Generation Rent has accused letting agents of greed – and of standing in the way of longer tenancies.
Dan Wilson Craw, of the campaigning organisation which also wants to ban agents’ fees to tenants, said that agents’ hunger to charge annual renewal fees is blocking longer tenancies.
He acknowledged that many buy-to-let lenders state that the longest period for an AST is 12 months.
But he said that while there are “uncompromising lenders” and “obviously” rogue landlords, it is agents that are holding the market back.
Wilson Craw said: ‘It is difficult for a tenant to get a three year tenancy because while you have a landlord that likes stability and a tenant who wants stability, the letting agent will want an annual renewal process where they charge a fee and can raise the rent.”
He claimed that agents were the “stumbling block” to a fairer rental market and that the lure of renewals fees is the obstacle to long term rental agreements.
Separately, Tory minister Eric Pickles is due to announce this weekend a new deal for tenants.
Housing associations wil be given £400m in cheap loans to build new homes.
Under the new rent to buy scheme, these homes would be let out at below market rates – probably 80% – to tenants for seven years, who would then be given the opportunity to buy the properties.
The scheme would be aimed at young people trying to get on the housing ladder by saving up a deposit, not social tenants on benefits.
Comments (10)
I don't believe this is a significant issue in our area. On every property we market we tell all applicants to ask for however long a tenancy they want and the vast majority choose 6 months, some 12 and a few 24 months but never longer than that through tenant choice. I guess tenants like the flexibility -their choice. Can't imagine why I would charge a tenant (effectively a customer) for wanting to bring you more revenue (rent). Sorry think this is an exaggeration
Never had a tenant ask for anything longer than twelve months. The professional tenants we have tend to prefer the flexibility of periodic tenancies. One of our 6 month tenants ended up staying for over seven years. Like Harold before him (showing my age now) this is another Wilson that sticks in my craw!
Yes, I do charge a small renewal fee, equally, this does not stop me doing 3 year tenancies where requested and agreed by negotiation between all parties so the suggestion that fees stand in the way of long term tenancies is nonsense. In fact, by charging the renewal fee we promote tenants to choose longer term tenancies wherever possible to avoid further charges. Perhaps more research is required by those pointing fingers!
Don't get me wrong, I am well aware that there are corporates out there charging both the landlord and the tenants astronomical renewal fees and trying to negotiate the shortest renewal possible because they believe that turning properties makes them more money (and when you consider the application fees I have seen in black and white this morning from having taken over a tenancy set up by this company you can see why), but they need to understand we are not all the same. It's the age old rule of the small minority of firms spoiling it for the vast majority!
The company I work for charges a small admin fee to the landlord to renew a tenancy, so it works out better for everyone to go for a longer tenancy! Quite often I am having tenants tell me they want a periodic tenancy, rather than a longer fixed term.
Having read this article, I can now only dismiss Generation Rent as being completely ignorant of the lettings industry and, perhaps, on some sort of personal vendetta. Longer tenancies are without a doubt better for letting agents, so much so that I have heard of agencies lying to both landlord and tenant that the other will only agree to the tenancy with a three-year contract being signed from the outset. That's only hearsay of course, but you can see the logic behind it. And yes, we have had tenants requesting two and even three-year contracts, that we have had to turn down because of the buy-to-let lender's restrictions. Not ever so long ago, six-month contracts were the norm. Nowadays, it's 12 month contract. I'm not aware of any agents trying to stifle this consumer demand.
I'm a portfolio landlord who loves long tenancies. I also run a national chain of sales and letting agents and we don't charge tenants an application fee or a renewal fee. However, every one of my BTL mortgages has a 12 month maximum AST clause. Breach that wilfully, and you are in breach of contract, risking repossession and potentially mortgage fraud.
So whilst I have a lot of time for Generation Rent – this completely partisan view point, total removed from the practical reality – only serves to weaken their credibility.
They should campaign for lenders to allow a waiver of the 12 month AST clause.
Agree with Mark Walker; arranging longer tenancies is a more reliable model for growth. More tenants and landlords are looking for stable relationships, which are generally better for all parties. Generation Rent need to focus their attention on industry-wide regulation in order for good agents to support their campaign.
Agree Mark, no doubt some corporate started the whole 'renewal fees' scam looking to increase margins, which has spread down. I wont entertain it.
…Dan Wilson Craw, of the campaigning organisation which also wants to ban agents’ fees to tenants, said that agents’ hunger to charge annual renewal fees is blocking longer tenancies…
Not that we charge, but really where is this muppet from…? Even charging tenants a couple of hundred to renew is going to be cheaper than the physical cost of moving. I fail to see his logic.
Ummmm, Dan we don't have renewal fees and we have a very large book of properties for our area. We like getting paid on long stable tenancies which we manage. It really is lenders and unexpected changes in people's circumstances that put off longer tenancies.