The announcement, though not unexpected, generated plenty of controversy. Just days after Baroness Grender’s Renter Rights Bill passed the House of Lords committee stage, Chancellor Phillip Hammond announced yesterday that letting agents will be banned from charging fees to tenants, bringing England and Wales in line with Scotland (Scotland banned tenant fees back in 2012).
Obviously, this announcement has been met with strong opinions from all parties. Tenants are unsurprisingly overjoyed that they will no longer be paying ‘administration’ fees of up to £420, while agents are predictably furious that a profitable revenue stream has been dammed. After inspecting some of the fees that the major agencies charge, it’s hard to disagree with the ban. No wonder it’s been becoming harder and harder to step onto the property ladder, given the extortionate agency fees levied against tenants.
This change will undoubtedly shake up the industry. Many letting agencies, reluctant to lose out on the fees traditionally charged to tenants, may well pass them on to the landlords. Perhaps it’s time to assess your letting agency…..
Isn’t this exactly the shake-up the lettings industry needed? We might recall very recently that certain agencies were charging extortionate admin fees for changing light bulbs, while another was charging £432 for a change of occupancy contract. Where are these large brands going to collect their fees from now? It’s time for landlords to choose their agents wisely.
Managing Director of the Association of Residential Letting Agents (ARLA), David Cox, has been quick to denounce the move, saying: “Agents’ fees have to be paid by somebody. If any extra fees are passed on to landlords, tenants will end up paying them forever as market rents will increase”. We say that this doesn’t need to be the case.
At Ogilvy & Sneyd, we believe that David Cox’s observations may be correct for those agencies that have based their business model on receiving both landlord and agency fees, and refuse to have their margins reduced. However, our business model can absorb this decrease in revenue stream without having to pass on the margin loss either to the landlord or back to the tenant through rent increases. If you want to see how we do this, please get in touch. We’d love to tell you more.
It’s time for honest agents and landlords to work together to keep the buy-to-let market profitable. To find out more about Ogilvy and Sneyd, go to our home page by clicking here.