By banning letting fees, has the Chancellor really done tenants a favour?
Since Phillip Hammond delivered his statement that lettings fees will be banned, numerous articles have emerged of people complaining about the service received from an agency, or paying a letting fee which they believe to be ‘extortionate’.
It appears that the Chancellor statement is welcomed amongst most, but why wouldn’t it be? Any news would be welcomed when a service that cost money is now free.
Other Estate Agents are calling this a Draconian measure, and to put it simply, it appears so.
Many think that Estate Agents are concerned for themselves, with shareholdings for a number of reputable Agency plummeting, however this is unlikely to be the case. Yes, some Agents businesses may involve charging excessive fees to tenants, but we at Harlands, and many other agents, charge a small fee to cover the administration cost only. Certainly the latest news from the Chancellor is not welcomed by many agents, but not due to the effect that it may have on themselves, rather to the effect that it will have on the market. The fees will still be paid, albeit from the Landlord.
No doubt this will lead to higher rents, and although many say that Landlords are in a position to ‘shop around’, many landlords have used a particular trusted agent for a long period of time, and therefore they would not want to no longer use them simply due to an extra administration fee. Realistically, they would simply ask the agent to spread the cost with the rent.
How about service? Regardless of what many might say, if you pay for a service, then you should receive what you pay for. The letting process involves but not limited to, undertaking an inventory, drafting / negotiating the tenancy agreement, and registering the deposit, all of which benefit both the Landlord and the Tenant and so the cost should be spread.
There is a number of other costs in other sectors that if reduced, would have been influential towards an average person’s household costs, such as energy costs. Instead, it appears renter’s fee has been targeted, a cost which would generally occur every 3-4 years, if that.
There is a number of alternatives the Chancellor could have proposed, and example being a simple cap.
Setting an upper limit, would not only ensure that Estate Agents do not charge excessive fees, it would also ensure that renters are able to budget, when moving to their new home. It would ensure that the tenant also receives the same professionalism, a paying client would expect. It would certainly solve any problems that led to the chancellor making such a statement.