I see Grant Shapps is having another go at housing associations about transparency. He might be better off shining a light on the murky world of letting agents.
There’s another timely reminder of the state of a sector that risks giving estate agents a good reputation out this morning. A report from the Resolution Foundation finds that tenants are being ripped off with significant upfront costs, variable fees and a lack of transparency around charges.
In a mystery shopping exercise conducted in three cities, researchers found that all agents were charging tenants administrative fees ranging from £95 to £375. On top of that half were charging for putting an extra person on the tenancy agreement, a third were charging tenancy renewal fees, half charged a check-out fee and some charged holding fees, check-in fees and credit and reference check fees.
Total upfront costs including a deposit, fees and rent in advance for a one-bed flat ranged from £1,028 in Manchester to £2,166 in London.
Yet only two of the letting agents displayed the costs of renting on their websites and many renters only discovered charges after they had decided to rent a property.
The research covers a relatively small sample of agents but this is far from the first time that abuses have been highlighted. In 2009, Citizens Advice found that 94 per cent of agents were charging fees on top of what they already charge landlords. Some were charging a modest £25 while others were charging almost £700.
At the time, the Labour government had just published a green paper calling for statutory regulation of the industry and the reputable firms in the industry, represented by the Association of Residential Letting Agents (ARLA), had just launched their own bid to clean up the sector.
However, the regulation plans proposed as part of the Rugg review were one of the first things scrapped by Grant Shapps as ‘red tape’ when he became housing minister last year. ‘With the vast majority of England’s three million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords,’ he said.
The decision was criticised not just by Citizens Advice but also by ARLA. ‘A great fear is that a lot of agents who were looking at tidying up their practices will now feel they can run amok and add to the poor reputation we have at the moment,’ said its operations manager at the time. ARLA has has pressed ahead with a licensing scheme for its own members
The Resolution Federation argues that letting agents should be regulated to the same level as estate agents so that unscrupulous firms can be banned. It says all agents should be signed up to an ombudsman service to give effective redress to tenants and they should have to display all charges on their website and in adverts.
On the last official statistics the private rented sector had grown to 3.3m or 16 per cent of households in 2009/10. By now it is almost certainly bigger than the social rented sector and many people estimate it could grow to almost a quarter of households by the end of the decade.
Yet concern has continued to grow too about the way that unscrupulous letting agents are ripping off not just tenants but landlords too.
How much longer before the government shines a light where it is really needed?
Have your say
You must sign in to make a comment
Readers' comments (7)
F451 | 08/12/2011 11:27 am
It would be delightful if Shapps was discovered to be following the 'not biting the hand that feeds you' principle in his treatment of Private Landlords - but it simply appears that he is pursuing his predecessors preference of the private sector.
The approach makes as much sense as Lewis Hamilton throwing in his car and taking on the opposition with a horse and cart - and then paying several £Billion to feed the horse, whilst demanding the local authority cleans up after it.
I have met a number of Estate Agents who were members of the Conservative Party, and some of those elected Members - but I'm sure there are some who are not, so perhaps Shapps is being equal in his approach.
Unsuitable or offensive? Report this comment
Melvin Bone | 08/12/2011 12:02 pm
Congratulations F451 that, without doubt, is the worst analogy I've ever read.
Unsuitable or offensive? Report this comment
PGriffiths | 08/12/2011 12:48 pm
The murky world of some Housing Association and the way its treats its Tenant under ASB issues which are not tenant against tenant but the fact put commercial units under the property's where people live and them Commercial Units like food stores constant noise all day and after the night due to being open to 22:00 p.m. and leaving by 22:30 p.m. to 22:45 p.m. with cages being dragged across the pathways and delivers non stop and staying over time. If you like to see the amount of emails send to Parking Services at our Council and our Landlord doing nothing to enforce our rights to peace and quite enjoyment. Our Landlord a Social Landlord has the title documents and head lease and write a month report on the store and again nothing being put down in the report. Yes we have made a complaint and we have told are Councillors.
Unsuitable or offensive? Report this comment
F451 | 08/12/2011 1:05 pm
Thanks Melvin - I was thinking of you when I found a way to conclude it.
Unsuitable or offensive? Report this comment
Jono | 08/12/2011 1:08 pm
What ever happened to that once important thing - Reputation?
In this age of communication, there is very little reason why we should not know (or be able to find out) which agents are not good to use, and which ones are.
In terms of transparency though - I would like to learn whether Registered Providers, whose net surpluses have more than doubled and top £1bn, will use that capacity to build. They say its for Affordable - but seeing as those plans are faltering, lets hear it from the visionaries at the top of these RPs - where are the new homes going to be, and when are you going to use all your cash to build them.
Or, and I might get in to trouble for suggesting this, is there any political leverage by not building and putting pressure on the Government? I wonder.
Unsuitable or offensive? Report this comment
Melvin Bone | 08/12/2011 2:24 pm
Not a problem F451. :/
Who are these people butting in on our conversation...
They are both speaking in riddles.
Unsuitable or offensive? Report this comment
F451 | 08/12/2011 2:34 pm
Actually, Jono is making much sense with his post.
Elsewhere I'm calling for those RSL Leaders who cosied up to Shapps and demanded the right to freedom to charge even higher rents and reduce tenant rights to step forward and explain just how much extra housing and value for money they are going to provide.
It was all well and good hearing the slitherings from these Chief Executives before they realised their favoured Ministers would wreck the economy and stall development, but what are these highly paid non-public officials saying now - where are the results now Shapps has given them everything they lobbied for?
Unsuitable or offensive? Report this comment