The report is by Louisa Darian and was published in December last year, so I am a bit late in finding out about it!
Statistics and problems
The report starts by saying that some 17% of us live in private rented accommodation (up from 9% in 1991) and in 2006 two thirds of these involved a letting agent.
This is particularly relevant for the low to middle income sector as the foundations research suggests that it would take a low to middle income family over 30 years to save for a deposit to buy a property in today’s housing market. They will also find it more difficult than in the past to access social housing.
However all is not well in the letting industry. Although some agents are good, there are massive variations in prices and standards across the country, in particular in agents fees.
These can be crippling for low and middle income families as they generally need to be paid before the deposit for their previous property has been released to them. As they generally have no savings, they have to borrow from family or short term loan providers (often at high interest) to meet these costs.
Here are a few of the points made by the report:
- In London the upfront costs for a single person renting a one bed property are £2,166 compared to £1,028 in Manchester
- There is a big variation among individual agents over the fees charged. Virtually all charge a deposit, but other fees such as tenancy renewal fees, check in and check out fees and holding fees are charged by some agents but not by others
- Many agents appear to be charging fees for the same work to both landlord and tenants, and the fees are often disproportionate to the actual work involved. For example most agents have a standard form of tenancy agreement which just needs to be completed with the relevant details
- Tenants often do not find out what the fees are until they are committed to rent the property. However in many areas the shortage of properties available to rent is such that they have no choice but to pay what is asked or lose the property. Properties in some areas are rented within hours of going on the market.
These are the main recommendations made:
- Letting agents to be brought within the Estate Agents Act so the Office of Fair Trading can ban agents who act improperly. At present if an estate agent is banned he can set up the next day as a letting agent with impunity
- All letting agents to be members of an Ombudsman service so tenants have some redress
- Agents should be required to state their fees clearly on their paperwork and websites in a way that is easily comparable, so that tenants will know in advance exactly how much they will have to pay BEFORE they commit to rent the property. This could be done by making it a requirement to the code of practice of the Ombudsman service
- Government to make use of the 2012 re-tendering process for the tenancy deposit protection schemes to find ways to make it easier for tenants to use their old deposits when moving in the private rented sector, and
- Local authorities to extend rent deposit schemes to members of the low-to-middle income group.
These would go some way towards rectifying the problems. However whether the government, who appear to think that most tenants are happy renting in the private sector, will do anything is debatable.
If you want to read the report (which is not a long one) you will find it here.