Did you know that if you’re a renter in Scotland it’s illegal for a letting agent to charge you any fees?
Walk down any high street in England and you could go into five different letting agencies who would all charge you a different fee. You have to pay for the privilege of dealing with them, to secure a property and even to change the name on a piece of paper? You’re then also charged an inflated fee for a credit check, which actually costs when you as little as a tenner.
I have paid as little as £80 and as much as £552 in agency fees on different fees. How is it possible that fees can vary so much from agency to agency? It’s a rip off and the agents are getting away with it, all the way to the bank.
Every time you move and go through a letting agent you will incur some kind of cost. There’s no way of knowing what you’ll be charged until you’re about to sign, unless you think ahead and check on their website where they are legally required to publish their fees. When you’re in the midst of a stressful and draining flat hunt that’s not exactly the first thing on your mind though, is it? When you find a flat you actually like what are the chances that you’ll just swallow the fees so you can secure a decent place? This is not a renter’s market and estate agents are taking advantage of that fact.
As a renter you have no leverage. This is a supply and demand problem: there’s a supply shortage of decent properties and a surplus of people looking to rent. This means, as a prospective tenant, you’re bound by what the letting agents want to charge.
Letting agency fees in England are totally unregulated. However, in Scotland they've been banned completely, since 2012. So why do they still exist in here? Renting already costs the average person over one third of their salary, and letting agents' fees are basically just another way of penalising people who can’t afford to buy property.
This is why at The Debrief we’re calling on the Housing Minister to take action on agency fees. Renting is a lucrative business and Generation Rent are stuck on the wrong side of it. Sign our petition and let's sort this out.
Renting is the new normal
Homeownership amongst individuals and families under 30 has collapsed since 1980 when one in three 16 to 24 year olds were able to afford to buy their own home. Today only one in ten can.
High letting agency fees come at the least-affordable period in housing in this country for a long time. Renting is not a choice, it is no longer the mainstay of the very poor and most vulnerable people in society. Nor is it merely a stopgap for young people who have recently flown the nest, before they get their well-healed young professional feet on the property ladder: renting is the new normal. And, increasingly our society is divided into those who own their own home and those who rent.
Levels of homeownership have actually gone into reverse after years of rises that were fuelled, largely, by Margaret Thatcher’s right-to-buy initiative and the deregulation of the mortgage-lending business.
Today more people than ever rent. A report, conducted by economists at accountancy firm PwC last year, predicted that by 2025, a quarter of all households will be renting privately and that the biggest increase will be seen among those aged between 20 and 39, where ‘a clear majority’ will be private tenants within the next decade.
Renting privately is now the norm. There’s no doubt about it. House prices have soared while wages have stagnated meaning more people than ever before rent: 48% of 24-35 year olds today live in rented accommodation compared with just 21% 10 years ago.
It’s time the legislation started to reflect the reality of our society now. We are becoming not just a generation but a nation of renters, and the system doesn’t work for us. More than this, it’s unfair and prohibitive. The Chancellor said in his Budget speech last week that young people ‘aren’t saving enough’, how can we if the system is geared against us?
Shelter have been citing Scotland as an example of good practice and calling for a ban for some time. Citizens Advicehave also called for agency fees for tenants to be banned. Before the general election last year Ed Miliband said, if elected, he would sort this out. Not a whimper from Labour on this issue since, however.
A culture of urgency and fear
The property market in this country is in crisis. Renting is being treated like buying by letting agents who encourage a culture of urgency and fear: ‘if you don’t take it right now someone else will’. There are also tales of sealed bids being encouraged at viewings for rented properties and there can be queues at viewings for decent rented properties in desirable areas. Surely it’s time for proper regulation of renting?
Do you remember how much money you laid down to secure your current pad? How much do you think you have spent so far in fees, paid to estate agents, of the course of your life since leaving home? Chances are it will be somewhere in the hundreds, if not thousands.
I recently had to cough up £1,000 to 'secure' a flat to rent, on the spot, and prevent anyone else from putting in an offer. I wanted a second viewing but was reminded that the property 'would go' if I waited. I’m not actually sure this was even legal because I’ve since found out that the 2004 Housing Act says that 'all money paid in advance of a tenancy and which could or should be returned to the tenant must be defined as a deposit'. Agents have long been warned against doing this but it's still happening.
I was then hit with a deposit, 6 weeks rent up front and £552 in agency fees to ‘set up’ the tenancy and cover a so-called ‘check-in charge’. The flat was unfurnished, my tenancy agreement was sent via email and only required an electronic signature. I also got in touch with the agency in the first place, I put them in touch with my references and I picked up the keys from the landlord myself so I’m still unclear as to what exactly their charges covered! I asked for an exact breakdown several times and was, more or less, been stone walled by the agency.
What did the agency really have to do? Apart from collect their fee from us, collect their fee from the landlord (often a ‘finders’ or ‘set up' fee and 15% of the rent), sit back and watch the cash roll in.
This must be about the seventh time I’ve moved into new rented accommodation since leaving home at 18 to go to university. Every time I’ve been charged admin fees ranging from the sublime to the ridiculous and, I would argue, in my own experience, they’ve been increasing steadily since I rented my first property in Oxford in 2007.
As a nation we find ourselves in unchartered territory. The buy to let market booms, while a housing shortage combined with the tactics of over-zealous letting agents are inflating prices up and down the country, especially at the eye of the storm: London.
There is currently no cap on or regulation of what a prospective tenant can be asked to pay to secure a property. Despite the fact that renters are effectively consumers in the property market we are at the mercy of what letting agents want to charge. Surely unregulated fees are essentially exploiting the vulnerability of renters at a time when the odds have never been more stacked against us? If you want to rent a property and it's represented by an agency with particularly high fees it's not like you can just go and find it cheaper somewhere else as you would with any other product.
This country’s rental market is broken. Step one for fixing it? Let’s start with banning these ridiculous letting agent’s fees. Let’s make renting in this country a better deal for Generation Rent, we’re frozen out of the property market and nobody should be cashing in on or profiting from that. If they can do it in Scotland, we can do it here. Sign our petition and back Generation Rent. Let's make renting fair.
You might also be interested in:
**Follow Vicky on Twitter @Victoria_Spratt
**
Share your renting horror stories with us on Twitter @thedebrief #makerentingfair
This article originally appeared on The Debrief.