Tenant Fees Bill

Written evidence submitted by Louise Griffiths, Managing Director, Martin&Co. (TFB18)

Dear Sirs

 

I write to you as I believe I have ‘relevant expertise, experience and indeed a very special interest in providing a ‘final say’ on the Tenant’s fees Bill as it moves forward through Parliament.

 

I have been involved in the letting industry for some 20 years and my current role is that of Managing Director of Martin and Co, an agency established in 1986 which has 186 high street offices serving England, Wales and Scotland. It is one of the major residential lettings agent in the UK with over 37,000 properties under management. Prior to my current role I have held senior posts with Savills, Hamptons International and The Leaders Romans Group. Previously I was an active ARLA regional representative and held a seat for two years on the ARLA Board.

 

The Government intention is to introduce an outright ban on tenant fees in England and Wales, rather than a cap on landlords and their lettings agents charging any type of pre-tenancy fee. This legislation is designed to be a more fair approach for tenants however I feel strongly that introducing this total ban will, in all reality, bring significant disadvantages to the tenant and I hope to be able to offer some explanations as to why I believe that this will be the case.

 

There has been no less than 145 new pieces of legislation impacting the lettings industry in the last five year alone and it is our job as ‘Lettings Agents’ to act as the legal specialists in the governance of this legislation to ensure that both our Landlords and our Tenants comply with all necessary requirements.

 

A complete ban on charging any sort of ‘fee’ for providing this imperative ‘service’ to our clients will have far reaching and undoubtedly negative impact on our customers. We are providing a ‘service’ to our customers. A service that any reputable agent will take very seriously indeed.  We act as, for all intents and purposes, the Legal specialists when arranging tenancies.  It’s been said before but it is significant, no one would expect a solicitor to carry out conveyancing work on a purchase of a property for free so why are we being asked to provide this intricate part of the work that we do for our clients for free?

 

An outright ban on Tenant fees will result in this non-exhaustive list of far reaching problems for tenants and Landlords.

 

1. Agents will no longer be able to afford to employ the appropriate staff to prepare compliant and fit for purpose documentation or indeed provide the necessary service attached to the remainder of the complex transaction, required in order for both Landlords and Tenants to ensure that they are fully compliant with the law.

2. Reduced revenue will result in staff redundancies and even the prospect of office closures which will have a significantly negative effect of the level of service provided over all.

3. Part of the income that is generated from the Tenants fee goes towards providing costly training and coaching of our staff to ensure that they are familiar and knowledgeable about the law and that they can confidently talk to customers about their legal obligations.

4. Some agencies will be forced to use Tenancy Agreements that are not fit for purpose and will become quickly out of date which will disadvantage everyone.

5. Agents will be forced to mitigate the tenant fee ban so that they are able to recoup some of the lost income so that they can continue to provide a good ‘service’ to customers, using a host of other income streams which will ultimately cost the tenant and the landlord more.  Examples of where agents will attempt to recuperate their lost fees are as follows:

a) Increases in rents (Negative for the Tenant)

b) Increase in fees to Landlords (Negative for the Tenant because the Landlord will demand higher rent to cover the costs (Negative for tenant)

c) Increase in fees to Landlords will force some Landlords out of the PRS resulting in less choice of rental property on the market meaning demand will be higher so rents will increase (Negative for the Tenant)

d) Schemes such a Zero Deposit schemes will be introduced by agents which will ultimately cost tenants more money as for those that would normally be due their full deposit back at the end of the tenancy. (Negative for the tenant)

e) Agents introducing schemes whereby the tenant pays an additional percentage of their rent each month in lieu of deposits which is ‘dead money’ for the tenant, as this additional percentage paid will not act as a deferred deposit rather further ‘charge’ to the tenant. (Negative for the Tenant)

 

The majority of lettings agents do charge fair amounts however it is the minority of agents who have taken advantage of market conditions and have raised their ‘tenant’s fee’s to dis-proportionate levels.  It is this minority of agents who bring our industry into disrepute and have led to the recent Government intervention.

 

It is not the best way forward for anyone and there should be some significant consideration given to the ‘capping’ of fees at a level that means that we can continue to provide the best possible service to both our Tenants and Landlords.

 

I would very much welcome the opportunity to meet on June 5th 2018 to discuss further and I look forward to hearing from you

 

Best

 

Louise Griffiths

 

May 2018

 

Prepared 4th June 2018