They’ll be some relief for hard pressed private renters in coming months as excessive estate agent fees are banned.
Charges of hundreds of pounds for signing a ten page off-the-shelf document and hundreds more for credit checks costing a fiver will be no more.
It could be introduced as soon as February if it becomes law in coming weeks so if moving into a new place in the near future haggle hard with agents.
The act has almost finished its transition through Parliament, passing nine of 10 stages, and now simply has to pass one more in scheduled in two weeks before reaching Royal Assent stage. It has strong cross-party support and becoming law should be a formality even accounting for Brexit.
Estate agents will take quite a hit as some have become used to charging high fees to tenants over the years. Share prices of big payers have plummeted in recent months. Foxtons and Countrywide are notorious for high fees and have seen some of the biggest falls.
Share price falls
I’ve much experience of this issue. I was quoted huge fees by a Countrywide subsidiary recently for the most basic tasks. They are now clinging on for life with the share price in the toilet having dropped 97% over the past year. Maybe don’t treat tenants so badly and business wouldn’t be so bad?
I think a modest fee cap would have been ok but too many agents were quite simply taking the pee. Now they’ll need to compete more on service instead of relying on high fees.
Some online players have already ditched fees. With landlords themselves paying agents there’s no need to double dip. The old high street companies need to adapt and quickly.
The usual scare stories of rents being whacked up is again bandied about with little actual evidence. It didn’t happen in other nations.
Even if rents did increase ( and it’s a big if) then costs are at least staggered over 12 months and not in one up front lump sum. Currently many tenants are asked to pay fees around £500 (at least) in addition to a six week deposit AND the first months rent. For a basic two bed house costing upwards of £1300 a month in rent that can now be £3000 to pay up front BEFORE any fees on top.
And in more good news for tenants, that initial deposit of six weeks will be capped at five due to amendments made in the Lords just before Christmas.
Disclosure: I’m a private renter. I calculate I’ll save at least £500 from this new law, and possibly closer to £700. It’s a godsend and a long time in coming.