Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

By now most students will have moved in to their digs. Whether it be freshers excitedly setting up in a new city for the first time or students who have returned to continue their studies after the summer break, the choice of where to live is crucial.

While universities provide a limited amount of accommodation – usually aimed at first year students who are finding their feet – many students from their second year onwards turn to the private rented sector.

Radio 1’s Newsbeat bulletin on 20th September featured a student who had chosen his accommodation but had been hit with an unexpected bill from the letting agent for their fees. This goes to the heart of a controversial topic of letting agent fees and who should ultimately be responsible for them.

Unfortunately, as with many issues, it is the behaviour of the minority which tars the letting industry as a whole. Some agents provide very competitive fees to landlords and seek to recoup this via the tenants. Student tenants in particular seem to be hard hit by this.

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Letting Agents are under intense pressure from all sides to keep fees as low as possible. But ultimately a service is being provided and this must be paid for. The question is who should be responsible for paying these costs and are the charges ‘fair’?

Campaigners are fighting hard to impose an outright ban on letting fees being charged to tenants. In Scotland this ban already exists, and many argue that it should be applied across the UK.

But the suggestion has not been well received in all quarters, with one property news website recently issuing a plea to letting agents, asking them to come together to participate in the campaigns and take charge of the situation before such “draconian” measures are imposed upon the industry.

In a move to do just that, the National Approved Letting Scheme (NALS) has launched a ‘Fair Fee Forum’ to create a Fair Fees Charter for the private rented sector, which includes the student sector of the market.

The move appears to reflect the view of agents across the board; in a poll commissioned by the NALS, 84pc of 1,000 letting agents agreed that a cap on their fees might be appropriate, as opposed to an outright ban. Indeed, the majority of agents consider that their fees are reasonable and proportionate, thus would fall within any proposed cap.

But what are tenants actually paying for? Well, the duties of letting agents have increased, particularly over the past 12 months, with new legislation stipulating that agents must serve an increased amount of information on tenants and undertake ‘right to rent’ checks, which can impose a criminal sanction on the agent if breached.

Any tenancy agreements then have to be renewed each year, creating further admin costs for the landlord and, as a result, the tenant.

In many cases the reality of the requirements involve admin tasks such as taking copies of tenants’ ID and storing these on file. Documents can be served by email to save on printing costs. Nonetheless the additional obligations take up valuable time and resources and must be fairly paid for.

So what is a ‘fair fee’? In the legal industry, a judge will only allow costs to be recovered if they are proportionate and reasonably incurred or reasonable in amount. The same principle could be applied to letting agent fees. Citizens Advice have reported that in some cases, the annual fees requested of tenants have been as high as £700.  Are these costs really justified?

The second issue is that of fees being set out upfront. There are strict requirements on letting agents to clearly publicise all fees, in fact the Consumer Rights Act 2015 specifies that letting agents have a duty to do so, with the Local Authority given the power to fine agents found to be in breach by up to £5000; however this does not always happen. Citizens Advice has reported receiving an increasing number of calls year-on-year from students aged 17 – 24 who have been asked to pay increasing or unexpected letting agent fees.

Indeed, students – most of whom are living away from their parents for the first time – are particularly hard-hit, with these extra costs coming in addition to household bills, a deposit, rent, food shopping, not to mention hundreds of pounds on reading material for the year. The outlay is huge, which is why letting agents should consider a special rate or cap for students in particular.

One student on Radio 1 mentioned that a property with no letting agent fees would be much more attractive as this is simply one less thing that they have to pay.

It is worth considering, then, whether it would be a smart move for landlords to agree a fair fee with their agent up front, as well as agreeing the fees to be paid by the tenant. Can this cost be spread over a number of months? Can the landlord foot a higher percentage of fees to take the additional financial burden away from students? This may well become a key selling point for the landlord in attracting students, or any private tenant, to their property.

Article Courtesy of: Danielle Hughes, Solicitor at Kirwans – www.kirwans.co.uk

Please Note: This Article is 3 years old. This increases the likelihood that some or all of it's content is now outdated.

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