Tag Archives: Tenant Rights

By Steve Roulstone

The Governing Bodies.

As a member of ARLA and TPO I will restrict my review on professional bodies to these two organisations and what they recommend, but I have to state at the very beginning, how much easier it would be if legislation was passed which embodied such recommendations in the same way as RICS codes of practise are adopted by the Government.

There is no doubt that bodies such as ARLA and TPO will have to come off the fence and state their opinion. Because at present, the advice listed is about clarity and visibility if fees, not about the level of fees. RICS who the Courts would turn to for guidance in any court case, agree with my opinion, Peter Bolton King in an RICS Blog on the subject states: Shelter’s proposal does little to protect exposed renters to all manner of unethical practices on the part of unscrupulous agents.

Another vote for legislation and a weighty one at that! But consider the opposite for a moment? If Shelter get there way, Tenants will lose the protection that they possess as a fee paying customer, there interests will still be subject to the correct duty of care and from what seems to be happening in Scotland, yet another barrier between Landlord and Tenant will not be introduced. All of this, in an Industry that would still remain unlegislated, for their recommendation, whilst supporting legislation, does not include it. Surely what Shelter should be doing, rather than just shooting from the hip, is working with the Industry, to push for the legislation those who believe in professionalism are seeking already.

There is another area where I believe Shelter to be wrong and that is in the area of choice. Some 20% of UK housing stock is now available through the private rental stock. That is choice in anybody’s book and to state that Tenants are forced down the route of high fees is not true, certainly not in my town. Through choice, Tenants can walk away from high fees, just as Landlords have the choice to resist Agents that charge unreasonable fees to Tenants. Only yesterday, I drove past an office advertising to Landlords, that they could rent their property at no cost to the Landlords at all!

It is clear from such instances that Shelter has some justification for what they are attempting and I must make it clear that I agree in principal with their case. What is also clear is that I do not agree with their assumptions and methods, but whilst some agents advertise in this manner, they will always have an ear. What is needed is debate and discussion as the more people who are made aware the better for the industry. All could take action in their own way, hopefully against those who give credence to Shelters cause.

In summary, I was always taught that it is better to lean on an open door than try to smash them all down? The picture painted is I believe unreasonable, but not without cause. The aim however is somewhat misguided and would do better and I believe achieve much more, if accompanied by legislation that was enforceable. In the meantime, healthy debate will spread the knowledge of what is happening and I encourage everything that is done to further healthy knowledge.

By Steve Roulstone

High fees.

As a Letting Agent of some fourteen years, I am happy to confirm that my Wife and I now make a good living from the Business that we run. It has taken many years of hard work and long hours but this very statement is subjective and as two people who started their working life in a two up two down terraced house, I know that our description of a good living is well below the expectations of most when using these words to describe their lifestyle.

This is the point, what some call excessive, others call standard. Add this to how you differentiate between differing more expensive to live areas of the Country and the question of ‘what is acceptable’ becomes difficult to answer! You can then add to this, the level of service provided and the reflective charges made for higher quality services. They do exist and should not be ignored.

What however cannot be ignored and where I am totally in agreement with Shelter, is where charges levied are beyond what is reasonable and where the service delivered does not justify such charges. I would add, especially where Tenants are charged in order to advertise reduced prices for Landlords.

There is no doubt this is seen as a marketing strategy and an acceptable way in gaining those all important new Landlords. Locally to me, we have vehicles carrying Company logo’s proudly stating how low there charges are. I am not aware of what they charge their Tenants, so would not point the finger, but as the market becomes more and more competitive, more and more Agents respond by cutting prices. The fact remains, the opportunity to reduce charges to Landlords whilst increasing Tenants fees exists with no restraints.

I would associate this practise to how rouge agents who do not deal with Tenants deposits correctly are dealt with. Does that mean all Agents should be tarred with the same brush?

I think not and believe that a fair charge can easily be configured, even with the option for Tenants who wish to sign up for higher level services, which we should not remove from the market place. Let’s look to application fees again for Mortgages. They operate well from an industry that is well regulated, yet the choice is out there and we all know that fees need to be considered. Is it really outside the realms of possibility that a similar situation could not be delivered for Letting Agents?

If they are transparent, capped in law and understood what the minimum available for the fee that is charged is, then surely we have a framework for Agencies to be included in a professional industry, through which, licenses are offered for compliance.

Get it wrong, the license is revoked. Service levels need not be affected; proper fee paying diligence would be a consideration for both sides and recourse still available for the Tenants. I call that a win win!

Finally, a look at the Professional Industry view will be the focus of Part 5.

By Steve Roulstone

Agent and Landlord fees.

I think it a good starting place to look at why charges are introduced to Tenants. Letting Agents unlike car rental Companies for example, do not own every house and therefore reap no benefit from the rent. Yes of course, the end result is to provide a service for the Landlord to provide a Tenancy that is acceptable, insurable and above all efficient as far as care of the property and payment of the rent is concerned, but that is not to say that the Tenant does not benefit from the process by ensuring their needs are covered through the process.

We discuss affordability before any fees are taken, to ensure they approach referencing in the right way, the need for guarantors and additional supportive paperwork to get them through the process, which is all treated with confidentiality and respect for their own circumstances. Time is taken to discuss and arrange further visits to the property to cover their requirements and to measure for curtains or furniture as part of the service. If this element is removed, I do not see how this will benefit any Tenant or procedure of renting a home. Rather, by being a fee paying part of the process, they have rights and they need to be respected during the process that they pay towards.

I cannot help but feel that Tenants would be better served by Shelter, if they looked to ensure they received better service for their part of this process, rather than this sledge hammer approach.

So let’s look at what the Landlord is charged for that service.

He also pays a fee up front, which on average should be split down the middle between Tenant and Landlord. If the service commissioned is a ‘Tenant find’ service, then the Landlord will usually pay a substantially higher fee, but the Tenant fee should remain the same.

The Landlord then, in the case of a fully managed property, continues to pay a monthly fee against the rent collected. I can only comment on our office, but in order to provide the best service for our Landlords, which Shelter do recognise is where our legal responsibility lies, charges made to Tenants during Tenancies are wherever possible, reduced to the minimum, reflecting the work being undertaken, or indeed avoided if at all possible. This means we do not insist on new agreements and the evidence is that Tenants like the option of choice this gives them, as in reality, our Tenants appear to stay longer than the average. Shelter believes all Tenants should be given much longer Tenancies. I doubt many would wish to sign for the five years they feel should be available and I say this as a Tenant myself.

The tenant pays to be referenced, which apart from confirming the affordability, also ensures the Landlord can take Insurance against any unpaid rent and to cover legal expenses if action needs to be taken. From the Tenants perspective, the affordability is no different than the assessment made when applying for a mortgage, yet I see no claims that Mortgage companies (the financial beneficiary) should pay for application procedures in the same way.

Tenants also pay for the documentation raised to move them in. This more often than not reflects their individual situation, regarding pets or lifestyle, as well as being enshrined in Law to ensure they are protected.

Therefore, reasonable charges are in my opinion justified and rather than challenge the legitimacy of any such charge, it is the level of charges that should be addressed and this will be the subject of part 4.

By Steve Roulstone

The Shelter perspective:

Shelter answer many questions within their report, far too many for me to comment on in these pages, but clearly they see high fees as the issue, but do not support a reasonable charge, rather preferring that all Tenants should be able to rent property at no charge. I do not understand why and see the reasoning behind their assumption as a strike against any organisation that has to be able to make a profit rather than a conclusion that makes any sense.

They fail to recognise that many Agents are reasonable and charge fees far lower than what they call unfair, making charges easily visible and making it possible for Tenants to remain within the property of their choice with very little financial impact for the life of the Tenancy. At Castle Estates, as a Franchise organisation, we were all taught the need to have fees which are justifiable. We are now independent offices, but the replies I received to my question of fees before writing this Blog from our offices, all confirmed rates around half of the average quoted by Shelter.

Whilst on this tack, what about the information they make this judgement upon? Where did that come from? They state on two occasions in the report that 1 in 4 people in England and Wales have complained about being overcharged by Agents. But then, if you read carefully, confirm that the 1 in 4 is actually based upon those who responded to a request for information in the first place and so forgive me, but in my opinion, it is better described as from the complaints received, 1 in 4 related to Agents fees, because unless Shelter can tell me differently, people who have nothing to complain about, would rarely respond or contact them? Perhaps they can confirm to the contrary?

They also state that a complete ban on Letting fess is the best solution, because they have conducted many surveys and mystery shopping schemes around the Country, but do not actually give any other figures or conclusions about the surveys other than the 1 in 4 figure. I would like to see this figure clarified and further proof of why  a total ban is the only solution, because the impact they see from what has happened in Scotland is clearly only considered from the Tenants point of view and for any change to be fair, surely all sides need to be considered?

The implications I know of, without having to check many sources, is the that many Tenants are now aware that they can pursue more than one property at no cost to themselves and decide which property is more suitable as the process continues. In one case, a Landlord paid for four sets of referencing fees before finding a Tenant that would complete. In one case, being advised the day before a Tenancy was due to start that they were not preceding. The result in another case was the property was taken of the market in support of a prospective Tenant, for four weeks and yet they still advised the Agent concerned, that another more suitable property had become available.

There are those who would say so what to these details, but Landlords, who Shelter clearly agree are desperately needed in the housing market, are having to now respond to the whim of Tenants. Is that what Shelter wish to propose through the whole Country?

I could go on, but will just restrict to asking again, why are reasonable fees not an acceptable solution? Shelter state because they could be challenged through the Courts! Well forgive me, but I thought the point of the Courts was for all practises to be able to be challenged? Rather, legislative restrictions to fees would be created through the Courts. Is that not a fairer way rather than a total ban?

By Steve Roulstone

The introduction:

Two weeks ago, Shelter launched a campaign to remove Tenant Fees from the current standard practise of renting a property through Letting Agents. The outcry from the Industry could be heard loud and clear as calls to action were sounded. What is needed is a realistic look at the reasons why and the current practises of the Industry and through several Blogs I will look to state the case for those concerned as it currently exists, along with my own take on the subject.

The Blogs will mainly consider Shelter’s stance as the impact of and reasons why the campaign was launched at all is considered from all sides. This is a debate that will run and run, but one that could have been tackled already if the Government of the day had listened to the clamour for licensing that is supported by those who link themselves, through professional bodies and through our membership of approved recourse agencies, to the word ‘professional’ at all levels.

I will also comment on the impact of the process in Scotland where such legislation was introduced as far back as 1984, but as Shelter recognises, only truly took effect with legislation allowing recourse last year.

Shelter make many claims in their report, but one thing stands out quite clearly in how they describe both the industry and what they believe should happen and that is that they do not fully understand the industry and how it should operate. I say this because they clearly recommend that legislation could be introduced alongside the existing Estate agency legislation that oversees that particular section of the industry, but fail to recognise, that for many years, the majority of those who charge high fees, are in fact Estate Agents who Let property as well.

Even the suggestion, that an industry that deals with such complicated legislation as Letting Agents do, should be dealt with by linking us to Estate Agency legislation makes no sense. Rather, what this industry requires is legislation to ensure that not only are Letting Agents registered, but that they are also qualified. That is legislation that needs to stand alone and indeed, only then, could Estate Agents who, let’s face it, have turned to our industry for survival after the collapse of the sales market, be seen to understand and be aware of just how complex this market is.

Of course the problem with such statements is that there are plenty of Estate Agents who do know and have always known how to run a Lettings section. Just as there are plenty of Letting agents who have spent years taking advantage of Tenants. I admire and object to both accordingly, but to suggest that some ‘bolt on legislation’ could solve the overall issue, is short sighted, in my opinion.

Indeed there is plenty wrong on all sides and what this campaign does do is give the opportunity for the overall scenario to be discussed. I for one welcome that opportunity and by writing what I hope will be an informative article, hope to clarify some of the statements that are currently flying about.

I do however fully understand and accept that in many cases Tenants are overcharged for the process. The most worrying fact that has come out of the report is that many Landlords are not even aware that charges are levied upon Tenants and surely therefore, would not be aware, that many Tenants are starting Tenancies in their property, feeling they have been taken advantage of and somewhat cheated from day one! As a Landlord, that is a situation I would wish to avoid, at all costs!