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Take That To The Bank

Guest post by Bobby Gill

Ever been frustrated or felt ripped off by your bank?

Yep thought so.

Maybe this letter will make you feel better and give you some ideas next time you contact them… shortly before closing your account and banking with a Co-Operative Bank instead!

Read more of Bobby’s thoughts and musing here – http://bobby-gill.blogspot.co.uk

Dear Sir:

I am writing to thank you for bouncing my cheque with which I endeavoured to pay my plumber last month.

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Labour MP's Intend To Introduce Regulation To Control UK Lettings Industry

Labour MP’s Intend To Introduce Regulation To Control UK Lettings Industry

The regulation of the private rented sector (PRS) and the UK letting industry as a whole has been the subject of many tabloid newspaper headlines in recent months and now MP’s are adding their weight to the calls for further regulations.

The subject of letting agent fees is now being used by politicians to create civil unrest among tenants and their landlords, in order to bring about even more regulation.

One of the many problems faced by tenants in the PRS has been highlighted by Hilary Benn, Labour’s shadow secretary of state for Communities And Local Government (CLG), who has spoken out over the high charges placed on tenancies by letting and property managing agents and she has claimed that some agents are ‘ripping off’ landlords and tenants.

The shadow secretary of state said Labour are concerned about commission charges and fees for additional services such as Tenant Referencing, credit checking, periodic inspections and sending letters.

The data gathered by the Labour Party suggests that agents’ charges vary to a huge extent, a worrying factor when it is considered that in 2013, the number of residential properties available to be rented out privately is set to exceed social housing in the UK for the first time.

Letting agent charges for Tenant Referencing and credit checking range from £10 (GBP) to an excessive £275 (GBP), while the charge for renewing a tenancy varied from £12 (GBP) up to £220 (GBP).

“What is actually £220 of cost in terms of administration if you had just to send an email, open an envelope and stick it in a file? That seems to me to be a rip-off. It’s a problem not just for tenants but also for landlords.” Said the Labour MP.

Hilary Benn and the Labour party have promised that they will look into ways to cap charges in the Private Rental Sector (PRS) and would be a widely welcomed move by Landlords and Tenants Groups across the UK.

Ian Fletcher, Director of Policy at the British Property Federation (BPF) said: “Anyone can set themselves up as a letting agent, and then potentially abscond with hundreds of thousands of pounds of people’s cash. It is therefore counterintuitive that estate agents who handle relatively little cash are regulated, but letting agents who handle lots of cash are not.”

Labour has conceded that part of the problem lies in the fact that the levels of social housing have still not increased from when they were last in power, and as a result, more and more people are forced to turn to the private rental sector as they are unable to get on to the property ladder and into home ownership.

In the present day, the Labour Party recognises that the PRS is meeting an urgent need and will press on with finding a solution to excessive agent charges.

Housing charity Shelter has made the news headlines again, after launching another attack on private renting, this time attacking letting agents in Wales over their up-front fees.

Shelter launched a verbal tirade on fees charged by lettings agents in Wales and already has an active campaign under way in Scotland, where upfront fees are illegal, but the timing of the stinging attack coincides with a move by the Welsh government to introduce compulsory licensing for both agents and landlords, a move that could set a precedent in the rest of the UK.

Shelter Cymru carried out a mystery-shopping exercise with letting agents across Wales to investigate fees and charges and how they vary between agents.

Agents were asked about the costs of setting up a tenancy, deposits required, the upfront costs of renewing a tenancy, charges for credit checks, late payment charges and any other fees or charges.

Researchers found that some tenants could be charged as much as £594 in set-up fees for a property at the average market rent.

It means that as well as finding one month’s rent in advance and a deposit usually totalling a month’s rent, prospective tenants needed to find additional fees and charges of around 45% of the monthly rent. With some agents, this sum could be as high as 120%, say Shelter.

Additional charges included fees to renew contracts, check-in and check-out fees to hand over keys and check inventories, and non-refundable pre-contract administration fees for everyone who applied for a tenancy regardless of whether their application was successful.

John Puzey, director of Shelter Cymru, said: “You have to question how reasonable these charges are when credit checks can be carried out online for £20 and tenancy agreements are usually standard template contracts. These kinds of unregulated charges, which are now actually illegal in Scotland, are making the private rented sector even more unaffordable at a time when many people in Wales are already struggling to find and keep accommodation. In addition, we found that most charges were not well advertised so prospective tenants are often unable to discover the true cost of setting up a tenancy until they are well into the process of making an application, by which time they may already have handed over some non-refundable payments. Some agents charged a flat administration fee to all tenants, while others varied the fee depending on the rent level, raising the question of why the amount of administration work should depend on the tenant’s choice of home. This lack of transparency traps people into paying additional fees as it is almost impossible for them to make an informed choice when they start the process of renting a home”.

While a minority of agents published the costs of setting up a tenancy on their websites, the researchers found that with the majority this information was very difficult to obtain without asking very specific questions of the salespeople.

The Property Ombudsman’s Code of Practice for Residential Letting Agents states that agents should flag up any potential liability for fees, charges and penalties ‘prior to an applicant’s offer being formally accepted’.

But Shelter said that this is a very late stage in the process, by which time many tenants may have already committed money in the form of administration charges or holding deposits. The charity says that disclosure of fees post-application means that tenants are unable to exercise consumer choice in this area, which removes any incentive among agents for competitive price-setting.

Mr Puzey highlighted the proposals in the Welsh Government’s Housing White Paper for the compulsory accreditation of private landlords and letting agents in Wales and urged the Government to ensure that the forthcoming Code of Practice includes clear standards on transparency in agents’ fees and charges.

He said: “The private rented sector is a significant and growing element of the housing market in Wales and so we need to ensure that agents operate to the highest standards. We hope that accreditation will lead to greater transparency and a more efficient rental market for tenants, but if this does not happen then maybe a total ban on premium charges should be considered.”

The Shelter research in Wales showed that two adults renting a three-bed property pays a total of £1,448 in upfront fees on average, while two adults in a two-bed property pay £1,295 and one adult in a one-bed property pays £1,054.

Plaid Cymru’s housing spokesperson, Llyr Gruffydd AM, said: “Shelter Cymru’s research highlights some very serious concerns about the hidden charges people can face when renting a home. Plaid Cymru now wants to see some swift action on this issue from the Labour Welsh Government.

“At a time when the Westminster government is reforming housing benefit in a manner that will increase the amount of families looking for a new home, it is crucial that the Welsh government mitigates this by tackling the excessive hidden charges that tenants in the private sector face. While we welcome the Welsh government’s promise to tackle these hidden charges through new legislation on tenancy reform, we are concerned at the apparent lack of urgency. For many Welsh families, action needs to happen now. Bringing forward their proposed legislation on tenancy reform, rather than delaying, is an example of practical action they could take now to stand up for Welsh families. I urge the Labour Welsh government to stand up for Welsh families by taking swift action to tackle this problem.”

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