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Landlords Are Still Screwing Renters Over, Despite the Tenancy Fee Ban

Two months after estate agents were banned from charging admin fees, VICE has found cases of landlords hiking rents to cover these costs.

by Ruby Lott-Lavigna
09 August 2019, 11:57am

Photo via Alamy. 

To rent in a major British city is to be in a constant state of financial fragility. Akin to leaving your overdrawn debit card at a festival, attached to a Post-It note with your pin number and “enjoy :)”, signing a housing contract almost always means burning money on extra charges, without really knowing what you’re paying for. Add to that the lack of rights to challenge those charges – plus the fear of being left homeless if you piss off a landlord – and you’ve got: renting as an adult!

In June of this year, however, a small glimmer of light appeared in the ink-black darkness of the expanding private renting world. This summer, the Tenant Fees Act came into action, banning all estate agents in England from charging renters administration fees on contracts issued after June the 1st. They can still charge advanced rent once the tenancy is agreed (usually a month in advance); a refundable holding deposit (no larger than one week’s rent); a refundable tenancy deposit that would be no more than five weeks’ rent (or six, if the total rent of the property is over £50,000); and a few smaller charges once the tenancy has started, but admin fees are now the burden of the landlord. These might include a check-in fee, a referencing fee or any other random charge the estate agent deems to fall under ambiguous “admin” work.

Letting agents can still charge renewal fees on tenancies that began before June the 1st, but those will also be banned in 2020. Of course, many other aspects of renting are largely horrible – the constant fear of eviction, losing 40 percent of your wage each month, waking up to randomers taking ket in your living room at eight in the morning – but at least, for now, one small evil has been removed.

Unfortunately, the tenancy fee ban hasn’t stopped estate agents and landlords from being arseholes. This week, the BBC reported that an estate agent had tried to illegally charge admin fees after the ban came into place. Meanwhile, other renters are being forced to pay the fees in more stealthy ways.

VICE found numerous cases of letting agents asking tenants to sign contracts before the June the 1st deadline in order to get around the admin fee ban, even when their move-in date wasn’t for weeks.

“We had to sign our tenancy before the 1st of June to secure the house, but then didn’t move in till the 20th of June,” Jack Snell, a photographer from London tells me. “We did feel like they were pressuring us to sign as quickly as possible probably so they could get the fees.”

The London Renters Union, a coalition of housing groups and social justice groups campaigning for renters rights, also confirmed to VICE multiple cases of tenants being asked to sign contracts before their move-in date, in order for estate agents to collect the fees.

It doesn’t stop there. Now that the Tenant Fees Act is in place, some landlords are passing the admin fee cost back onto tenants through rent increases. Sarah, who lives in a one-bed flat in south London, recently had her rent put up for this reason.

“I emailed my landlord (as the estate agent doesn’t manage the property) and said, ‘I like living here, how do we proceed for another year?’” she tells me over the phone. “[The landlord] was like, ‘We could do a rolling contract, where nothing will change and we just give each other a month's notice if it's not working out.”

Sarah asked for a 12-month, fixed-term contract. “[The landlord] said, ‘OK, but I'd ask for £25 a month increase in the rent to cover the fees that I'd have to pay with the estate agent.’ Because my contract was due to end at the end of June, and this was about the end of May, and there wasn't too much time, I just agreed because I didn't really know whether you could say no, and I didn't want her to turn around and cancel the whole thing and find a new tenant.”

Indeed, data from the ARLA Propertymark, a professional and regulatory body for estate agents, also shows that rents are increasing, thanks to landlords refusing to take on the admin costs. The June issue of its ‘Private Renting Sector’ report, released this week, shows that the number of renters experiencing rent increases is the highest on record, with 55 percent of estate agents reporting increased rents. Instead of paying the admin fees themselves, landlords are finding ways around the ban and increasing rent for their tenants.

Amelia Heathman, who rents a property in south east London, has also experienced this.

“This year, [the letting agents] emailed us in May asking if we wanted to stay, and I told my boyfriend we would not be emailing them back until June, because I do not want to be hit by a fee again, now this [Tenant Fee Act] has come in,” she tells me. “It got to mid-June, and we said, ‘Yes, sure,’ and they said, ‘OK but the landlord wants to put the rent up by £50 a month.’ It really fucked me off but my boyfriend thought, there's nothing else we can do about it. I genuinely think it is because they can't charge the fee. Nothing else has changed.”

“It's just one of those things,” Heathman continues. “You just feel powerless.”

Sanjana Varghese also experienced a rent hike in her shared flat in north London for the first time in 14 years. “The rent is really cheap. I think [the landlord] put it at that price in 2003 and has not bothered to raise it since,” explains Varghese over the phone. “In June, one of our flatmates wanted to move out. We emailed the estate agents and they said they were going to increase the rent starting from August. It's £13 per person but there's four of us, so that's £52 extra a month.”

When Varghese and her flatmates asked the reason behind the first rent increase in 14 years, they were told it was to cover a “reviewing cost.”

“It doesn't feel like anything we can say,” Varghese says. “When other rents in the area are so high, we don't want to rock the boat too much.”

So, what do you do if you think you’re being screwed over? When it comes to regulating the tenancy fee ban, or even complaining about fees that you believe to be erroneous, there is no unified regulatory body responsible for investigating. Legally, estate agents must be members of a regulation agency – either the Property Ombudsman or the Property Redress Scheme – however, these companies will only investigate a fee if the tenant has complained about it. If the agent is willing to refund the charge, then no fine is issued.

According to Property Ombudsman data shared with VICE, there has been no increase in fee complaints in the month of August, when compared to the previous month. This could be for one of two reasons. Either, that almost all letting agents are now playing by the rules, or, more likely, tenants aren’t aware of where or how to complain about a fee; are too worried about housing security to do so; or are experiencing rent increases that aren’t illegal.

Katrine Sporle, a spokesperson for the Property Ombudsman, says that letting agents have been fully informed of the tenancy fee changes: “It is too early to say how the new law might impact tenants but [the Property Ombudsman] have done all they can to prepare agents for the legislative changes through their annual conference, webinars and changes to codes of practice.”

Other than the universal truth that estate agents are the scum of the earth, why else may they not inform renters of their rights? Sam Hurst, a spokesperson for OpenRent, a letting startup that does not charge landlords admin fees to use its site, tells me there’s no excuse for ignoring the Tenant Fees Act. “There can be no pleading ignorance when it comes to charging tenants payments that are now prohibited by the Tenant Fees Act,” explains Hurst. “The whole lettings industry knew that these changes were coming in, when they started and what they entailed.”

“Some agents simply won't see it as their job to inform tenants of their new rights, especially now they cannot even charge them any money for the pleasure,” adds Hurst. “Such an attitude not only lets down tenants, many of whom will be vulnerable or renting for the first time, but also puts the landlords they represent in danger of huge fines and even criminal records.”

When it comes to rents rising to cover admin fees, the new tenancy fee ban is hardly to blame.

"[These rent hikes] are likely to be accurate in terms of passing on the costs,” says Hurst. “Agents charge around £300 for renewals. But I wouldn't blame the landlord for the increase in rents. Agents don't need to charge renewal fees. Landlords may not know they don't need to accept it when agents try and charge them money that they charged tenants before the ban. Landlords can shop around where tenants couldn't.”

In the powerless world of renting, knowledge is the best defence we have against shitty landlords and estate agents. With plans to ban Section 21 evictions, which allow landlords to evict tenants with no reason, Sadiq Khan’s pledge to introduce renting caps if re-elected as Mayor of London, as well as the government’s commitment to set up a unified regulatory body for agents, there’s hope yet. A silver lining, on the coffee-stained, mouse-infested cloud of renting.