A North East lettings expert has welcomed calls from Labour to clamp down on letting agents that are charging extortionate fees.
The lettings industry made the headlines this week when the shadow secretary of state for communities and local government, Hilary Benn, called for regulation on agents that ‘rip off’ landlords and tenants.
Ajay Jagota, managing director of North East- based KIS Lettings, says the calls for regulation are necessary.
“The amount different lettings agents charge for their services can vary massively, which is why there needs to be some sort of clampdown to protect landlords and tenants.
“With the current demand for private rented accommodation the market will only see prices rising and those agents charging excessive fees will inevitably put up prices further. Many people are already feeling the pinch and are turning to renting as the more affordable option and we can’t exploit these people by charging outrageous fees.
“At KIS we try to be as transparent as possible and our business model is focussed around keeping costs down by working smart, so that we still provide a high quality service for landlords and tenants.”
In an interview earlier this week, Mr Benn said 3.6m homes were being rented in England and next year, for the first time in half a century, more people would be living in private rented accommodation than in social housing.
Two-thirds of tenancies now involve a letting agent, an unregulated industry of 4,000 companies which he says are charging widely differing fees for managing relations between 1.4m landlords and their tenants.
The costs vary from £10 to £275 for checking references, while the charge for renewing a tenancy – where lettings agents send out an email and ask for it to be printed and returned – ranged from £12 to £220.
KIS Lettings charges £30 and £50 inclusive of VAT for 6 and 12 month tenancy renewals.
Ajay added: “The fees charged for letting services need to reflect the administrative input they require. At KIS we keep fees low by working innovatively and use technology. We are also able to charge a five percent management fee where others charge upwards from 10 percent.”
KIS landlords pay a setup fee of £250 inclusive of VAT which provides them with 12 months nil excess rent guarantee and legal protection. Tenants pay no deposit and instead secure a homeowner guarantor. They pay the standard one month’s rent upfront plus an administration charge equivalent to half a month’s rent plus VAT, but included in that is damage protection policy worth £500 negating the need for a deposit making the cost of moving in more affordable.
Mr Benn understand that rent controls may only cause landlords to flee the market but said he would consider linking rents to inflation on an annual basis.
He also said that he would be considering ways of securing longer tenancies for private renters – who on average move every 12 months, including paying housing benefit directly to landlords instead of to tenants, a move that would reverse current coalition plans.