Cambridge letting agents ‘exploiting vulnerable tenants’

08:08 Monday 6th October 2014
BBC Radio Cambridgeshire

DOTTY MCLEOD: People in Cambridgeshire are being ripped off by unscrupulous letting agents charging excessive fees.That’s the fear of the MP for Cambridge, who wants to see a code of practice adopted by the lettings industry to curb excessive charges for reference checks and tenancy agreements. Administrative fees for three people moving into a three bedroomed house in Cambridgeshire vary from £650 at some letting agents in Cambridge Peterborough and St Neots to just £225 at one agent in Fenland. Julian Huppert says with rising house prices and a shortage of affordable homes, more people are now being forced to rent. He joins me on the line now. Morning Julian.
JULIAN HUPPERT: Morning Dotty. How are you?
DOTTY MCLEOD: I’m fine thank you. How do you know that these fees are actually excessive.
JULIAN HUPPERT: Well I think you can just look at how much is being charged. I had a look around in Cambridge at some places charging £250 to change a name on a form, £16 for sending an email or a letter. It doesn’t cost that much for a stamp and an envelope and certainly £16 for an email is pretty steep. But also there’s been work done around the country. So Shelter did a survey, and found that one in seven people who use letting agents have to pay more than £500 just to get started. That’s an exorbitant amount of money for people who often are struggling to get the money together to pay for the deposit and the rent anyway.
DOTTY MCLEOD: And do you think that this is a problem in Cambridge specifically?
JULIAN HUPPERT: It’s particularly bad in places like Cambridge, because you might say there’s a free market. If people think they are paying too much they’ll just go somewhere else. But anybody who has tried to rent a property in Cambridge will know you simply don’t have the opportunity of saying oh no, I don’t like this agent, I won’t look at any of their properties. You have to act very very fast. You have to be open to it. So people don’t really have an opportunity to choose.
DOTTY MCLEOD: Well also on the line is David Cox who is the Managing Director of ARLA, the Association of Residential Lettings Agents. David, something like that, charging more than £100 to change the name on a form, that’s quite hard to defend, isn’t it?
DAVID COX: Good morning Dotty. I think it’s slightly more involved than just changing the name on a form.
DOTTY MCLEOD: Well explain what might be involved with something like that. Because maybe we don’t realise what the letting agents have to deal with.

DAVID COX: Well letting agencies are running businesses. They are providing a vital customer service to both landlords and tenants. There’s an awful lot of work and expense going on involved in marketing properties, advertising properties, complying with all the legal requirements that go around legally setting up tenancy agreements, and complying with things like health and safety regulations, shortly immigration checks, and an awful lot of legal burdens placed on letting agents.
DOTTY MCLEOD: But surely an agent in Fenland that’s charging £225 in initial fees has to deal with exactly the same amount of legal bureaucracy as one in Cambridge that’s charging £650. So what are they using that money for?
DAVID COX: Absolutely. And it’s the same legal requirement and the same administrative burdens wherever you are in the country. And there is no doubt that there are some agents that are exploiting vulnerable tenants, particularly in the student towns, where people are renting for the first time. And that is why I agree with Dr Huppert that we need greater regulation of letting agents, because there are some people out there that are exploiting tenants, they are offering sub-standard properties.
DOTTY MCLEOD: Julian, what kind of regulation are you calling for?
JULIAN HUPPERT: Well I think there’s a whole range of things. On fees, I think you should limit the actual cost. And in Scotland for example, where letting agent fees have been banned, that seems to have worked quite well. Of course letting agents should be able to get money for the work that they do, but they are also paid by the landlord in the first place. And I think we also do need to have greater regulation overall of letting agents, because while some do their job very well and don’t try to exploit people, there are some who do, who will try to hang on to deposits for a very long time, who will leave people in massively sub-standard properties. We cannot just simply ignore this.
DOTTY MCLEOD: And Julian, you have said that you want a property ombudsman, or a housing ombudsman, but there is one. We spoke to him earlier. Is there some confusion around that?
JULIAN HUPPERT: The ombudsman only covers some properties, so generally properties that are in the social sector, and there’s no requirement for anything in the private sector to be able to get to them.
DAVID COX: Dr Huppert that’s not true. A new piece of legislation came in last Wednesday morning that requires all letting agents to be a member of a compulsory redress scheme, an ombudsman service. And any agent that is operating today that is not a member of the ombudsman service is liable to a £5000 fixed penalty notice. One thing that we are saying, if people find these agencies, please do let the local authorities know. They are prosecuting bodies. And if they don’t want to go to the prosecuting bodies themselves, come to ARLA and we will notify offences on their behalf.
JULIAN HUPPERT: In that case I stand corrected. I hadn’t realised it had finally come into play. It’s something I’ve been calling for for quite a long time, and I’d clearly missed that announcement. But I very much welcome that that is now finally in place.
DOTTY MCLEOD: You might have to rewrite the speech a bit for the conference Julian.
JULIAN HUPPERT: I’ll be able to edit it, and thank you for the advice. And ARLA has done some very good work in helping us to deal with this, because the good landlords do behave well. It’s the bad ones that are a problem.
DOTTY MCLEOD: Isn’t the problem here really though Julian, doesn’t it go back a level to the fact that there’s so few places in some cities like Cambridge where it is affordable to live. People can’t buy homes, so the private rental market is simply saturated.
JULIAN HUPPERT: Absolutely. Some people want to rent. It’s not that everybody is necessarily forced into it. It’s a choice for many people. But yes, the problem of prices in somewhere like Cambridge is huge, which is why we have to have much more housebuilding, we have to build more affordable homes, we have to have more social homes and council homes. And we’re finally getting some of those being built. When we LibDems ran Cambridge City Council we set up a scheme for example to build 2,000 more council houses, as well as going to 14% affordable homes on all new sites. But there’s a lot more that needs to be done to make sure that the prices are affordable.