Inventorybase says banning fees isn’t clear cut

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Making a more transparent way of deciding on the amount tenants pay is good business, this way fees would be reduced overall - while keeping agents able to cover all their costs.

(PRWEB UK) 31 May 2014

The subject of banning letting agent’s fees to tenants has been widely debated in the property industry over the last few months. The shadow minister for housing Emma Reynolds wrote an open letter to agents asking them to “please stop charging tenants these unfair fees now.” See the full letter here: http://www.lettingagenttoday.co.uk/573-labour-writes-open-letter-to-letting-agents

The industry reacted strongly and responses were immediate. Ian Potter from the Association of Residential Letting Agents said the plan could have an "adverse affect on tenants".

He continued, "Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise." See the full response here: http://www.lettingagenttoday.co.uk/590-mps-vote-against-ban-on-fees

On the other side of the coin, tenants’ campaign group Generation Rent posted their own blog on the subject. Director Alex Hilton wrote:

“The landlord holds the home and agents are many in number, requiring no great skill and no qualifications at all. The agents have to compete with each other to win a monopoly over the tenancy of a landlord’s property. So agents won't be able to hike up fees to landlords because the landlord will just go to a cheaper agent. This will lower agent fees until they are more reflective of their cost base, at which time they will have to start competing on other grounds, such as professionalism and customer service. By banning letting agent fees to tenants, less money will go to agents, that's true. But landlords should expect lower costs and a better service as the effects play out.” See the full blog here: http://www.lettingagenttoday.co.uk/577-banning-letting-agent-fees-won-t-push-up-rents-says-generation-rent

Steve Rad, creator of property inventory software InventoryBase, deals with letting agents, landlords and tenants on a daily basis. He says:

“This issue is a huge change for the letting industry and I don’t think it’s clear cut. I can definitely see advantages on both sides. Ian Potter is correct when he says moving a new tenant in is a business expense for agents – so there should be fees. The law requires an impartial inventory, for example, so there is work to be done that needs to be paid for. The danger is that agents fees can usually be higher than they need to be, so something needs to give.”

He goes on to suggest: “Perhaps the costs should be split between the two parties, the tenants always pay the same amount the landlords pay, this creates a fairer, more unbiased system allowing landlords to be more subjective about the agents they choose rather than just the cheapest (who make their money from the tenants fees). Alex Hilton’s point that customer service and professionalism of agents will become a more important part of the equation if fees were scrapped, would still happen if the fees were fairly split between landlord and tenant. Making a more transparent way of deciding on the amount tenants pay is good business, this way fees would be reduced overall - while keeping agents able to cover all their costs.”

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