Councils warn about impact letting agents can have

Published on Monday, 04 February 2013 09:22
Posted by Vicki Mitchem

Extortionate fees charged by some letting agents are exacerbating the housing crisis, local government leaders are warning.

Some letting agents have been found to be charging non-refundable admin fees in excess of £500, according to recent research.

The Local Government Association, which represents more than 370 councils in England and Wales, will be looking to raise the issue, along with concerns about rogue landlords, at a select committee inquiry on private rented sector housing today (Monday).

Councils are warning that as well as being unfair on the increasing number of people who rent, letting agent fees in some areas are so high that they could be acting as a barrier to people being able to find a house or flat in the private rented sector, particularly for younger people on low incomes. Some local authorities have set up their own letting agencies to ensure tenants get a fair deal.

Councils believe private rented housing plays an important part in meeting housing need and work with landlords to ensure the availability of good quality appropriate housing in the local area. While the vast majority of private sector landlords provide good housing, local authorities are calling for more effective powers to protect tenants from rogue landlords who do not.

Councillor Tony Newman, member of the LGA's Environment and Housing Board, will be giving evidence to the Communities and Local Government Select Committee inquiry on the Private Rented Sector this afternoon.

Speaking ahead of his appearance, Councillor Newman said:

"With the housing market stagnant and a shortage of mortgages available to help first-time buyers, people are increasingly turning to the private rented sector to find a home.

"Now, more than ever, we need safeguards in place to help people find good rental properties and protect those who rent from bad landlords and rip-off letting agents.

"For many people looking to rent, especially the younger generation moving out from their family home, the up-front costs of a deposit and agency fees can be huge. We've heard stories of some letting agents charging hundreds of pounds just to carry out basic credit and reference checks. For people in the early stages of their career and on relatively low incomes, this can prove a stretch too far.

"Pricing people out of private rented housing in this way is adding to the pressure on already over-subscribed waiting lists for council and social housing.

"The vast majority of private sector landlords provide good housing and a fair deal for their tenants but there are some bad landlords out there which give the rest of the sector a bad name by renting out shabby, substandard homes. We've seen examples of people being made to live in squalor in properties that are small and unsafe, crowded in with too many other tenants by landlords more concerned with their profits than the wellbeing of their tenants.

"We need government to strip away some of the needless bureaucracy which makes it more difficult for councils to help protect those tenants who are being ripped off and forced to live in substandard housing."

According to the Government's most recent English Housing Survey, there were 3.62 million private rented households in England last year – an increase of more than 1 million in six years. Over the same period, the number of people owning their own homes fell.

Official statistics also show that the number of families in England waiting for social housing rose to 1.85 million last year. Councils are concerned that some of those families may be being denied the opportunity to rent privately because of excessive letting agent fees and dishonest landlords.

Local authorities in some problem areas have started acting as letting agents to help out people looking to rent.

Councils in Derbysire formed the Decent and Safe Homes local lettings agency in 2010 to match up referenced tenants with trusted landlords, more information about them can be found on their website:
Decent and Safe Homes East MidlandsThe London Borough of Harrow Council set up Help2let, the first social letting agency in London to help people on the local housing waiting list with private landlords.

Councils are also calling for government to lift some of the restrictions which make it hard to tackle rogue landlords who exploit tenants

Source: ©LGA

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