CEO defends letting agent fees
Published by Max Salsbury for 24dash.com in Housing
rentImage: rent via Shutterstock
The chief executive of a rental firm has leapt to the defence of letting agent fees.
Peter Girling, CEO of Girlings Retirement Rentals, has said that the fees are an "essential part of delivering a professional lettings service".
Responding to Labour leader Ed Miliband's pledge to shake-up the private rented sector, Mr Girling has argued that the fees, which in some parts of the country come to £600, cover the cost of referencing tenants, security deposits, carrying out inventories and administering tenancy agreements.
However, Alex Hilton, director of tenants campaign group Generation Rent, slammed Mr Girling's suggestion.
He said: "Letting agents certainly do provide a service – for landlords. They don’t work for tenants, so they shouldn’t expect to be paid by tenants."
According to Mr Girling, there is a "danger" that if landlords' costs increase they may leave the PRS entirely, meaning there will be less rental properties available.
Responding, Alex Hilton said: "For a tenant, £500 is a huge amount of money to spend when they’re moving house, but to a landlord bringing in many times that over a year it would be a drop in the ocean – especially as Paragon estimates that the annual return on buy-to-let is 16.3%.
"Moreover, the fees are only that high because that is what letting agents can get away with – printing out a tenancy agreement does not cost £100. In a cut-throat market for houses, tenants can’t shop around based on agent fees. Landlords can shop around, so if they pay the fees, you would expect them to fall closer to the true cost."
According to Mr Girling "landlords have to pay the agents fees, as well as any associated fees, to a freeholder, if applicable, as well as the cost of ensuring that the property is kept in a safe and in a rentable condition.
"The agreement brokered by the agent between the landlord and tenant is a contract in which both parties enter willingly. It is not the case of the ‘giant greedy rich landlord’ versus the poor vulnerable tenant that is so often portrayed."
However, Alex Hilton retorted that “the housing shortage and massive imbalance between supply and demand means that the landlord is in a much more powerful position and tenants cannot negotiate too much – they need somewhere to live”.
Generation Rent is currently urging MPs to support a ban on letting agent fees in when the House of Commons votes on the Consumer Rights Bill next week.