Chancellor’s autumn statement included the ban of agents fees to tenants
In my opinion many agents use this as a big profit opportunity eg charging students £500. This is excessive but many agents will get away with it because tenants believe that they have to pay the fee. This is covered in my book, because credit checks cost how much? £30? An agents’ admin. time is maybe an hour, or two depending on the amount of time they spend doing a viewing. That’s maybe another £60. Completing a tenancy agreement would take a maximum of another hour and would only cost paper and ink as the agreement is a standard one, or one provided by a more diligent landlord. Total costs are therefore not much more than £100.
However I do think its reasonable to charge a reservation fee to make sure that tenants don’t make offers on several properties concurrently, therefore wasting agents & landlords’ time provided that a fee is deducted from the initial rental. So, my opinion is that a fee of £200 is reasonable and anything above this is excessive.
Its the last issue that I feel should have been tackled by the Government – refunding the deposit from first rental should be compulsory. The cost of the administration should be paid by landlords as they are the client. Obviously this cost would then result in rentals increasing but I believe that it makes for greater clarity of charging, and would reduce the incidence of agents “double-dipping” ie charging landlords AND tenants.
The other issue for landlords is that if tenants cant afford the deposit, then they will likely default on subsequent rental payments. If properties were not so expensive then it wouldn’t be an issue as rents would be lower. Yet who has caused property prices to escalate? Gvmt, as a result of low interest rates, and increasing demand by encouraging people to get onto the “housing ladder” !!!