As the pound plummets and uncertainty sets in it’s time to tighten our belts and look for ways of saving a few bob. Again I’m looking at the property market and especially looking at renting as with many things at the moment this is a hot topic about what will happen in the market.
Given I am a renter and have been ever since I could leave home. It pains me to say that the process in the UK is antiquated, takes far too long and is incredibly expensive. So what can we do about it. The first thing we can do is abolish rental fees. It’s high time this administrative fee was taken out of the equation in my opinion.
Rental fees the end is here
This includes knowledge picked up along the way from articles, various friends, colleagues and family members.
A History of rental fees and how they are used today
My research leads me to believe that after the restrictions were taken off renting property post war time these fees have become more and more common place. So around 1951-56 it looks like the ban on certain “premiums” were removed. Then the real changes come in the 1980’s as the legislation had to change as more people were able to buy a home, which in turn increased the number of private landlords as demand increased for private rental property driving prices up as well in a buoyant economy at the time. This leads to agents adding on their fees to cover the cost and make some actual money from rental properties. Shelter says these fees are now used to cover a range of things from taking the rental property off the market, drawing up contract, renewal of the contract, checkout, and obtaining references. I would also add to this list Inventory checks of the property as well.
What’s a typical rental fee?
Who knows is my answer. As it appears anything can be charged for these fees as they can contain labour costs for administration as well costs for mailing letters and printing contracts. Really, what’s the world coming to when you get charged for the agent giving you a printed document. I’ve heard people pay as little as £80 (still too much) up to £600 (incredible as I’ve never paid more than £150, which I thought was a lot then). This is completely unregulated and that’s why the agents can charge whatever they want. There should be strict rules about what the agents can charge an administration fee for and how much if any they can charge.
What do the experts think about them?
There are a few commentators such as myself advocating the removal of these fees. As in most cases they are not required. It feels like another stealth tax to increase the cost of something that isn’t too cheap in the first place. But the agents themselves of course will see this as an important part of their charges to ensure they have balance between them, the tenant and the landlord. The argument seems to be that if these fees are abolished as with anything else the cost will be passed to the consumer in another way. In this case through increased rent. There is a precedent for this in Scotland where they have abolished these fees in 2012. The agents there have confirmed that rental prices have increased to cover these costs. So it looks like this would also happen in the rest of the UK as well. But with ever increasing property prices anyway and less new property being built and now an uncertain political landscape will it make a difference. I expect people to start living underground like they are in Beijing soon!
What are the alternatives
As mentioned above Scotland have abolished fees. But in Edinburgh rental prices continue to rise regardless of fees. But at least just paying the rent we would know what we are paying for and that it was part of the monthly outgoings not some upfront fee that feels like your signing a contract in blood and passing it to the devil on your way to a fiery grave. However, it could be worse. You could be trying to rent in New York. Incredibly it is more expensive than the UK even if salaries are comparable to London. But it’s a lot less regulated than the UK is. So you cannot always be sure even if the agent actually does represent the landlord. Also you need a guarantor that is from the states as well as paying whatever fees they can make up to put in your application for the property (They’ll let you know if it’s yours or not and refund your payment minus an admin fee of course). On the flip side of the coin there is where I am now in Thailand, prices are cheap, there is no admin fee. I paid half a month’s rent plus 2 months’ rent in advance (deposit) and then you can move into a nice clean modern place as quickly as you need to. Quick easy and as painless as possible. Also when you need to extend your tenancy there is no extra fee. I suppose those are the two extremes. But the system in Germany is also a very good one in my opinion. Of course there is a different outlook in Germany to renting than the UK but I like the fact that there is a committee you can go to as a tenant to ensure the amount of rent you are paying is fair and you’re not paying a lot more than everyone else in the same area.
What can you do about it?
If you feel as strongly as I do against these fees, please feel free to support the campaign run by Vicky Spratt on www.thedebrief.co.uk at Abolish Rental Fees. Once a communicative government is in charge maybe something can be done about the law in the rest of the UK. But for now do question what you’re paying the admin fee for.
I hope this has been informative, interesting and you liked reading it.
That’s all folks this week but I’ll be back again next week. Please subscribe to my Virtual Demon blog and I look forward to your comments and feedback.