Scot­tish de­ci­sion to ban ten­ancy fees crit­i­cised by land­lords

Yorkshire Post - Property - - PROPERTY - Sharon Dale

THE news that all ten­ancy fees have been out­lawed in Scot­land has prompted out­rage in the let­tings in­dus­try.

Jonathan Mor­gan, manag­ing di­rec­tor of Leeds-based Mor­gans City Liv­ing, says: “If there are no fees agents won’t be able to trade. What’s needed isn’t an out­right ban on fees charged to ten­ants but sim­ply a rea­son­able and trans­par­ent fee struc­ture that ten­ants are made fully aware of be­fore they sign for or move into a prop­erty.

“Any agent worth its salt would sign up to a scheme where they pro­vide ten­ants with a break­down of charges be­fore a ten­ant has to com­mit to any­thing. To ban all let­tings fees is crazy, it’s like say­ing a mort­gage bro­ker can’t charge a fee for find­ing a mort­gage.”

Shel­ter’s re­cent YouGov sur­vey said 23 per cent of ten­ants felt “ripped off” by let­ting agents but Mor­gan be­lieves that by in­tro­duc­ing an agree­ment that clearly shows what fees are charged, any mis­trust would be erad­i­cated.

Jonathan says: “Of course it’s es­sen­tial that fees are fair. With such a boom­ing let­tings mar­ket and some un­scrupu­lous agents en­ter­ing the mar­ket to take of ad­van­tage of this, ten­ants must feel safe and se­cure and land­lords should also have a clear un­der­stand­ing of what their agent is charg­ing their ten­ant.

“To talk of out­law­ing all charges is just not prac­ti­cal as there are sig­nif­i­cant cost im­pli­ca­tions for oper­at­ing a busi­ness in the first place, not to men­tion car­ry­ing out view­ings, pro­cess­ing ap­pli­ca­tions and gen­eral ad­min­is­tra­tion that have to be met.”

This sen­ti­ment is echoed by Jane In­gram, pres­i­dent of the As­so­ci­a­tion of Res­i­den­tial Let­ting Agents. She says: “It is im­por­tant to bear in mind that a pro­fes­sional let­tings ser­vice can­not be pro­vided to ei­ther a land­lord or a ten­ant at low cost. How­ever, both par­ties should be aware of their costs and feel that they have had a pro­fes­sional ser­vice, and should have some­where to seek re­dress if they feel oth­er­wise.”

Shel­ter has also called for a new five-year pri­vate rental con­tract to be in­tro­duced to give peo­ple greater sta­bil­ity. They say this would help ten­ants put down roots and give land­lords greater cer­tainty over re­turns. The sug­ges­tion is that rents would rise in line with in­fla­tion each year.

Jonathan Mor­gan isn’t so sure this is a good idea: “The premise of a five-year con­tract with the abil­ity to give notice on ei­ther side is not sound. Cur­rently the av­er­age ten­ancy length in our city and the North Leeds area is around eight to 10 months and this is a re­flec­tion of the life­style of the vast ma­jor­ity of our client group. They rent for a shorter pe­riod be­cause they ac­tu­ally want short-term com­mit­ment and flex­i­bil­ity and have no in­ter­est in be­ing com­mit­ted for a longer term. If it’s the case that rent­ing is a step­ping stone for most peo­ple, and ev­i­dence sug­gests that this is very much the case, then it fol­lows that a five-year ten­ancy will only ap­peal to those who do not en­vis­age buy­ing in the next five years.”

He be­lieves that the Euro­pean model of rent­ing won’t catch on in Bri­tain as many fore­cast­ers have pre­dicted.

“In Ger­many, the most prorental mar­ket in the EU, around 54 per cent of peo­ple rent their home but the cost of buy­ing a prop­erty has al­ways been much higher, with av­er­age de­posits at around 40 per cent. In sim­ple terms, the buy­ing pub­lic have al­ways had to have sig­nif­i­cant eq­uity. This is not what the British pub­lic have be­come used to, and whilst it might take a while, the con­sen­sus is that loan to value re­quire­ments will fall over time back to­wards lev­els at which the vol­ume of transactions will once more in­crease.”

He adds that re­luc­tant land­lords are fill­ing a gap in the rentals mar­ket by let­ting a prop­erty they would rather sell, which means that a lot of lets will be re­leased for sale as the mar­ket re­cov­ers.

More at Jonathan Mor­gan’s blog at www.cityliv­ing.co.uk or www.cityliv­ing.co.uk/blog/

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