Rent costs are out of control – government must support renters by banning letting fees

Can the government do more to support renters?Reuters

The cost of living for private renters has hit crisis point. As a customer in the private rented sector you have more consumer rights when you buy a fridge than you do when you rent the flat to put it in. Renting is the most expensive form of housing, and with rising rents and increasing demand, renters are trapped with limited choice. Tenancies are increasingly very short – often only six months or twelve – so renters lack security and constantly have the imminent threat of a rent rise hanging over their heads.

But it's the upfront costs that are sometimes the greatest barrier. In London the median amount that renters must pay up before moving is £1,500 ($2,160, €1,950), and in many cases this cost is several thousand. This is especially hard on those on low incomes, who are viewed as higher risk and may thus be required to provide several months of rent in advance.

With costs at this level, it is unsurprising that the main cause of people becoming homeless these days is the ending of a tenancy in the private rented sector.

Advertisement

For others, the high costs are a barrier to moving out of their family home. A report from KPMG found that a quarter of all adults under the age of 35 are still living in their childhood bedroom, despite 70% of them being in work.

It is time for serious change in the private rented sector – this is now a sector with over four million customers. Renters have for far too long been overlooked and now that 18% of the population live in this sector – more than in social housing – we need radical action to improve the security, conditions and cost of renting.

My Renters' Rights Bill is a start and has attracted support from Generation Rent, The Debrief's "Make Renting Fair" campaign and others. One of its main proposals is a ban on letting fees being charged to tenants, which is an unnecessary and often spurious part of the upfront costs of moving.

Costs vary from agent to agent and range from £40 to £780, with the average just under £400 per move. Around a third of renters have to borrow money to pay them, and with many tenancies lasting just six months, these costs are all too frequent. A credit check costs just £25 but some agencies charge a tenant more than £150 to carry one out.

Agents are charging both landlords and tenants because they can get away with it, and it needs to end

While letting agents have some genuine costs when it comes to moving tenants into a property, the appropriate payer of these is the landlord, not the tenant. It is the landlord who is the client, and most of the fees charged to tenants would be costs the landlord would expect to already be covered in the amount they pay to the agent. It is the landlords who can pick or choose the agent they use. But agents are charging both landlords and tenants because they can get away with it, and it needs to end.

Fees for tenants have already been successfully banned in Scotland. Research into its impact commissioned by Shelter shows that it has had only minimal side effects for letting agencies, landlords and renters, and the sector remains healthy. Only 17% of letting agents increased fees to landlords and only 24% reported a small negative effect on their business. Not one agency manager interviewed said it had a large negative impact on their business, while 17% said it considered the change to be positive for their business.

Advertisement

There is a clear case for the government to take action in support of renters and end these fees once and for all. Many aspects of the housing crisis cannot be changed in the stroke of a pen, but this one can – and it must happen without delay.


Baroness Grender, MBE, is a former head of communications for the Liberal Democrats


© Copyright 2017 IBTimes Co., Ltd. All Rights Reserved.