Letting agents slammed for 'ripping off' customers

Letting agents are routinely ripping off landlords and tenants, and making up administrative charges as they go along.

The accusation comes from Citizens Advice whose spokesperson Moira Haynes told the Daily Mail that charges by agents often bear little or no relation to the cost of the work involved.

She said: “Many letting agents routinely rip off tenants by imposing unjustified and excessive charges and providing a poor or non-existent service.

“In some cases letting agents appear to make them up as they go along.

“These charges can be a huge barrier for people on low and even average incomes who have no housing options other than the private rented sector. They should be banned.”

According to the article, Citizens Advice is particularly concerned about the lack of regulation in the lettings sector, with anyone able set themselves up as a letting agent without any need for professional expertise or experience.

Service charges soar as agents cut commission to the bone

This week, letting agents were slammed by Citizens Advice for ripping off the public and inventing charges as they went along.

Citizens Advice said that the charges, which are levied on top of the agent’s normal commission, are unfair and should be scrapped.

But according to London agent Nigel Bosworth, some agents are cutting their commission to the bone, and making no margin on it at all, in a bid to secure the landlord.

To compensate for this, they have to make up for it elsewhere. Some do so by charging high renewal fees, or for services such as drafting tenancy agreements.

Is rental market working? 'No' say most

Is the rental market working? An overwhelming majority – 94.8% when we last looked – say no.

The Guardian has been running a poll – Is the Rental Market Working? – which was open for voting until the end of yesterday.

The results look interesting, although the Guardian failed to ask some key questions – nothing, for example, on whether people thought landlords and/or agents should be regulated, and nothing on whether agents should be legally compelled to keep client money in separate, untouchable accounts.

But the poll did show that most people (42.5%) think that increasing housing supply is the answer; others (21%) want to see tenants’ rights improved in line with the EU – whatever that means; a reasonably strong body of opinion (20.6%) thinks the answer is to raise taxes on second homes; but long-term tenancies aren’t seen as an option, with only 6.7% of voters wanting them to be encouraged and only 0.8% wanting mortgages to allow long-term tenancies.

Perhaps most concerning is that only 6.7% believe that all letting agents should be forced to join a redress scheme.

Redress, of course, is not the same as regulation, and a truly aggrieved tenant or landlord may not win as much as they would get in court – or have the satisfaction of seeing the agent named and shamed. 

However, as you can imagine, Property Ombudsman Christopher Hamer certainly had something to say when asked by The Guardian.

He said a decisive no in answer to the question as to whether the letting market is working.

He said: “Whilst the market is currently buoyant, there is little protection for tenants and landlords from rogue letting agents.

New report calls on government to regulate all letting agents

Tenants are being ripped off by cowboy agents in the ‘exploding’ rental market, says a major new report out today.

It is urgently calling on the Government to regulate letting agents to the same standards as estate agents.

The Resolution Foundation, an independent think tank which focuses on lower income groups, says tenants are having to pay significant upfront costs, whilst agents’ fees are variable and there is a lack of transparency around charges.

The organisation carried out a mystery shopping exercise of 25 unnamed letting agents in three cities – London, Cheltenham and Manchester. It found the range and type of fees charged varied enormously.

For example, administrative fees ranged from £95 to £375. Total upfront costs (including deposit, admin fees and rent in advance) for a one-bed property in London were £2,166, around double those charged in Manchester (£1,028) and Gloucester (£1,094).

Just 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.

Average deposits for a one-bed property ranged from £487 in Manchester to £1,099 in London.

Many tenants reported difficulties when moving within the private rented sector as they had to hand over a new deposit before they had got their old one back.

Resolution says its findings are particularly relevant given the growing number of households forced into renting for the long term. In 1988 only 14% of low to middle income households aged under 35 were living in rented accommodation, but by 2008 it had tripled to 41%.

The report points out that unlike estate agents, letting agents are unregulated and under no compulsion to hold membership of an ombudsman service.

The Resolution Foundation is calling for:

•  Letting agents to be regulated to the same level as estate agents, so that unscrupulous agents can be banned;

•  All agents to be signed up to an ombudsman service giving redress to tenants;

•  The ombudsmen’s codes of practice to stipulate that agents must display all charges to tenants and landlords on their website and in adverts in a way that is easily comparable across agents;

•  The Government to consider ways to make it easier for tenants to transfer deposits between landlords when they re-tender for the tenancy deposit protection schemes in 2012.

Vidhya Alakeson, Resolution’s director of research, said: “The lack of regulation in the exploding private rented market is of growing concern.

“We need more transparency so tenants at least know what fees they’re facing and to help create a more competitive market. Given that an increasing number of families have no option other than to rent long term, we need to question why letting agents are not regulated to the same degree as estate agents.”

Christopher Hamer, The Property Ombudsman, said: “This report emphasises the growing importance of the lettings sector for people seeking a home to live in.

“The Government does not see regulation of the sector as a priority and I, therefore, welcome the recommendation of this report that all letting agents should be required to be registered with an ombudsman scheme so that, at least, landlords or tenants can gain redress where they have been disadvantaged by an agent.

“Providing clarity and transparency of fees is also very important. As more and more people become tenants or landlords, these measures would assist them in fully understanding the commitments they are taking on and enable them to challenge the agent if anything is unclear.”

Property firm fined after harassing tenants

A firm of property agents that conducted a campaign of harassment against some tenants has been fined.

Wimbledon-based Spudnic Ltd was ordered to pay £20,561 in fines and prosecution costs after the Wandsworth Council took it to court when officials uncovered a prolonged campaign of dirty tricks against its tenants.

Kingston Crown Court heard that Spudnic turned off the water and electricity, damaged the toilet, sealed up the letterboxes and sent in builders without notice, who then left the property full of rubble and rubbish.

One of the tenants, a librarian, returned home from work to find the front door locks changed and belongings packed up and removed from the house.

Spudnic also sent quasi-legal documents to the tenants telling them they had to leave, even though the company did not have an eviction order.

One Spanish-born tenant received a letter from Spudnic telling him they needed to see his passport and wage slips and that if he failed to provide them, they would report him to the Home Office and also to the Inland Revenue fraud department.

Tenants were also sent threatening letters warning them not to co-operate with council officials and to refuse them entry.

On one occasion, tenants returned to find a notice on the front door telling them the electricity supply was dangerous and that they had to move out. But while they were standing on the doorstep discussing what to do next, two new tenants arrived who had been told by Spudnic they could move in.

The court heard that the company had been charging the tenants upwards of £20,000 a year in rent for the five-bedroom property in Roehampton.

Commenting on the case, the council’s housing spokesman, Cllr Paul Ellis, said: “This was a truly shocking and relentless campaign of harassment and intimidation carried out against innocent tenants.

“The tenants were paying their rent on time and were not causing any problems to their neighbours. Yet this company seemed determined to drive them out. Its behaviour was totally unacceptable.

“Landlords and their agents should not be under any illusion. We will simply not tolerate them bullying their tenants in this way.

“If you are a landlord and you would like a tenant to leave, then you simply must go through the proper legal channels.

“Any tenant who is threatened with an illegal eviction or harassment should contact the council’s housing department straight away.”