Agency Fees – What’s happened so far
As I am sure many of you are already aware, the Chancellor proposed in the Autumn Budget to introduce an outright ban on Letting Agencies charging tenants upfront fees for taking out a tenancy. Whilst we accept that there are some Agencies out there that do take advantage of a generation of renters, we do not believe that this is reflective of all Agencies and an outright ban could have wider consequences for the rental market.
Agents, Landlords and Tenants are all concerned that these proposals will result in higher management fees with costs being passed down to tenants through higher rents. ARLA research has revealed that 42% of agents believe that the ban will result in a reduced number of staff and 62% think that the quality of rental properties will decline.
Letting Agent fees cover a wide range of tasks such as conducting credit checks and references and general administration which on average can take up to 8 hours per tenant.
ARLA have called the proposal “Draconian and a crowd-pleaser” and have offered an alternative proposal. They have proposed for tenants to spread the cost of Agency Fees over the course of 6 Months rather than paying up front. This will mean that tenants must only find the first month’s rent and deposit prior to moving-in making tenancies more affordable. It will also mean that Landlords interests are still protected as Agents will be able to maintain a high level of service without having to increase management fees or cut staff.
The Chancellor’s proposal is still in the early stages and a consultation has been planned for some time this year with ARLA having been asked to put forward industry views. Clarification on exactly what the ban will include is needed, what exactly are “upfront fees”. Any changes, whatever form they may take, will then require primary legalisation so realistically a ban will not take effect until 2018 giving the industry plenty of time to plan.
We’ve seen many changes to our industry over the years and are confident that whatever the ruling is MTM will be able to overcome the hurdles and still be a market leader in the service we offer and the fees we charge.
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