TENANTS who face forking out rip-off agency fees before they’re banned this summer should try to haggle down the costs, experts say.
Three years after is was announced, the Government will finally impose a ban on letting agents charging ludicrous admin fees from June 1.
Tenants who sign agreements after this date won’t have to pay the typical fees for things like referencing, viewing a property and processing paperwork.
But in the mean time, renters are expected to spend a huge £154MILLION on fees before the ban comes into effect.
Potential tenants who are looking to avoid being stung should take their chances and try to haggle down the charges, advise industry insiders.
Martin Lane, from money.co.uk, said: “If your letting agent wants to charge you a fee don’t feel afraid to negotiate.
Ban on letting agent fees
THE Tenant Fees Bill bans letting fees paid by tenants in the private rented sector.
Housing charity Shelter says tenants shell out an average of £272 in fees, so this will save people a pretty penny.
But experts have warned that renters could still be open to being charged “default fees” – such as when they lose their key or breach their contract.
Under the rules, agents and landlords will still be allowed tenants fees associated with:
- a change or early termination of a tenancy requested by the tenant – but this will be capped at £50 unless the landlord or agent can demonstrate that greater costs were incurred
- utilities, communication services and council tax
- payments arising from a default by the tenant, such as replacing a lost key.
Landlords and estate agents will also only be able to recover “reasonable costs”.
For example, they won’t be able to charge tenants hundreds of pounds for a damaged item that actually only costs a few pounds to replace.
“A letting agent will be making their money from the landlord, so it’s worth haggling over any fees they want to charge you.”
TV’s Phil Spencer reckons it could be a good opportunity for agents to look good by dropping the fees early so it’s definitely worth tenant’s asking.
But it won’t be easy, with many agents set to miss out on the extra income once the ban comes into force, they may be more intent on cashing in while they still can.
“Unfortunately, all tenants can do is walk away,” property expert Henry Pryor told The Sun. “If it was possible to haggle successfully then there probably wouldn’t have been any need for the change in the law.”
Nevertheless, we spoke to the experts for the lowdown on how to drive down the costs if you have to move before the ban comes into play.
What fees are most likely to be negotiable?
The fees that letting agents are most likely to budge on are the ones that will be specifically banned from June 1, says property expert Henry Pryor.
These fees are set by the agent who may be in a position to negotiate, especially if they’re struggling to shift a property.
The fees they may be able to waiver:
- Charging for a guarantor form
- Credit checks
- Cleaning services
- Professional cleaning
- Have the property de-flead as a condition of allowing pets in the property
- Admin charges
- Requirements to have specific insurance providers
- Gardening services.
Henry said: “Many letting agents are already changing their fee model and a lot of tenants are already getting the benefit of the new law before it hits the statute books.”
This could mean that they may be willing to move on how much they charge for these services.
The fees that are likely to be non-negotiable are deposits and charges for defaulting on payments which will not be banned under the new laws.
Martin Lane adds: “If it’s not within your nature to haggle get a friend or family member to do it for you or ask over email instead.
“Sometimes its easier to negotiate when you can’t see the person and you’ll have everything in writing.”
Research how much the admin really costs
On average, letting agents charge tenants £80 to carry out references, according to latest Government figures, despite the process only actually costing £15 says online property listing site, OpenRent.
Sam Hurst from the firm recommends potential tenants do their research before entering into negotiations by finding out how much the paperwork really costs.
“It will be easier to back yourself when haggling,” Sam told The Sun.
Another thing to look out for is if the agent is charging you for things they are legally required to do on the behalf of the landlord – you can usually get them to back down on those.
He added: “A common one is the Right to Rent check, i.e. seeing and scanning your passport or visa,” explained Sam. “This is something a landlord is legally required to perform.
“If an agent tries to charge you for this, then remind them that it is a landlord’s obligation.
“If you don’t pay and they don’t perform it, then they will have broken the law.”
How to haggle with your landlord and bring down your rent
WHEN you first sign your tenancy agreement with your landlord your rent should be agreed either in writing or verbally.
To increase your rent your landlord must send you a section 13 notice which gives you a month’s notice in writing telling you how much your rent will be increased by and the date when your rent will go up.
At this stage you should try to talk to your landlord and come to a fair agreement on how much rent you should pay.
Your landlord can only raise your rent if you agree to the increased price.
Matt Hutchinson, communications director for flatsharing website SpareRoom.com said that if you are a good tenant then you’ve got bargaining power.
“The first thing to bear in mind is that demand is lower at the moment than over the past couple of years.
“That means you’ve got a bit more bargaining power, especially if you’ve been a good tenant, as your landlord won’t want the expense and hassle of having to find another tenant and even potentially face a period with the property empty.
“Failing that, it’s worth seeing if you can get anything thrown in with a rent increase, such as minor bits of redecorating or any bills.”
Landbay have a free rent check service to see how much rent you should be paying in your area.
You can find the rent check service here.
Find out more about how to haggle with your landlord to bring your rent down here.
Know your rights
If an agent is cutting corners that this gives you more leverage to negotiate better fees.
Sam added: “The interaction between agents and tenants is actually quite highly regulated – but unfortunately it falls on the tenant to know when they’ve been treated improperly and then report it.
“For example, all agents are required to display their fees on their website – but a huge number don’t bother.
“If an agent is asking you to pay fees that aren’t listed on their site, tell them that they weren’t and threaten to tell the Property Ombudsman.”
If they won’t budge, offer less rent
If a letting agent decides that their fees are non-negotiable then it’s time to haggle on your rent offer.
Much like house prices, just because a property is advertised with one rental price doesn’t mean that it’s set in stone.
Henry Pryor said: “If you are being charged fees that you don’t feel you should pay then make an offer of rent that reflects this.
“Letting agents have come to think that the asking rent is non-negotiable, it isn’t and you should always haggle on the amount you are going to pay each month.”
Cut out the middle man
Of course, a sure fire way of avoiding letting agent fees is ditching them altogether and dealing directly with the landlord.
There are sites like OpenRent, SpareRoom and Gumtree which link private landlords with tenants, bypassing letting agents, so renters won’t have to pay any fees.
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Hold off if you can
Phil Spencer, who also runs moveiq.co.uk, recommends tenants hold off moving ahead of the ban if they can.
He said: “The agents most likely to dig in and refuse to give ground are those in areas where demand for rental properties is strongest, like London and Manchester.
“Where there is strong competition among would-be tenants, it’s easier for an agent to find someone else who is willing to pay their fees.
“All a renter can really do is try to delay the process until the ban comes into effect. However this strategy carries the risk of missing out on the property you want, which would put you back to square one.”
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