Rent fees: New laws 'will not stop hidden charges'

By Felicity Hannah
Wake up to Money, BBC Radio 5 live

image copyrightCharlotte Von Crease
image captionCharlotte says she was hit with hundreds of pounds of extra fees

Campaigners say new laws going through Parliament will not go far enough to stamp out all hidden fees and charges for renters.

Charlotte Von Crease, a 27-year-old renter, says: "When we moved into our last property we were hit with nearly £3,500 worth of fees, before we even got the keys."

However, those pre-tenancy fees are just one of the hidden costs.

Tenant campaign groups say banning them will not solve the problem.

There were the usual costs for Charlotte, such as one month's rent in advance and six weeks' rent as a deposit. But she told BBC Radio 5 Live's Wake Up To Money there were "also £875 worth of letting agent fees, £600 were admin fees, £120 for employers' references for both me and my partner, and £155 for an inventory check-in fee as well".

Charlotte is one of the estimated 11.5 million people who live in private rented homes in England.

Many renters complain of high upfront costs to secure a property and the Tenant Fees Bill passing through Parliament will effectively cap or ban these extra, unavoidable charges for tenants in England.

Wales has similar legislation under way and Scotland outlawed pre-tenancy fees back in 2012.

In Northern Ireland it's a more complicated picture. A judge recently ruled that tenants could not be charged upfront costs, but without a sitting assembly to bring in new rules, tenants there are still paying them.

'Frustrating experience'

But those pre-tenancy fees are just one part of the hidden costs for renters and a number of tenant campaign groups, including Shelter and Generation Rent, have expressed concern that banning them will not solve the problem.

When the new rules eventually come into force, they will not stop landlords and letting agents from charging default fees, such as cleaning costs or those for repairs. While those are often for work needed after tenants leave a property, some tenants report being charged huge amounts for tiny jobs. Some tenants say they feel ripped off.

"I've just ended 10 years of renting [and] each property was its own frustrating experience," says 30-year-old former renter Jen Eastwood.

"Never once have I received a full amount of deposit back, despite every property being returned in a better condition than when it was given to me. Twice I paid for professional cleaning and gave the receipts as proof, and still I was charged for cleaning."

Ask any group of renters about their experiences and at least some will have similar stories. Private renting has more than doubled in the past 20 years.

There's been a decline in home ownership among millennials in particular, leading more to rent for longer. Earlier this year the Institute for Fiscal Studies reported there had been a large decline in home ownership among middle-income 25-34-year-olds. In 1995-96, 65% of this group owned a home but by 2015-16 that fell to just 27%.

Shelter has said tenants are routinely being overcharged. It lists examples of tenants paying as much as £20 an hour for their landlord's time, £45 for procuring a replacement dustpan and brush - and even £100 for removing cobwebs. None of those charges will be banned by the Tenant Fees Bill.

Clearer guidelines needed

Tenants deposits are now routinely held in deposit protection schemes, meaning money is protected and they can challenge charges they think are unfair.

However, if a landlord or agent can show invoices and receipts for work carried out then it can be hard to argue it was unnecessary or unfair.

Polly Neate, chief executive of the charity, says she will welcome the new rules but tells Wake Up To Money it must go further.

Clearer guidelines on what tenants can and can't be charged for are needed, she says, to prevent landlords and agents finding "additional things" to charge for.

"Letting agents are running a business and their business is managing properties. So they ought to be able to calculate the general costs that they will incur. [These] should be part of the totally predictable cost of managing a property."

'Reasonable balance'

Tenants may feel ripped off by these fees but letting agents and landlords argue they genuinely reflect the cost of the work.

One letting agent, who did not want to be named, said: "To get anyone to show up at your door no matter what they do is £50 or something in that region. So, if a tenant is to leave a bit of fluff somewhere, someone still has to take an hour to go there, do it and come back and you have to hire a professional.

"I used to own a property and I wouldn't just run out to clear up a bit of fluff or change a bulb, I'd say it's my tenants' responsibility."

image caption11.5m people rent in England

His comments were echoed by housing minister Heather Wheeler. "I genuinely think that you have a responsibility when you take on a property - you expect it to be in good order when you arrive, it's your job to make it in a good order when you leave."

Richard Lambert, chief executive of the National Landlords Association, said the new rules will curb abuses. "Default fees will have to be a reasonable charge for a defined purpose. But if I have to come to you to change a light bulb then I have to drive for half-an-hour, plus petrol, to carry out the work. I wouldn't be charging you anything more than what it cost me.

He said the government had tried to strike a reasonable balance between tenants and landlords.

David Cox, chief executive of Arla Propertymark, said: "Letting agent fees cover the cost of essential services during the lettings process, such as referencing, negotiations about clauses in the tenancy agreement and the inventory - processes that cost letting agents time and money to carry out.

He says research for Arla by Capital Economics showed that a full ban on tenant fees would mean two tenants would end up paying an extra £206 per year in rent.

"Ultimately, the ban doesn't reflect the value of the services which agents provide to tenants," he said.

Shelter will be answering questions about renting costs on the BBC Affordable Living Facebook page