We know that the Tenant Fee Ban has cost letting agents dearly, with an estimated loss of £314.5 million paid to letting agents by tenants*. But desperate times do not always call for desperate measures – especially in an industry that’s as close to official regulation as you can get, and one that doesn’t always have the best ethical reputation.
It’s now dawning on many letting agents that there’s still the same amount of work to do – perhaps even more so with an ever-increasing amount of compliance – for less money. Gaps in income can be alarming and we can’t say we’re surprised to hear that some agents are resorting to questionable approaches.
It was only weeks after the ban that ARPM learnt of one agent in London telling tenants that the Tenant Fee Ban only applied to renters outside of the capital. It’s a cheap shot that plays on the blissful ignorance of some tenants but given ARPM’s report, ‘Why let-only is a losing game for London letting agents’, which established that the ban on tenant fees will result in £400 less income, on average, per new let for London agents, this agent may not be alone.
We are also reading about other underhand tactics employed by letting agents to plug the financial gap. Among them is increasing the rent charged to tenants yet failing to tell the landlord, and charging exorbitant default fees (for lost keys or defaulting on a tenancy term, for instance) – recoverable costs that are still permissible.
There are also rumblings around deposit-free schemes, which can be administered by the agent. Monthly fees, joining costs, sums of money requested for transferring back to a traditional cash deposit scheme – all nonrefundable – are grey areas and without further clarification, look like they fall outside of the Tenant Fee Ban if the tenant has voluntarily entered into the agreement.
If the thought of anything as desperate as the above feels like common sense to you, it reflects bad planning in the run up to and the direct aftermath of the fee ban. Drastic measures are a false economy on so many levels – with the potential for irreversible brand damage, a loss of immediate business and a contribution to the notion that lettings is an immoral business.
Many agents have already discovered smarter ways to run their agency, by reducing overheads, renegotiating deals and discovering the power of outsourcing. ARPM would be delighted to tell you more, so please get in touch.
*Figures from landlordsguild.com using media fees
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