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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.”

Will UK Government act to end the bad practices of rogue landlords?

Legislation is needed to eliminate rogue landlords

With various UK landlord associations, official trade bodies and voluntary charitable agencies all lobbying government and campaigning to stamp out rogue landlords in the UK Private Rented Sector, the government have finally decided to take action.

The coalition Government’s Housing minister, Grant Shapps has revealed that he will be issuing guidance about rogue landlords following talks with interested parties.

The statement could have sent chills down the spines of many underperforming landlords and earned the government a huge chunk of industry respect; however it turned out to be a bit of a damp squib.

In response to a question from Labour MP for Coventry, Jim Cunningham, in the House of Commons, Mr Shapps said: “I have just held a meeting with the interested parties about rogue landlords. They are a matter of considerable concern, and I will be pulling together all the powers and issuing a booklet on that shortly.”

Are the government just paying lip service to landlord associations or will they ever issue legislation to encourage a strict code of conduct among UK landlords?

Shapps denied removing any of the protections from landlords or tenants in the UK private rented sector, saying: “It is worth remembering that actual measures consistently show that people are happier in the private rented sector than in the social sector, which might surprise him. I can also tell him that 90% of tenancies are ended by the tenant, not by the landlord.”

Shapps also said that the number of non-decent homes in the UK private rented sector has fallen from 47% in 2006 to 37%.

Labour’s shadow housing minister, Jack Dromey took Mr Shapps to task about his previous claims in the House of Commons on private rents supposedly falling in response to caps to housing benefit. – Read the full story here

Mr Dromey said: “Both the housing minister and the Prime Minister, out of touch with reality, have asserted on the floor of the House of Commons that rents are falling in the private rented sector. An analysis conducted by the House of Commons Library reveals that in 90% of local authorities in England, in all nine regions, rents are rising or staying the same. Will the housing minister now admit to the 1.1 Million families struggling to pay their rent that he got it wrong?”

Shapps admitted to having used the survey by LSL, (The parent company of estate agency chains Your Move and Reeds Rains), but said it had not been wrong to say rents are going down. He said: “The LSL survey shows that in the three months through to January, rents actually fell, but we do not have to believe LSL. There was rightly some scepticism there – LSL measures only buy-to-let – so let us instead look at the absolutely authoritative figures recently produced by the English Housing Survey, which show that in real terms, rents have fallen in the past year.”

There has been yet another survey conducted in the UK with yet another set of shocking and depressing findings…

The YouGov / Shelter survey reveals that almost 7 Million people are relying on some form of credit to help pay their housing costs, using payday loans, unauthorised overdrafts, other loans or credit cards.

The results reveal the spiral of debt that people are falling into in order to keep a roof over their head.

The survey asked 4,014 people in the UK if they had used payday loans, unauthorised overdraft, other loan or credit cards to help pay their rent or mortgage in the last 12 months.

15% (1 in 7) said yes, representing a national figure of almost 7 Million people, with almost 1 Million people using payday loans.

The homeless charity warns that 2012 could bring with it an increased risk of homelessness, for those who are struggling with their housing costs and is urging anyone worried about their debts to make seeking early debt advice their New Years resolution.

Shelter has a network of specialist advice services around the country, a free telephone helpline and online advice available at shelter.org.uk/debt, including a new budget calculator. 

Campbell Robb, Chief Executive of Shelter, said, “These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home. Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness. Every two minutes someone in Britain faces the nightmare of losing their home. We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice.”

Martin Lewis of MoneySavingExpert.com, said, “The UK is the crock of gold at the end of the rainbow for the world’s payday lenders. They’ve been regulated out of other countries and jump for joy at our lax supervision. That’s why these 4,000% APR lenders are exploding across British high streets. Yet these astronomical APRs aren’t the real danger and that comes from the rollover. This is where people can’t repay at the end of the month and compound interest kicks in. It’s incredibly worrying there’s now evidence of people using payday loans to meet housing costs. Many struggling with core rent or mortgage commitments will struggle to repay payday loans on time too. While it’s an obvious temptation to grasp these loans as a lifeline, in the long run it may hurt more than help. Instead I’d urge anyone struggling with payday loan and housing debts to get in touch with one of the great non-profit, non-judgmental advisors out there, such as Shelter – the sooner the better.”

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The 2012 New Year Honours list, published on New Year’s Eve, is set to commend a convicted fraudster and founder of the Heron Group, a multi-million pound property empire, with a CBE for his services to charity.

The ex-con tycoon, Gerald Ronson, 72, was once the 14th richest man in the UK with a property empire worth over half a billion pounds. Founded at age 17, his portfolio includes property throughout Europe, including the famous London City skyscraper, the Heron Tower.

In 1990 he was ordered to serve a 6 month custodial sentence and fined £5 million for his part in the ‘Guinness Four’ scandal.

Mr Ronson was convicted of fraud for inflating the price of shares in the drinks company, Guinness, during a fierce takeover battle by Scottish group, Distillers.

Despite the criminal conviction, Mr Ronson will be honoured for his services to charity, with the CBE intended to show support and gratitude on behalf of the state for those who have made an outstanding contribution to Britain over the last 12 months.

Gerald Ronson, maintains that he did not act dishonestly in the fraud scam and has donated £30 Million (GBP) of his own money and raised over £100 Million (GBP) for charities including the Prince’s Trust.

Despite Mr Ronson donating all his shares in his property empire to Great Ormond Street Hospital and the National History Museum, some sceptics claim that such an accolade is a rehabilitation prize.

The knighthood has fuelled the gossip between Conservative and Labour MPs.

The Tories claim to have acknowledged those who support Cameron’s charitable aims for the ‘Big Society’, but Labour MP’s remain dubious about rewarding the disgraced property mogul.

John Mann, Labour MP for Bassetlaw and Treasury Select Committee member claimed notable accolades for ex-criminals are a “disgrace” and also believes such awards show that “…when millions of families are struggling to get by, it’s the Tories’ friends in the City who get the rewards”.

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