Renting roulette: the great letting agents gamble

I have just read this report and am deeply disappointed at what appears to be a biased and dishonest, yes dishonest report by Which.
The report appears to contain misinformation which deliberately seeks to portray lettings agents in a far worse light [ if possible].

I refer to your listing of fees which you have done is such a way as to infer that the agents keep all of this money, and you list such items as a security deposit and advance rental which are not charges or fees, but payments the tenant will pay whether or not they use an agent.
Just how can you portray rental as an agency fee?
ie:-
You have the following in your report
1. Average tenant fees and charges based on one person on a tenancy agreement (Which? mystery shopping investigation, October 2012):
Holding deposit One week’s rent – £400
Administration fee £120 – £420
Deposit administration fee £0 – £29
Deposit 1 month’s rent – 6 weeks’ rent
Rent in advance 1 month’s rent
Credit reference check £43 – £90
Check in fee £0 – £60

The holding deposit is usually the payment of 1 to 2 weeks rent in advance, this secures the property, ensures it is removed from the market and the referencing process is started. This money is deducted from the first months rental… Not a fee or charge. The only proviso is if the prospective tenant presents false references, or is caught trying to obtain the tenancy by deception they will forfeit this money.
Rent in advance, I already mentioned how you can call rent a fee or charge; this is just plain dishonest reporting.
Deposit: Again this is not a fee or charge; this is a refundable security bond.

The situation with dishonest and disreputable agents is already causing issues within the industry without biased inaccurate reporting such as this, whose only purpose seems to be added fuel to the fire without proffering sensible workable solutions. I remind you that a survey of just 32 agencies out of thousands cannot be taken [as you have done] as indicative for the entire industry.

Agents provide a professional service, there are over 2000 pieces of legislation covering the lettings industry, [most designed to protect tenants] which is why a lot of landlords use agencies, most have just 1 or a few properties and are not professional landlords, they are aware that the slightest breach of these regulations can result in heavy fines and need a reputable dedicated agent, just as when you need legal help you go to a solicitor [and if you are unlucky you choose a bad one, but that does not mean all solicitors are bad]. In any other field would you be calling for the abandonment of fees for service rendered, of course not!
We had the same issue with solicitors fees a while back, now they have to list fees beforehand, we had the same issue with pubs, now every pub has to display a price list behind the bar.
This is all that is required from agents. If you walk in and ask how much for the services they provide, and they cannot show you a printed document outlining fees and offer you a written guarantee that the fees agreed up front are the fees you will pay, then walk out and go somewhere else, exactly as you do with any other service.

The agency administration fee should include the following and only the following:-
Contract preparation
Inventory at start and end of tenancy
Credit check
Deposit administration
Office admin
[If there are exceptional or special circumstance fees ie.. pet damage bonds, these must be discussed, listed and agreed up front]

These items are necessary for the protection of the tenant and security of landlord.

The contract:
Self evident, as this is a very powerful legal document, and must be free of rouge clauses and threats to make the tenant pay for the whole period when they wish to legally end the tenancy early.
Inventory:
This is vital for protection on both sides; this can be presented to a court if there is a dispute at the end of the tenancy. This must be done by an outside agency and now include photographs and videos of the property, décor, fixtures, fittings, and any furniture supplied. Inventories can be expensive and the cost should be shared between landlord and tenant.
Credit check:
If the tenant lies about references and status, they can lose their initial holding deposit, many insurers will not give cover if the tenants have not been checked, rent guarantee schemes rely on credit checks, in fact it is very difficult to get a tenancy without one. These checks are not expensive.
Deposit administration:
Again not expensive, this should be a minor charge to cover the time spent and any work done in lodging the deposit, in some schemes there is a charge to the agent for lodging the deposit and they pass this on to the tenant. The DPS custodial scheme is free to use.
Office admin:
The agent would then add a small charge for the rest of the admin involved [calls, letters’ visits etc…]
All other fees such as check in, check out etc… Are spurious and can be classed as rip offs.

I give this as a guide example of a transparent fee structure:

Contract preparation £25 [per contract, not per person]
Inventory at start and end of tenancy; Total cost £250 tenants cost £125 [this is for the property and not per tenant]
Credit check £30 [per person]
Deposit administration £20 [this is calculated as 10% of the total]
Total £200 for a single person renting.

If you walked in and saw this on the office wall, you have 3 choices, Turn around and walk out, agree it seems reasonable and register with the agent [no charge for that], or negotiate a reduction, I have never known a business person [who is still in business] who is unwilling to knock of a couple of quid to get the business. Just remember if you do get a reduction to get it in writing.

I think I have blathered on for long enough, but I would point out one other thing that disturbed me in this report.
Some agencies are still charging viewing fees, this is illegal [and I believe a criminal offence] if anyone knows of any agency doing this please report them.

One thing to look at is requiring letting agents to share the landlord’s contact information with the tenant. In our last (rented) home, the letting agent was scamming the landlord out of thousands and us out of weeks of time by sending around someone (related to the letting agent) to “fix” the boiler who did everything in his power to milk money from the landlord. (He replaced every part but the broken one, taking a full month each time to do a 10-minute swap of the broken heat exchange; he never flushed the rust out of the system, so the part continued to break every year for three years in a row. Eventually, he talked the landlord into replacing the whole boiler – and still didn’t flush the rust out of the system).

We were powerless to enlighten the landlord, because we had no contact information for them. It should be included on the lease: “Tenant (contact info) agrees with Letting Agency (contact info) on behalf of Landlord (contact info) … ” At the very least, it should be required that the letting agent pass on the landlord’s contact information. As it is, we didn’t hear from the landlords until they called us telling us that they were fed up of the repair bills so they’d decided to sell the place, and would we like to buy it? (Sure, everyone has a deposit for a property in their back pocket at all times, don’t they?)

Unless it’s legally required, letting agents won’t pass on contact information, fearful that both sides will get fed up of the lousy service and high fees and decide to go private. Besides, it’s unfair that landlords have the contact information for tenants (they certainly have a postal address!), but tenants have absolutely no idea who their landlord is, or how to contact them.

Furthermore, letting agents need to be made to understand that it’s the tenants who pay their wages, so they really should treat us better. They can have all the landlords in the world sign up with them, but if there are no tenants in those properties, the letting agent isn’t making any money. If the tenant up and leaves, there is no more revenue from that property. Our calls need to be taken seriously, and not fobbed off. That said, I know a few people who’ve become landlords for awhile, and they have a similar experience with the letting agents from their side. There’s no excuse for it, and I wish Which luck in combating it – it certainly needs to be done!