Letting agents Foxtons and Felicity J Lord have been named as two of the worst for charging high fees to residential tenants – and acting in a way that has encouraged the Labour party to call for legalisation to ban upfront fees.
Aside from fanning flames of the debate for greater regulation, the excessive charging of some agents is encouraging others to enter the market. New landlord brands such as Fizzy Living and Get Living London are dealing with their tenants direct, cutting out the letting agent as being a middle man with insufficient value to add to justify their fees. At the same time new entrants are coming into the lettings market, convinced they can still create a workable business, while charging less substantial fees.
The high charges were revealed by a Labour member of the London Assembly, Tom Copley. In a recent article in New Statesman, Copley said he had even gained an acknowledgement from London mayor Boris Johnson that the fees charged by Foxtons – famous for their swanky offices and fleet of company Minis – were “unacceptable”.
“Foxtons charge new tenants £420 as an ‘administration fee’,” said Copley. “Felicity J Lord charge £165 per property for a ‘tenancy agreement’, £65 per person ‘for reference checks’, a £60 ‘admin fee’ and a £120 ‘check-in fee’.”
He noted the problem is more widespread than just the two letting agents named. “A constituent that contacted me from the London Borough of Camden was asked by a letting agent to pay £300 just to be added to a tenancy agreement. He was told that this sum would not be refunded even if his references didn’t come through.”
Copley has called for the rest of the UK to adopt the system employed in Scotland, where letting agents can only charge fees to landlords – who will then amortise these in the rental charged. He says Labour’s other proposals, for longer tenancies, and some form of ceiling on rent rises, do not amount to a return to rent controls, as some have suggested. Ed Miliband’s proposals are “are a shift to the kind of second generation rent regulation seen in most of our European neighbours”.
“Tenancy reform would help to create a more stable private rented sector for tenants, and make the rental market more affordable,” he insists: though acknowledging that the other major issue is getting more homes actually built.
The overcharging cowboys are also encouraging new entrants to the marie. One letting agent convinced there is a better way – at a less punitive cost – is Seren Living. Covering the South Wales area from a Newport office, the company was set up under the auspices of the Seren housing association; and lettings agency is something other housing associations are also getting involved in. Despite the connection with their parent, the office lets properties for a range of private landlords. Manager Emily Samuel told me part of their service is to advise on such things as installing smoke alarms and stair handrails; issues which prevent landlords from the danger of being sued down the line.
The New Statesman article is here.