afford to rent a property without paying what they claim are large upfront costs.

As a bit of background, the reason social tenants and low paid workers have to rent privately is back at the end of the 1990s, the Conservatives decided to reduce people’s reliance on social and affordable homes. This saves the tax payer the cost of building and maintaining properties, which as any diligent landlord and home owner will know isn’t cheap.

But should they and Labour and the current Coalition have transferred vulnerable, social tenants to a Private Rental Sector that they then refused (having been asked and lobbied many times by good letting agents such as NALs, ARLA and RICs) to regulate? And now that they haven’t regulated it, and bad practices have developed, those that find it difficult to “fight back” due to a lack of choice and rogue landlords and letting agents in existence, they want to take money away that helps to fund services to tenants.

I will always make sure when I consider a new policy think about it from the consumers perspective – in this case from the tenant and landlord’s perspective. To me, it’s right that if a tenant wants to rent a property, likely to be worth in excess of £100,000, they pay a deposit towards it and pay the person who does the work to:

  • Carry out the legals on their and landlords behalf to create a fair agreement
  • Make sure the property is legally and safely let for the tenant

If a tenant doesn’t want to pay a tenant fee, usually if they rent from a landlord directly they won’t pay this fee, but they will have to carry out their own due diligence on their landlord and the property they let.

Effectively when you rent a property, the letting agent fee a tenant pays for goes towards the legals and survey a buyer would normally pay for. Letting agents also change names on utility bills, carry out inventories via check-ins and check-outs, make sure tenant fees are advertised upfront across all publicity. They carry out reference checks and secure guarantors if, as a tenant, rental payments aren’t 100% sure.

All this takes time and although the landlord pays for the majority of the lettings process, it isn’t, in my view, fair they take 100% of the cost. This would mean there would be no real duty of care by the letting agent to the tenant and helpful services they receive may be cut back on.

In Lincoln, having looked around at tenant fees, they range from around £100 for one tenant to £200 for a couple, so that’s not a huge amount to pay, then there is the deposit which is typically a month’s rent upfront.

The likes of Shelter claim this is too much money for tenants to find. My worry is, as a landlord myself, if a tenant can’t afford these costs, then are they actually safe to let to, as any bad news financially is likely to mean they can’t afford the next months rent either.

I understand why Shelter want to protect the vulnerable and low paid and agree with that, but surely that should be by building more social and affordable homes, regulating the private rental sector and local authorities, as many do, providing this finance upfront, as opposed to being at the expense of legitimate charges letting agent make?

Kate Faulkner is Managing Director of The site gives free advice to consumers on how to measure their local market and an understanding of how to buy their first home or trade up. Kate’s background stretches from self-build to part exchange to buy to let and renovation. She is the author of the Which? property books and regularly appears on local and national media.