Celebrating the End of Tenant Fees in England & Wales 🎉

News & Updates
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Originally published at: https://blog.openrent.co.uk/celebrating-the-end-of-tenant-fees-in-england-wales/

Almost three years since being first announced, the Tenant Fees Act will finally come into force in England on 1st June. A similar law will commence in Wales in September.

This is something OpenRent has been campaigning for since founding in 2012. So we’re in the mood to celebrate!

The Fee-Free Philosophy

OpenRent has always believed in a transparent and fair property market.

We understand that the tenant is forced to deal with whomever the landlord chooses as their agent.

Tenants choose properties based on their location, price and number of bedrooms, not their agent. They can’t shop around. They aren’t protected by competition keeping agent fees low.

Fees are often hidden, too. Maybe the agent fails to display them on their website. Or maybe they only mention them after you’ve set your heart on a property, or even after you’ve paid a holding deposit. That’s wrong.

We think charging tenants these fees is simply unfair. So we’ve never done it. That simple philosophy has been at the heart of OpenRent for seven years , ever since we founded in 2012.

It’s absolutely no surprise that landlords agree. Landlords don’t want to see their tenants being ripped off by unscrupulous agent fees, either.

With the support of over 100,000 of these landlords, OpenRent has become the biggest letting agent in the UK.

Along the way, we’ve saved tenants £85m in agent fees.

A Long Battle

Before OpenRent, landlords were forced to pay ÂŁ1,000+ to letting agents, who would then also charge the tenant. These fees were hidden and not grounded in real costs.

The 1st June is the day that all tenants in England, not just the 1.5m who have used our site, will be able to find homes to rent knowing that they won’t be ripped off. Soon Wales will follow England and Scotland and become fee-free, too.

We have argued for this result on the radio, in the papers, online and in Parliament for years. By becoming the UK’s biggest letting agent without charging fees, we have proved that a fair and transparent business model is totally compatible with business success.

Because of the support of hundreds of thousands of like-minded landlords, together we have given unfair letting agents no excuse to charge ÂŁ300 per tenancy on average.

OpenRent will continue to lead the sector on transparency and customer experience, using technology to revolutionise the way people rent property in the UK.

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OpenRent - can you point me towards your lobbying for landlords?

E.g. the end of section 21 - thought to be a contributor to many landlords exiting the market.

https://landlords.org.uk/support-advice/april-2019-changes-to-section-21

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Hi Logical Property Dev,

Sure, so we’re a letting agent and our main concern is providing a fantastic service to landlords and tenants with a transparent and fair platform.

So we don’t do any lobbying as such. That is, we don’t present member petitions to politicians, or host events trying to persuade our guests of our policy views. The link you shared is to the NLA site. The NLA are a trade association, and so its certainly within their remit to ascertain the views of their members and lobby for their advantage.

We have, of course, spoken up for our users on many occasions. As the UK’s largest letting agent, OpenRent’s insights are regularly sought by other groups who do lobby policymakers, and policymakers themselves.

For example, we spoke to the Tenant Fees Bill committee, here.

We also spoke at the Work & Pensions Committee investigation into tenants renting while claiming benefits, here. We responded to some of their questions publicly, here.

But more than this, we think that being an example of a company that charges low fees to landlords, and no fees to tenants, we are an example that the whole PRS policy community cannot ignore when planning how the future of the sector could look. By being successful while also being transparent, fair and with small fees, we are proof that the industry can change in a positive way and be successful at the same time.

Sam

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I’m not celebrating with you.
Maybe during your campaigning you could have concentrated on fair and transparent fees rather than no fees at all. As a landlord I’m now faced with £300-£400 bill for every tenancy changeover. Some of that fee is for me to check that whoever’s coming in, is suitable. How is that fair?
On departure I also have to pay to have the place cleaned to a certain standard. Tenants have notoriously differing standards when it comes to cleanliness. How is that fair?

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Hi Anthony,

We agree that it makes some sense for tenants to cover the real cost of their own referencing (i.e. £20, not £100) — if nothing else, then just to make sure that they have a reason to only apply to properties they are serious about letting. This is a point we made in parliament when discussion the Tenant Fees Bill with MPs.

You’re right that paying £400 for a renewal of tenancy is not fair to landlords. We let landlords renew tenancies for free. And if you need to reference new tenants, then OpenRent charges just £20 per tenant.

Letting agents have been able to over charge for too long and the new rules will hopefully force a major shakeup that ends up benefiting both tenants and landlords.

Sam

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You’re completely missing the point!

As a landlord renting a property, I have to pay the council £500 every 5 years to verify that I am a “good landlord” (area: West London), I also have to pay for EPC, Gas Safe & Electric checks across varying periods, to verify my property meets a basic standard.

I now also have to pay for Inventory checkin & checkout (where I previously only paid for the checkin and charged the checkout to the tenant) so that I can make a claim(should it be needed) against a deposit. All this in addition to paying for tenant referencing, to verify they are actually good tenants.

Everything is now loaded on the landlord. I can’t even charge the cost of a professional clean against a poorly maintained property.

Your weak defence of “we don’t charge very much” doesn’t really work when the quality of the services you provide, is as low as the price you charge.

You are clearly are not representing Landlords in your viewpoint in any way and while I understand the need for some legislation to reign in greedy Agents, I feel this legislation is a real punch in the face for fair landlords everywhere, layered on top of all the other pressure and charges (i.e tax), being applied.

JFYI when I mentioned cost of changeover, I meant a new tenancy, not a renewal. Why the F*^$" should I pay anything for the renewal of an existing arrangement, that I’ve already paid for, anyway?

Please explain, in detail, how this benefits fair landlords, in any way.

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Sam,

I struggle to see anything OpenRent have done which helps landlords specifically in all those links you reference.

We’ve got licencing coming in from the council in many of our Cities. In mine they stipulates amongst many aspects a legal duty for the landlord to manage anti-social behaviour from the tenants. We’ve then got the threat of section 21 being abolished - so how do we manage anti-social behaviour without using a section 8 route, which turns us into private detectives gathering evidence. This is just one example where landlords are getting squeezed and many are exiting the market.

I’ts struck a chord particularly as you’re celebrating the fee ban and after checking - I could see nothing OpenRent are doing to help landlords.

Whilst I do like the OpenRent platform and will continue to use it for the foreseeable - you need to realise many agents are going down the online route and you need to be working harder to distinguish yourselves. With your clout you should have private landlords interests at the top of your agenda as all your revenue is now coming from us in it’s entirety.

Regards,
Mandeep

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Ah OK Anthony I thought you were just talking about agency fees to landlords! Sure, happy to respond to some of your points here.

Certainly the government policy of the last 5 or so years has been to make being a landlord less attractive to the more casual investors and accidental landlords by making the sector more highly regulated and highly taxed. Whether or not increased regulation (though not taxation) is a natural consequence of the simultaneous policy of improving tenants rights is hard to say.

OpenRent has on many occasions, not always in public, argued against measures that are unfair to good landlords. We will of course continue to argue for what we see as sensible policy that ensures our users can continue to let property in a fair and sensible way.

But we’re not sorry for celebrating the Tenant Fees Act coming into force this week. It will end decades of tenants being ripped off, and that’s something OpenRent is happy about. We’ve always been against tenant fees and most of our landlords agree that tenants have been ripped off systematically and something had to change.

The Act may not be perfect and it’s not the outcome that we argued for when we were consulted by MHCLG, but it does mean that the landlords and agents who have not relied on ripping off tenants (which I’m sure you will agree is the majority) will now do better than ever, and the ones who did rely on this unfair income will have to make way for them.

This article is certainly written with the tenant’s experience in mind. For a more landlord oriented view, here’s a piece from a few months ago called Tenant Fees Act (2019): What Landlords Need to Know.

If there’s a particular service you’ve used of ours that you’d like to give specific feedback on, we’d be really eager to hear it and get back to you. You can reach our team at FAQs | OpenRent.

I totally agree. But many (most?) agents do charge tenants and landlord renewal fees. I’m just saying its something OpenRent has never done.

It was good to read your thoughts here and do come back if there’s anything you’d like to add.

Sam

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Hi Sam, rant over for me…almost… I think what’s clear to me now, is that the government hasn’t managed to differentiate Agents from Landlords. I expect in most cases(maybe not all), it’s not Landlords that charged fees it’s the agents they used and Landlords have little say in that. It seems that the landlords are now mainly paying for unscrupulous activities of Agents.

I’ve already provided feedback on the issues with the services that I’ve experienced.

Cheers
A

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And so it begins…
No financial buy in from applicants.
Just had credit check returned as refused due to multiple CCJ’s.
Welcome to the new world of no risk at all to applicants who want to tell a few fibs but landlords pouring away money on wasted reference fees.
Nothing to celebrate here. Was ÂŁ20 really too much for an applicant to pay just to keep them invested in the process ??

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Hi Steven,

A really good point and one we agree with and argued for. Tenants now have no disincentive not to speculatively apply to dozens of properties and may not realise the cost of the work landlords must do to in order to reference them so they can, for example, be eligible for essential Rent Guarantee Insurance.

A classic case of good landlords being harmed by measures meant to stop the bad practices of others.

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Poor Sam,
I´m with you man. Thanks for defending the tenants!
Look, like in many markets, the lettings had plenty of intermediary bloodsuckers that made an insane profit selling smoke and mirrors. Referencing process are not serious nor a guarantee of anything, the inventory check is absolutely overpriced, the contract preparation 120 quid…really? they copy and paste two names, a price and an address!
I understand that agents incur in fix costs when it comes to the viewings that don’t end up in a contract, but the fees that tenants were paying was just bonkers.

The problem that I find in the Act is that since it does not top landlords´ fees, that may result in intermediaries (agents) increasing even more those crazy fees, what will, in some cases (the least hopefully) be an incentive for landlords to increase the monthly rents to tenants. Long story short, again the poorest (those who cannot afford a property) are paying more.
Anyway, let´s see how this all develops, but I am a fan of OpenRent´s idea, you own it, you manage it. Make a fair profit for it and avoid unnecessary intermediaries.

All the best

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I’m no longer a renter and now a landlord but am fully with OpenRent on celebrating this landmark day, which to be honest I never thought could happen in the UK.

As a tenant in London, before I discovered OpenRent, we paid hundreds of pounds in non-negotiable fees to agents and landlords who literally made things up as they went. After hearing a friend sing OpenRent’s praises, I decided that I would only look for OpenRent properties and found a decent landlord, paid no fees AT ALL (he did his reference checks manually by looking at my id, income proof, etc), charged no fee for tenancy renewal (upped the rent by just £15 a month after a year, can you imagine an agent doing that?!) and genuinely valued having a decent tenant.

We moved on to buy a home and later, when we rented it out, paid it forward by using OpenRent (we did charge the tenants the ÂŁ20 reference fee though to get it done through OpenRent) and nothing else.

As Sam explains, there a few issues such as the inability to charge a small fee for reference checks, but overall the Act has got 9/10 things right and that’s a great first step.

There will always be a place in the market for full-service agents but it is only right that landlords (who have to power to choose their agents in a competitive market) pay for the services provided by an agent. If some agents still persist with unjustifiably high fees like a hundred pounds to print and sign a standard tenancy contract, landlords will no doubt find more efficient agents who won’t charge as much. That is the point of the Act.

Once again, kudos to OpenRent for getting this right 7 years ago, when nobody could ever think that such a day would come!

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Ah thanks so much Rahul.

I’ve showed this around the office and we’re all so happy that someone has used us both as a tenant and a landlord and had a good experience both times!

Most landlords are like yourself: they have a small number of properties, they care about their tenants’ experience of the process and they are increasingly demanding real value for any work they may decide they want from an agent.

Hopefully we will continue to set an example for the rented sector in the coming years!

Thanks for your support :slight_smile:
Sam

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Have I missed something here? I thought two of the justifications for retaining the holding deposit were (a) if the tenant had been deliberately misleading (eg had previous undeclared CCJs) or (b) withdrew from the tenancy when offered. So I will now make it very clear to prospective tenants that I won’t return their holding deposit in these cases. In the past I just sucked it up, returned their deposit less the referencing cost and moved on.

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