There was shock and anger at yesterday’s NALS conference when delegates heard that in future, letting agents will have to declare all tenant and landlord fees to both parties.
Ruth Hayes, senior policy adviser at the Department for Communities and Local Government, told delegates that this will be mandatory under the Consumer Rights Bill.
She said the requirement was in place to stop agents double charging.
The Consumer Rights Bill, which has been put forward by business secretary Vince Cable, is currently in the House of Lords.
According to the most recent version of the Bill available online, under Sections 81 to 86, it does not say that agents must specifically communicate to the landlord what the tenant will be paying, and vice versa.
However, it does say that agents must clearly list their fees in their premises and on their websites – suggesting tenants and landlords would be able to work out what both they and each other were paying.
The Bill also says that each fee must be listed fully inclusive of any applicable tax. Where the actual amount of a fee cannot be worked out in advance, there must be a description of how it will be calculated.
See next story for Nick Salmon’s full report of the conference.
Comments (15)
Ruth Hayes anyone? Who, how, what qualifies her to be a senior anything in terms of PRS advice to government? Already the spurrious retaliatory evictions stats are proving to be ( insert polite political term for made up). Presumably this is all a result of Cambell Robb's / Alex Hilton's Labour chums lobbying
I don't see how being transparent with fees is going to be an issue.
I noticed a local subsidiary of a large corporate charges £400 admin fees now, plus a £100 premium if you want to move in within three days, plus £300 if you want to change someone's name on the tenancy agreement along with a whole host of other add on fees for pets etc. Blatant profiteering and taking advantage of a lot of people who don't have a choice.
This is on top of the £250 that they charge the landlord for finding a tenant and preparing the tenancy agreement, before they even take their 10% or whatever monthly fee.
This is exactly why all this is happening. How can a letting agent charge those fees. I'd love to be a fly on their office wall watching exactly what they do and how long it takes for that £400 admin fee to be justified. Tenants and landlords alike should be allowed to see what they are being charged for. If I was a landlord and I found out that prospective tenants were being put off my property due to high admin fees from my letting agent i'd be hopping mad.
Yep, I know which National you are talking about here, I was privy to these the other day too when they were accidentally left in a file I recieved. Equally though, I also got to see the Landlord T's and C's the other day and they also make for very interesting reading!! @James Morris you are quite right, this is absolutely and unequivocally why we find ourselves in a situation where a regulation in fees is being called for. Once again it's the arrogant big boys that end up putting us in this situation! I can tell you that here, from what we can see, their business model isn't doing so well, but I guess when you are charging fees at that level you can afford a bit of 'fall out'.
I was at the conference yesterday and was appauled that yet again something else has come out to victimise letting agents. The tenants have no idea what it costs to run an agency, provide qualified, experienced staff and its more than likely, they will start adding 2 + 2 and get 5 with regards to landlords and tenants fees. Its not fair to say we should disclose all Landlords fees, why can't it be just the fees that both parties may have shared cost for. It appears to me, that again, no thought has gone into this and what the consequences may be.
There's an argument for saying that the landlord has a legitimate business interest in knowing what we charge a tenant, because if our fees to tenants are outrageous it may act as a barrier to letting his property.
But I see no reason why it should be any of a tenants business what we charge landlords.
On the "bit in the middle" where fees are shared between landlord and tenant there's a good argument for saying that this should be disclosed to both parties. The reason is that, by splitting the fee you are acting for and accountable to both parties rather than only one of them, and its not unreasonable to say that this should be made clear.
Sorry but I must be the only one who can't see a problem with this? Our tenants, landlords and vendors can see exactly what they will have to pay and what they will be charged for on our website. I don't see why it's a huge problem tenants seeing what we charge our landlords or vice versa. What I don't agree with is agents double charging because they can and charging both a tenant and a landlord £50 EACH for extending a tenancy agreement.
James: Saying that agents are "double charging" is the sort of spin we expect from people such as Shelter.
In the hypothetical example you gave us, an agency charges a total of £100 to extend a tenancy. You tell us that you don't agree with charging the tenant and landlord £50 each.
So who do you think should pay the full £100 then – the landlord or the tenant?
Why does it need to be £100? If we fully manage a property for 10% we include everything, the landlord doesn't pay for any extra. If the tenant wants another fixed term tenancy we charge the tenant £50 which includes the 10 mins work we have to do altering a date on the agreement and the cost of re-protecting their deposit. If they want to continue on a roll over then the tenant pays nothing either. Once again agents are in uproar over new legislation that probably wouldn't come to exist if they didn't double charge or charge ridiculous fees in the first place.
Maybe a mute point, but in my example it is not a double charge it is a £100 charge split 50/50. In this example, TPO say you must quote £100 to both tenant and landlord and note split.
So we will be forced to re-do this every time the VAT rate changes ? When will this wretched spoon-feeding of the great British public stop ? Maybe we should be compelled by law to complete their reference forms and sign their AST's as well…
Yep, add it to your weekly task!
TPO has already stated that in their new codes of practice, effective 1st August 2014, (see below) agents must disclose fees to both parties where the fee is shared, i.e. tenancy extension £100 split £50 each. However, there is no requirement to disclose a tenant or landlord only charge to the other party. I think you will find that this is what Ruth Hayes is on about.
"New paragraph added ‘You must not make a tenant or landlord
pay a charge for or be liable for an element of your service that
the other party has also been charged for in the course of the
same transaction."
Fair enough, for split fees but I don't really see how it is the tenants business what I charge a landlord to renew the contract, or get the GSC.
So what happens if we decide to make an exception for a tenant? Maybe tenant who is being evicted who wants to apply through us, and we reduce our fee slightly? Or a Landlord who has several properties and we reduce a fee for them?