Tenants’ campaign group Generation Rent says banning letting agent fees to tenants won’t push up rents.
The group made the statement after claims that rents would go up if Labour’s plans to scrap letting agent fees to tenants become reality.
Generation Rent director Alex Hilton wrote the following blog post on the group’s website:
“Supply and demand.
Oh you wanted more than that? Ok.
There is short supply and high demand for homes to rent. The balance between these forms a price that a tenant is willing to pay a landlord. So far not controversial.
However, that is not how the relationship between tenant and agent is characterised. At the time of signing a contract, the agent is the gatekeeper to a single home with any number of keen tenants. The agent is not an actor in the market for homes to rent but a creator of micro-monopolies for single homes.
This is the reason why letting agent behaviour, hidden fees, discrimination, poor customer service etc. is so rife, and indeed why these behaviours are rarer in areas where supply and demand for homes is in better balance.
The relationship between agent and landlord on the other hand is vastly different. The landlord holds the home and agents are many in number, requiring no great skill and no qualifications at all. The agents have to compete with each other to win a monopoly over the tenancy of a landlord’s property.
So agents won't be able to hike up fees to landlords because the landlord will just go to a cheaper agent. This will lower agent fees until they are more reflective of their cost base, at which time they will have to start competing on other grounds, such as professionalism and customer service.
By banning letting agent fees to tenants, less money will go to agents, that's true. But landlords should expect lower costs and a better service as the effects play out. And more professional agents will be of benefit to tenants beyond the absence of exploitative fees. In fact, if this were implemented quickly and the market effects on agents flowed through quickly, that could radically undermine the case for mandatory licensing of letting agents.
This is such a classic market solution to a social problem that I'm surprised it's not Conservative policy.
So like I said, it's supply and demand.”
Comments
The agents who make fortunes out of the lettings business will soon find another way to boost their income stream and the smaller agents who struggle to try and get it right and fair for Landlords and Tenants will just work more hours than ever for even less. Landlords will always be able to find someone to do it cheaper - or at least do half the job for the same price - which is not in anyone's best interest. Rogue Landlords will carry on ignoring all the rules and mostly get away with it - whoever wins the election.
You are being very naïve if you think rents won't go up to cover the costs. We operate on a tight budget and charge a nominal fee to the tenants which covers the administration involved in credit checks, references, inventories, check in and checkout. All this costs money and we do have staff to pay along with all the associated cost of running a business. So yes, rents will go up to cover this cost because it will be passed on to the landlord who will pass it on to the tenants.
"till our fees are more reflective of our cost base"? How many stinking rich letting agents do you know? The big boys might be making packets in london but out in the rest of the country it is more work for ever decreasing fees. If tenants don't want to pay, they think we should do inventories and check ins to protect their deposits for free? Lower fees will mean worse service for tenants, not better.