Letting agents are profiting from charging spiralling fees for “no extra work”, believes a student tenant website.
A study by StudentTenant.com – a free-to-list student lettings platform – highlights the extent to which letting agents are profiting from higher rent prices.
Their “antiquated model” of charging a high commission to let a property still allows them to pocket sky-high fees, without conducting extra work, insists the organisation.
Letting Agents Profiting from Spiralling Fees, Believes Student Tenant Site
In the last 12 months, rent prices have risen to an average of £901 per month – up by 3%, which is higher than the current rate of inflation.
The lowest rents can be found in the North East of England, at an average of £530 a month. However, in London and the South East, it’s a completely different story…
The cheapest London borough for private tenants is Croydon, where the average rent is £1,170 per month. In Westminster, this rises to a huge £2,241.
Although the problem is considerably worse further south, rent rises have been felt across the country.
The UK’s greatest increase over the past year was in Lambeth, where rents rose by 12% to reach £2,874.
Only one part of the UK, Scotland, has seen a decrease in rents over the past year.
Some London boroughs have experienced rent declines, however, with Haringey seeing the greatest fall, of 6.4%. Prices are also down in Brent, Bromley, Kingston and Chelsea.
With the majority of regions and London boroughs seeing rent price growth, letting agents will also have experienced a bump in their earnings, StudentTenant.com points out.
The firm’s research puts the average letting agent fee at 12.7% of the total rent for the year, meaning the typical fee across the UK is over £1,300. In the South East, it’s more than £1,500, while those in Westminster charge a whopping £3,415.
Following a bumper rent price rise, letting agents in Lambeth can now charge £345 more than at this time last year.
But is this justified, asks the group.
“It’s really hard to justify the amount that a typical high street letting agent charges in the first place, let alone above inflation increases in most parts of the country,” insists its Managing Director, Danielle Cullen. “There’s a significant shortage of good rental stock, which means higher rents and yields, which can be great news for landlords, but not so great for tenants.”
She adds: “But when much of that gain is eroded by greedy agents taking a fatter and fatter chunk of it, 12.7% of what would otherwise be the landlord’s income in effect, then buy-to-let investors might want to think twice about resorting to an old fashioned high street-based rental firm.”
In order to protect tenants from spiralling fees, Citizens Advice has called on landlords to cover letting agent costs. Do you think this is a good idea? And would this deter you even more from using a high street service?