Keep Fees Fair

As a former letting agent (in England) and tenant (in both England and Wales), I am sceptical of the significance of the barrier posed by set-up fees to tenants when considered in the context of rents, which of course are rising. However, I am in favour of tighter regulation on agents and landlords in what is in many cases an unbalanced transaction, particularly where the is a housing shortage. I recognise that the opportunity to charge fees may be being exploited.

In the transaction, it is clear that the landlord should fairly shoulder some costs and the tenant others, and the agent should be able to earn a fee for their professional service. Their fee should paid by their client (the landlord), as is customary in the residential property sector, but there may be some legitimate costs (especially of bought in services) which should arguably be paid by the tenant, at cost only, ie without any additional administration fee.

The landlord should pay the agent a fee which covers the whole process of marketing the property including: particulars, EPC, advertising and viewings along with the preparation of the inventory and any safety checks (unless the landlord has arranged them separately). The landlord should also pay for 50% of the charge for preparing the tenancy agreement / occupation contract and renewals.

The propective tenant should only be charged the cost (not a fee) of the reference, which is almost always provided by a third party provider, and the other 50% of the charge for preparing the tenancy agreement / occupation contract and renewals.

I fear that if the landlord or agent is required to pay for the reference, they may be unreasonably selective of the applicants they accept for proceeding to reference.

It seems unreasonable to charge tenants for viewings and I have never come accross this practice, although I don't argue that it is possible, particularly as there seems to be an emerging trend more broadly in property to charge for viewings as an extra service, which it should not be.

I think the Consumer Protection Act changes, for upfront disclosure of fees, was very positive. The onus now is to make sure they remain reasonable and not unfairly weighted on the tenant. To ban them entirely will obviously result in some additional costs being covered by the landlord. Whether or they will result in higher rents is questionable, particularly as I believe some (but not all) of the fees and costs are tax deductible.

 

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by Carad on August 16, 2018 at 06:24PM

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