Why Shelter Cymru is campaigning to ban letting agent fees to tenants.
So what is it about returning your keys to a letting agent, at the end of a tenancy that incurs a cost? After all it’s you who’s doing the hard work – going to the office, handing over the keys. But one agent, surveyed by Shelter Cymru mystery shoppers, did just that – thank you for returning your keys, that will be £6, plus – to increase the absurdity of it – VAT.
Okay, that was only one of the 85 agents in Wales surveyed by Shelter Cymru campaign supporters but it was not the only one with some bizarre reasons for adding on charges. In many instances it was difficult even finding out what the charges might be, with contradictory information, hidden costs, vague terms and bizarre extras. What about fees to ‘protect’ the deposit already protected by law? Four out of five agents used a catch-all ‘administration fee’ and two-thirds provided no meaningful breakdown of what it included, despite Consumer Rights Act requirements of transparency and clarity.
But the real message was that in addition to rent in advance and bond, you were likely to pay anything between £100 and £300 in additional fees if you find your home through a letting agent – in some cases more than £300.
Remember letting agents already charge the landlord for their services, but at least the landlord can shop around. If a tenant finds a place to live they are stuck with the agency letting it and the charges it levies.
Let’s be fair – a few agencies were clear on their charging structures and about a fifth charge less than £100, but ultimately it’s not just the lack of consumer choice that’s the problem, it’s the additional costs of setting up a home. That’s the issue for Shelter Cymru, for local authority homelessness services, and for the 57,000 households in Wales currently renting through agents. We calculated that the average cost to move into a three-bed home in Cardiff, with rent in advance and a bond, is already £1,400. The average letting agent puts another £200 on top.
That’s why we are calling on the Welsh Government to end letting fees to tenants.
Of course there are opponents to this approach – one criticism is that the fee will effectively be transferred to an increase in rent; another is that it will put agencies out of business.
But we have a real live example of where fees to tenants have already ended – Scotland. What’s the experience there?
First there is no clear evidence of any link between higher rents and ending fees. The National Landlord Association says there is, but the Scottish Association of Landlords and the Council of Lettings Agents say that the majority of their members surveyed had not seen any increase in rents or fees to landlords since the ban had been introduced.
And three-quarters of agents say the ban either had no impact or a positive impact on business.
So, banning fees will end unfairness, reduce entry costs to the private rented sector for many people on medium to low incomes and will have no discernible effect on rents or agents’ business.
The call on Welsh Government to end letting fees to tenants is growing. To read our report ‘Letting Go’ and sign the petition, go to sheltercymru.org.uk/letting-go/.