/ Money

Closing the door on hidden letting agent fees

House keys in hand

Following Which? lobbying, the government has announced measures to crack down on the lettings market that will help give millions of tenants a better deal. Have you even been caught out by letting agent fees?

You may recall our mystery shop of letting agents earlier this year, where we found many not being upfront about their fees. In fact, we found that many were acting unlawfully. And back in 2012 we found wide-scale poor practice in the lettings market and a lack of consumer protection.

With renting the only option for many, 4.7 million people now rent privately, we’ve been working hard to improve protection in the lettings market. Most recently we provided evidence to a Select Committee Inquiry into the private rented sector in March this year. The government responded to this Inquiry by announcing rules that will be welcome news to millions.

Complain about your letting agent

The government’s Enterprise and Regulatory Reform Act 2013 will give all tenants and landlords (who rent through an agent) access to a complaints scheme.

This means that by Spring next year, the 40% of agents who currently aren’t signed up to a redress scheme will have to become members of an ombudsman. This will ensure that you can complain about hidden fees and poor service, and you can also be sure that this will be investigated independently.

Landlords will also be pleased – we heard from landlords who had lost hundreds of pounds after being at the mercy of an unscrupulous agent.

Having access to a redress scheme would help a tenant like L Hurd, who commented on our renting Conversation earlier this year:

‘I recently completed a credit application for a rental property and was successful, unfortunately after waiting almost four months the property became unavailable. The agency refunded my deposit and told me the credit check fee of £238 would not be refunded as the credit checks had been carried out.’

No more hidden letting agent fees

A new tenants charter also states that agents should tell you about all their fees before you’ve committed to anything – even before you’ve visited a property. This will make it easier for you to shop around when you’re looking to rent, without the risk of being hit by any hidden fees.

This is a big step forward to clearing up this market. We’ll be keeping a close watch to ensure that the redress scheme is brought into force as soon as possible and that tough action is taken against any agent that breaches it.

Have you ever been hit by hidden letting agent fees? Are you pleased to see these new rules coming into force?

Comments
Member

One common malpractice I’ve noticed by estate agents is misleadingly quoting prices excluding VAT. Prices quoted to consumers (as opposed to businesses) must include VAT. Excluding VAT is a breach of Articles 1 and 4 of the Price Marking Order 2004 and Regulation 6(4)(d) of the Consumer Protection from Unfair Trading Regulations 2008. The only purpose of excluding VAT from the price is to give the consumer a misleading indication of price.

Member

Thank you so much for pointing these links out. I had been looking for something like this for ages.

The other scam that is very popular is to quote a price for a service over the telephone. The service is provided, the customer brings out a chequebook and the tradesman says “Oh, if you are going to pay by cheque, then you must add 20%.” Of course he couldn’t care less about the VAT, what he is worried about is his 22% Income Tax.

The clever lawyers have made it illegal to record telephone calls in order to make it more costly to prove things in courts. This law needs to be repealed so that telephoned quotations have the same force as paper quotations. If the tradesman had done that on paper, he could never have got away with it.

I was the victim of a very similar fraud perpetrated by a conveyancing agent. An estate agent had recommended their associated conveyancing service, and it seemed cheaper than a solicitor so I gave them the business and sent a deposit. However soon after a postal strike was looming and I asked if they were able to do everything over fax and the internet. They said that they would not and would only post letters etc. I therefore claimed that they could not offer the service that they had contracted to and withdrew, but they withheld money +VAT for identity checks. I complained that identity checks were something they chose to do and if they wanted to complain they should do so through democratic channels.

Member

I’ve since noticed that the Price Marking Order 2004 applies only to goods and not services, but the Consumer Protection from Unfair Trading Regulations 2008 apply to both goods and services. Therefore only the latter is the appropriate legislation to quote with regard to estate agents.

Member
Anja liszt says:
29 October 2013

See here for all the law

Blog: Anja Liszt 
Post: Will civil claims bankrupt Foxtons, Countrywide and LSL? 
Link: http://anjaliszt.blogspot.com/2013/10/will-civil-claims-bankrupt-foxtons.html 

Member

Letting agents usually offer to renegotiate a tenancy after the initial period, for a fee, this is unnecessary as an assured shorthold tenancy automatically continues, the only difference is that after the initial period, the landlord must give two months notice and the tenant, one month.
letting agents also frequently charge a fee for arranging repairs.

Member
Fiona Lane says:
18 October 2013

I am a landlord and have lovely tenants, I consider myself to be a fair landlord and deal with any repairs or queries as soon as they arise. I have also had tenants who have caused no end of problems with the neighbours complaining and the police calling, it took me around six months to get them out and when they left there were no doors left in the property, holes in the walls and a kitchen which was completely unusable, it cost me over £3,000 to put right and it was only a one bedroom flat! I have great sympathy with tenants who are not treated fairly, but there are problems for both parties and the landlords are always seen as money grabbing and uncaring which is not fair to those of us who do the best we can for our tenants and are badly treated sometimes in return.

Member
Gary Sewell says:
19 October 2013

I have been a landlord for 20 years, I look after my tenants, who move into a palace, & usually move out of a sty, in rent arrears, I am owed 10’s of thousands by absent tenants who ripped me off, I have 12 rental properties I can’t remember the last time my bank account was in the black, forget nasty landlords, there are far more nasty tenants, & everything is stacked in their favor.

Member
Anja liszt says:
29 October 2013

Ombudsmen are generally slow and useless. The answer to this problem is extremely simple. Regulators should prosecute obvious criminal activity instead of issuing reams of guidance, and victims should stand up for themselves and sue. Most long-established estate agents would quickly collapse. See http://anjaliszt.blogspot.com/2013/10/will-civil-claims-bankrupt-foxtons.html.

Member

My daughter has 45 houses and lets them to, mostly, non working people, in other words, people in receipt of benifits. The council has the stupid idea that it is o.k. to give the tenants the rent money to hand to the landlord! As most people would realize the money often gets spent and the landlord gets excuses. This ends up with the tenant having to be evicted which takes 6 months and in the meantime no rent to the landlord! Then its bailiffs fees sometimes Police assistance and a really unpleasant time for all.

The other rather horrible event is when having been in arrears for several months, the tenant disappears usually taking the keys with them which costs the landlord hundred’s of pounds to replace the locks this is the tip of the iceberg as when they get in the house everything is ruined inside. Then its replace carpets, wallpaper/paint, doors,cupboards, virtually everything! This is the thanks for all the trust and and help they would have been given, as usually land lords will not entertain these people. No deposit is taken from them as they can not afford it.

Member

I used to get my own tenants but had no end of problems. Now I use a reputable agent to find tenants. Since doing this I have had few problems. Certainly, when a tenant leaves I usually have to go in, clean and repaint but I no longer go in to a trashed house. If you take this route, check on the agent, at least one in my area is very careful if they are managing the property and, in their own words, couldn’t give a monkey’s if they are not.

Member

Fiona, Gary and John describe some bad behaviour by tenants: I have heard similar things from other people who let property. Some use letting agents and some don’t and those who do have a similar experience to Peter’s with fewer problem tenants and more likelihood of the rent being paid on time. Psychologically, perhaps bad tenants have no qualms about being a nuisance for a private landlord but think twice about getting on the wrong side of a letting agent. But some landlords who manage their lettings themselves have had excellent long-term tenants. There does not seem to be any certainty under either scenario, except that employing a letting agent adds to the expense.

I am left wondering sometimes why landlords like Gary stay in the business if it is so unremunerative and indeed is positively destructive of property value with very little compensating satisfaction. John’s daughter, with 45 properties let to benefit claimants, is also persevering against the odds. Even the tax allowances for mortgage interest and the 10% repairs allowance cannot make good the depredations of delinquent tenants, defaults, voids, possession actions, and so on, especially if there is no capital appreciation, and little prospect of rental increases due to the changes to benefit rules and the state of the local economy, as is the case in many parts of the country. Perhaps London and certain other metropolitan areas are different and renting out properties is a better bet [although the entry threshold is very much higher and has to be factored into the arithmetic]. I should be very interested to learn from any private landlords what it is that keeps them going despite the adversity.