In the House of Commons, during Prime Minister’s Questions, Labour MP Corbyn claimed that high rents had led to “social cleansing” in London.
He said: “Across London there are thousands and thousands of families, people that work, people on benefits, who are frightened of the rent increases, frightened of short-term tenancy and frightened of the consequences for themselves and their children of being evicted or forced to move out of the areas in which they live.
“It’s social cleansing that’s happening in central London and it’s coming to the rest of the country.
“Can he [Mr Cameron] give me any assurance that in addition to any regulation of the agencies there will be serious consideration about the need to bring back rent control in this country to protect people to ensure they have somewhere secure and decent to live?”
Cameron replied: “I would agree with the honourable gentleman that there is a need for greater transparency for the work of letting agents in terms of fees.
“Where I would part company is with the idea of introducing full-on rent controls.
“Wherever they’ve been tried they’ve failed, and that’s not just my view, it’s the view of Labour’s shadow housing minister.”
Now whether you agree with Mr Cameron and Mt Corbyn, it is important to understand what an agent actually does before deciding whether or not fees are inflated.
Firstly, consider the word “Fee”. Which fees are being discussed? Fees to the landlord or fees to the tenant? If we are discussing fees to the landlrod, I know through experience of working day in day out that generally the fee for a fully managed service is extremely fair. And I am not being biased. Letting agents are faced with the challenge of being undercut by the competition.
In order to illustrate to landlords I was working with in Gateshead a few years ago that the fees they are charged are NOT inflated, I devised Susie’s Starbucks Comparison. Remember that a Satrbucks caffe latte costs £3.10.
Average rent is £600.00; commission PCM is £60.00; day rate received £2.00 per day LESS than a cup of coffee. I know exactly what a good agent does for their money and £2.00 a day is nonsense. The landlord wants quality, complaince, efficiency, excellent customer service, a trained, qualified and informed agent. For £2.00! Really.
Landlords make a lot of comparisons in relation to fees, yet what they fail to look at is the additional charges that are hidden in the small print. The majority of agents we deal offer great service for very reasonable fees.
So what about tenant fees? The fees charged to the prospective tenants come in so many different guises – referencing fee, admin, fee, registration fee, holding fee and so it goes on. These do range, in my experience, from £60.00 per applicant to £495.00! That last figure is NOT a London based agent. It is not just the disparity that causes the problem, its the fact that the agent cannot explain what the tenant is being charged for. Shelter’s criticism of the fee fiasco may be warranted, but what has happened in Scotalnd cannot happen in England & Wales. Shelter’s aim was to assist tenants and instead the tenant is now paying more in the long run.
What is required is transparency and a better understanding of what a good agent actually does.