So lettings fees, what are they all about?

Like it or loath it, chances are if you are looking to rent a property through a lettings agent you’re going to face what can only be described as a ‘letting fee’. This rather non-descript term is used to explain the fee that is charged by agents to potential tenants for administrative and vetting purposes before you even move into your new rental property.

The justification of these charges is to subsidise (if not completely cover) the agent’s administrative costs that are borne by preparing all the paperwork and documentation that is required to secure a let. Typically, these fees are pretty universal and likely to set you back somewhere between £200 and £300.

But what are the fees for?

Generally, the fee would be used to cover the cost of:

1.    The administrative of preparing tenancy documentation

2.    Credit reference checks

3.    References from banks, employers and/ or previous landlords

A good agent should always make a prospective tenant very clear of these costs before any agreement is signed. Clearly this is not always the case, so it is always sensible for a tenant to ask for the following:

1.      A full list of fees (if the agent does indeed charge)

2.      Details of the services that this includes

3.      If the agent is affiliated to any Trade Bodies, and if so, which?

Since November 2013, all Lettings Agents in England must disclose upfront any fees they charge on top of the rent and deposit in their adverts and lettings. (Please note, property portals like Zoopla and Rightmove are exempt from these requirements)

Further costs

But that’s not all. As a tenant, you will also more than likely be expected, quite legitimately to pay for:

1.    A holding deposit to secure a property

2.    An Inventory Report

3.    A Renewal fee for renewing the tenancy agreement when the fixed term ends.

A holding deposit should only be made when a prospective tenant has decided 100% to take a property, and wishes to secure it whilst the administration process is taking place. The holding deposit guarantees that the tenant will take the tenancy and should always be supported with written confirmation from the agent. The confirmation should include details of the amount that is paid, as well as documenting how the monies will be returned once the tenancy begins (if indeed the funds are due to be returned- sometimes they can be put towards the deposit). Please be aware, that if you choose not to move into the property, this fee may not be refunded.

The Inventory Report is a detailed record of the condition of the property prior to the tenant moving in, and is used as a basis to assess any damages at the end of the tenancy. With the introduction of the Tenancy Deposit Scheme, these reports have become more and more prevalent and it is common practise to charge the tenant for either the Inventory Report (carried out at the beginning of a tenancy) or the Check Out Report (at the end of the tenancy).

Finally, one should also be aware that the tenant might also be charged a renewal fee once the fixed term of their tenancy agreement ends. This is always worth checking prior to signing anything.

What A Tenant CANNOT be charged

It is a criminal offence for any agent to charge for the following:

1.    To register with the agent

2.    To show a list of available properties

Golden Rules

1.    Read everything.

2.    Don’t be afraid to ask questions- remember the agent needs you as much as you need them!

3.    Negotiate the lettings fees. If a property has been on the market for a while for example, there is no harm in asking the agent to cut their fees.

Complaints

Please visit the following sites for further information regarding making a complaint against an agent:

·      Advertising Standards Authority (http://www.asa.org.uk).

Complaints regarding the transparency of fees.

·      Trading Standards. Find your local office (https://www.gov.uk/find-local-trading-standards-office).

Complaints regarding any potential criminal activity by the agent.

·      Association of Residential Letting Agents (http://www.arla.co.uk/).

Complaints regarding any wrongdoing by the agent.

Property Pop: Comment: Armageddon

Property Pop: Comment: Armageddon: Interest rates likely to rise- aah!!  Call your parents and tell them you love them or kiss that photo of your lost love before tucking it...

Irony

The Government light a rocket under the property market to get house prices moving then ask the Bank of England to try and blow out the fuse just as the rocket is about to go into orbit!

Statistics for Tenancy Deposits

Statistics for Tenancy Deposits

Here’s a snapshot of statistics in relation to tenancy deposits:

·    There are £2.964 billion worth of deposits protected.

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·    Where a dispute has been lodged at the end of a tenancy*:

100% Deposit awarded to tenant                      29%

100% Deposit awarded to landlord                   15%

Deposit split between tenant and landlord        56%

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·    It is estimated that the compliance rate of deposits protected is 80.16%^

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·    A table of disputes as a % of number of deposits protected as at March 2013:

March 2008               0.05%

March 2009               0.52%

March 2010               1.08%

March 2011               0.82%

March 2012               0.85%

March 2013               0.92%

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Reasons given for the non-return of deposits:

	2007	2008	2009	2010	2011	2012
Cleaning	50%	52%	49%	47%	49%	52%
Damage	36%	45%	43%	39%	43%	45%
Decoration	18%	25%	26%	24%	25%	28%
Rent Arrears	22%	18%	16%	15%	16%	18%
Gardening	14%	13%	13%	12%	11%	12%
Other	47%	48%	50%	55%	55%	56%

* Data covers period April 2007 to September 2013

^ Government estimates- English Housing Survey 2011-12 DCLG (2013)

Angry Estate Agent

Number of Private Renters

I suppose it’s not a huge surprise, but it appears that since 2001, the number of those in privately rented accommodation has almost doubled.

According to figures from the Department of Communities and Local Government, those in privately rented accommodation had risen from 2.15 million people in 2001, to just over 4 million in the year 2011-12.

Interestingly, over the same period the number of those in social housing has actually remained rather static. In 2001, there were 4.23 million people, whilst in 2011-12 there were 4.03 million.

So what does this tell us?

Well, first and foremost, statistics are ridiculous. For example, working from these figures and taking the year 2006 as the baseline instead, I could equally have stated that the number of those renting social housing has risen from 3.91 million to 4.05 million in 2010-11.

And if I was Grand Duke von Twist II, an unelected figure of Parliament, being interviewed in a dimly lit television studio by a fierce bulldog of a presenter, and being pushed on my party’s manifesto pledge of increasing social housing- well, I would lean back into my chair, stroke my curly moustache rather smugly for a second or two, before declaring that these figures prove that there had indeed been an increase in the supply of social housing of almost 4% during our time in government.

I would then check my timepiece, pop it back into my waistcoat and tell the interviewer that I had to go on the grounds that as much as I would love to spend further time engaging the electorate, I actually had a previous engagement at my private members men club in Knightsbridge where there was a pressing game of backgammon in desperate need of attention.

I digress; though as the Grand Duke, I believe that I would be great at digressing. I’d like to think that I could steer a conversation seamlessly around the meandering maelstrom of how rubber is the perfect substitute for carrier pigeons to the relative merits of the humble shuttlecock.

Okay, I’m back.

It’s no real surprise that the number of those renting has increased over the last 10 years, and indeed, the trend will only continue upwards. Simple really; whilst the rate of increase in house prices outstrips that of salaries then it’s simple maths really.

My advice is- sell a kidney and buy a property. Failing that, steal a kidney and buy a property. Failing that, well, I suppose you’ll just have to come to terms with the fact that in all likelihood many of us will never realise the dream of home ownership. Ho hum…

In case you’re wondering, Grand Duke von Twist II says that if you want to own a house, maybe you think about working harder and having fewer children.

Comment: Armageddon

Interest rates likely to rise- aah!! 

Call your parents and tell them you love them or kiss that photo of your lost love before tucking it into your breast pocket or look into your pet's eyes and let them feel your devotion one final time (delete as appropriate). Then pack some canned meats and run to the hills. Find a small bushel or some fallen lumber, and hide like you've never hidden before. 

Comment: Tenant deposits

Your Deposit

So, it used to be that as a tenant, once the deposit was paid on your lovely new rental abode you could pretty much say goodbye to it and simply write it off as another one of life’s hidden expenses.

However, since the introduction of the Tenancy Deposit Scheme or the TDS in 2007 (I feel like this should be accompanied by some uplifting music, maybe Wagner or Neil Diamond) such worries have been banished into the ether.

The scheme was set up to try and make the lettings process a lot more transparent and fair. In the old days, the dastardly landlord (often twiddling their villainous moustache) would snatch your money into their top pocket like one may expect a baddy to in an old black and white film.

Authorised by the government (imagine the government dressed all in white; lots of linen and open-toed sandals), these Tenancy Deposit Schemes are designed to secure a tenant’s deposit, and only allowing deductions to be made at the end of a tenancy based on reason and impartiality.

But how do they work I hear you cry in a desperate chorus of wonton despair. Okay, okay, I’ll look at them in more detail on the information pages.

Random: Thoughts on builders

From my experience, builders are like prostitutes. They love you for the first 45 minutes but for the last 15 minutes they are already thinking about their next client.

Comment- How to slow down rising house prices

House prices in London are out of control. So much so that even the IMF have voiced their concerns, stating that this together with low productivity may have a substantial impact on the UK economy.

So what's the answer?

Maybe the more pertinent question is, so what's the cause?

The answer I believe is twofold. Firstly, many claim that foreign investors are hiking up prices by there desire to share in the boom of property ownership in London. Central London appears to be the location of choice for any self respecting overseas investor and this causes a ripple effect pushing up prices from the centre outwards.

The second reason may stem from the Government's 'Right to Buy Scheme', which allows first time buyers the opportunity to buy property with a much lower deposit than was previously required.

Okay, so what is the solution?

In regard to the foreign investors, I believe that there is a simple solution. Simply tax those purchasers whose residency lies outside the Britain. This would deter these investors, and any money raised by the scheme could be put straight into the building of affordable housing on brownfield sites in London.

The Right to Buy Scheme, although admirable in its intentions has failed. I would scrap it within London. 

In truth, something needs to be done to prevent the London housing market from overboiling again. And ultimately, whether you like it or loathe it, London must be treated as an entity in its own right- the sooner those in a position of power realise this the better!

Importance of a network

Okay, the older I get the more I realise that talent and drive is often not enough to succeed. This affirmation stems from the fact that recently our small company has lost a rather large contract due to a spat with an employee (freelance)- oh yeah, and this employee just happens to be married to a very senior director of the other company!

It's crazy, but only goes to prove something I have always been aware of, but never been certain of, basically that contacts are everything. I still rather optimistically hold on to the belief that if you are exceptional you still have a chance of success, however someone who is just 'good' will always be overlooked in favour of someone who is merely 'average' but has lots of contacts in their chosen field of work.

Sad really, and somewhat perpetuates the status quo ensuring that those with power, remain in power. I say this from a rather privileged background myself, so I am not looking for sympathy. Far from it, I am fine, but it just saddens me that those less fortunate than myself are being barred by this 'old boys network' that exists in every stratum of society.

It sucks!

A Will to Succeed!

It's been a while.

A baby, a new flat, a few more grey hairs to my temple and last but not least, a renewed vigour to do something.

Not sure exactly what yet, but needless to say that whatever it may be, it will be spectacular!