Support, Advice and Experience within the Property Market

House Of Commons Debate On Letting Agent Fees

From Robert Ulph on May 13, 2016

Earlier this month Maria Caulfield, the Conservative MP for Lewes, secured an Adjournment Debate in the House of Commons to discuss what steps the Government should be taking to put a ban/cap on fees charged to tenants by letting agents. This is something that you may be surprised to know that I am in fact in favour of a cap on extortionate fees but not on banning them completely, mainly due to the fact that as a Business owner we have to pay staff wages to do a job and most people would agree that if you do a good job you should get paid for doing it. Tenants have a choice on who they rent a property with but I fully understand if the property you want is not with the agent you prefer using because of low or no fees most of the times they would still take the property and just accept whatever that agent charged to move them in.

In some way this is why some agents get away with charging what I would deem as excessive fees. If there was a cap I am sure this would level the market out and make it a fairer system as long as the cap was set at a realistic level and was enforced that no Agent could be higher than that figure.

The Conservative MP opened the debate by saying, “To investigate the extent of the problem of lettings agent fees, my local Citizens Advice Bureaux in Seaford and Lewes researched those fees across the constituency. They found that the fees can range from £175 to £922. Such fees are in addition to the average six-week rent deposit required—it is rapidly becoming an eight-week rent deposit—and the month’s rent needed in advance.”

Alex Chalk Conservative MP for Cheltenham soon interjected to ask, “Does my hon. Friend agree that part of the problem is not just the size of the charges, which can be great, but the lack of transparency.”

Kevin Hollinrake the Conservative MP for Thirsk and Malton also got involved in the debate. He said, “letting agents rely on these fees for income, and so that income would have to come from somewhere else; it could be added to rent or else come from higher fees for landlords.”

Maria Caulfield also raised the issue of agents charging a fee for renewing a tenancy – what she called the “the six-month tenancy regime.” She said, “Very often, tenants want a longer lease and landlords are happy to give them one. But it is in the letting agent’s interests to keep tenants on a rotating six-month tenancy, because every time that tenancy is renewed the agent charges another £150 to £350. It is a classic opportunity to fleece tenants once again.”

Now with these comment I do understand that a lot of Agents automatically charge for a new fixed tenancy but at my company Pennington this is not the case as we give tenants and Landlords the choice to continue on a month by month tenancy (periodic) basis instead of forcing a new contract onto them. This point I agree with Kevin Hollinrake MP on but I would like to point out that like ourselves not all agents do charge and therefore this is another reason that tenants and Landlords need to make sure they ask of their agents what the on-going charges are before engaging with them. This is potentially a big money making exercise if the option is not there to just continue on a month by month basis and tenants/landlords are forced to have a new contract.

To close her remarks Ms Caulfield asked for five things from the Government to ensure further protection for those who find themselves part of generation rent. These were:

1. Cap letting agent fees
2. Set standards for what can and cannot be charged for
3. End the practice of charging for tenancy renewal
4. There should be tougher penalties for not displaying fees
5. Raise awareness about fees so tenants are more aware of charges 

It was a lively and interesting debate and I was pleased that ARLA got a mention and as an organisation will continue to engage with Parliamentarians to ensure evidence from the industry and the views of members are heard by those in the corridors of power. If you are interested in reading the full report its on