A VOTE was recently proposed in the House of Commons on banning fees charged by letting agents to tenants.
Fortunately the majority of MPs voted against the idea; however, it was something that left the lettings industry feeling great concern and frustration.
A VOTE was recently proposed in the House of Commons on banning fees charged by letting agents to tenants.
Fortunately the majority of MPs voted against the idea; however, it was something that left the lettings industry feeling great concern and frustration. Concern, because it could have had an extremely detrimental impact on the industry, potentially resulting in the loss of many jobs; and frustration because the proposition displayed not only a clear lack of understanding of the lettings business model, but also a very incompetent assessment of the long term impact on business and consumers associated with the industry (i.e. agents, landlords and tenants).
The proposition, which ironically was intended to benefit tenants, had two fundamental flaws. Firstly, tenant fees are there for a reason and are completely justified by the service a tenant receives through an agent. Secondly, the likely consequences contradict the apparent intention – which would have led to an absolutely no-win situation for everyone – tenants, agents and landlords.
Why is the fee justified? A letting agent provides a service to both tenants and landlords. In a nutshell, the agent’s responsibility to the tenant is to ensure safety and comfort; and to the landlord is to manage and monitor the investment. Every aspect of the agent’s service benefits the tenant as much as it benefits the landlord – for instance, gas safety certificates, comprehensive tenancy agreements, accurate inventories, deposit registration (not to mention the service that a prospective tenant receives even before the tenancy begins, i.e. accompanied viewings). Without the agent, the tenant, in most cases, is likely to be in a very vulnerable position.
How could this have led to a no-win situation? Tenant fees, on average account for approximately 10 per cent of an agent’s revenue – so what options would agents be left with had the vote been successful?
Remove this 10 per cent, cut down on staff and reduce the quality of service, exposing tenants and landlords to risk? Or, shift the deficit to landlords, discouraging investment in property, leading to a shortage of supply, making it considerably difficult for tenants to rent a property?
Luckily for the industry, the majority of MPs perhaps realised how damaging this would have been.
However, I believe such propositions regarding the lettings industry, or any industry for that matter, should be made responsibly, after an in-depth assessment of the consequences, involving industry experts.
For further details, contact Chelton Brown on 01604 603433 or visit www.cheltonbrown.co.uk