The government has proposed a ban on letting fees for tenants. The move was first announced in November 2016, and was formally announced in the Queen’s Speech in June 2017. Although landlords and some letting agents have warned that this will mean a rise in rent, others, including ourselves at PDF Estates Ltd, have warmly welcomed the move.
Fees can be as much as several hundred pounds, and they come at a time when tenants already need to find funds to pay for their first month’s rent and their deposit. As such, many tenants struggle to meet these costs. Studies suggest, in fact, that most people struggle to meet these payments, while more than 40% have had to borrow money to pay the fees.
At PDF Estates Ltd, we not only ensure that all our fees and rates are transparent, but we don’t charge exorbitant letting fees. We don’t charge administration fees, inventory fees, or tenancy renewal fees. In fact, the only charges we levy tenants are reference checking and credit checking fees, charged at £36 per applicant. That’s it, these are the only charges paid by our tenants.
New rules were introduced to the industry in May 2015. Chief among these rules was the requirement to make all fees transparent.
Gone are the days of generic “administration” fees or grouping multiple charges together under the guise of agency fees. Agents must now list charges individually and give specific details of each; an itemised bill, if you like.
All fees, whether they are charged before, during or after tenancy, must be transparently detailed to the tenant. Guidelines dictate that the agent should display these charges on their website, if they have one, and that tenants should not have to ask for a list of fees. The list should be readily available or presented to the tenant straight away.
All rates listed should also include tax.
Agents that are found to have broken this rule could be fined as much as £5,000, but these changes didn’t go far enough to improve the state of the rental market.
Average Letting Fees
There are certain checks that need to be completed by landlords, or their agents, prior to a potential tenant being offered tenancy. Some of these are taken by landlords to protect their own interests – credit checks and reference checks, for example. Others, such as the Right To Rent check, are a legal requirement. These checks ensure that individuals are permitted to live in the UK. They also ensure that a person has the right to specifically rent your property.
While these checks are necessary, or preferable, should the fees be passed on to potential tenants? After all, if a tenant’s credit check comes back clear, do they really deserve to be charged for it?
A study in 2015, by Citizens Advice, found that the average letting agency fees in the private rental sector equate to £337 per person. Other studies have suggested an average of £200 per person, while some agents have been found charging £500 to £800 or more.
Here are some of the fees you might be expected to pay if you use a letting agent other than PDF Estates Ltd:
- Reference checking costs tenants between £6 and £300.
- Tenancy renewal fees vary from £15 to £300.
- Credit checks, which can be completed quickly and easily online for around £30, could attract charges as high as £300.
- For those that fail a credit check and require a guarantor, an additional fee of approximately £120 is levied.
- Adding an additional person to a tenancy agreement attracts an average cost of £120.
- If a tenant wants to vacate a property, a check-out fee of as much as £120 can be charged.
Why Are The Fees Unfair?
Letting agents have costs that they must meet. Credit checks cost money, and it can take time to complete some of the other checks and administrative work, albeit only minimal time for some of the work. It is fair that a letting agent be reimbursed for their time.
Credit checks are widely available for £30 but some agents charge as much as £300 for this check alone.
Documents like tenancy agreements are standard documents. They take very little time to produce because there are minimal changes from one tenant to the next, so should agents be able to charge £300 to set one up?
We don’t think so.
Rogue agents also tend to charge both tenant and landlord, which means that they are doubling up on the money that they receive.
PDF Estates Ltd Letting Fees
Arguably one of the biggest problems facing tenants is uncertainty, caused by the disparity that exists between letting agents. There have been reports of agents charging as much as £800, while PDF Estates Ltd is proud to say that it is one of an alarmingly small number of letting agents that does not charge exorbitant tenancy fees.
In fact, when you rent a property through us, here are the fees you will be charged by PDF Estates Ltd:
- Administration charges are £0 per person.
- Tenancy agreement charges are £0 per tenant.
- Inventory fees (check-in and check-out) total £0.
- Tenancy renewal fees are £0.
- Tenant referencing and credit searches are charged at £36 per applicant.
- If you need to use a guarantor, there is a £36 charge per guarantor.
Will Rent Increase?
While tenants and tenant groups have largely welcomed the move, it has its critics. ARLA Propertymark chief executive, David Cox, has said that average rents will increase by £103 per year following the rule changes.
It has been suggested that the changes will benefit those tenants that move property more frequently than others. Long term tenants will end up paying more. However, this cost would be spread out over the space of the year, rather than being charged at the beginning of a tenancy agreement, when a tenant already has to meet additional costs of a deposit and up-front rent.
The belief is that because some letting agents will pass on the fees to landlords, it means that the landlord will look to recover the costs directly from the tenant.
At PDF Estates Ltd, we not only eliminate hidden charges and all but the most essential fees for tenants, but for landlords as well. Because we don’t levy these tenancy charges against the landlord, it means that they have no reason to increase your rent.
When Do The Changes Take Effect?
It is not known exactly when the tenancy charges ban will occur. The government has completed its initial consultancy, and some parties have suggested that it will be late 2018 before the changes are properly introduced. For now, tenants remain at the mercy of rogue letting agents, but not our tenants.
PDF Estates Ltd is committed to providing a transparent, competitive, and, above all else, fair service to our landlords and tenants. Whether you are looking for a new long-term tenancy for you and your family, a short-term agreement while you undertake contract work in the capital, or you want to use an agency that does its best to ensure an ongoing, positive relationship between landlord and tenant, give us a call today on 020 3815 7952 to chat about your requirements.