"Punishing landlords for having a great property that people want to remain in is just absurd"
- Phil Shelley - Hello Neighbour
Landlords renting property through high street letting agents are wasting up to £1bn a year paying unfair renewal fees, according to property-tech lettings company, Hello Neighbour.
There are over one million rental properties in London and approximately 760,000 of those properties are using high street letting agents.
With the average tenant in London staying in their rental property for two years, landlords are currently paying renewal fees on 380,000 properties each year.
While renewal fees vary, the average is approximately 8.5% (incl. VAT), meaning that for an average London rent of £2,500 a month, landlords are handing over an additional £2,550 to letting agents for their current tenants to simply renew - literally money for nothing! That is just for the second year. If a landlord is lucky enough to keep the tenant for a third year the cost just keeps adding up.
But it’s not just renewal fees that incur unfair costs. Letting agents are increasingly encouraging 18-month or two-year tenancy agreements at the outset to provide long-term security for the landlord and to help the tenant “beat the queue”.
What this actually means, however, is the agent can charge the highest letting fee - not one discounted for renewals - for the longer full period up-front, whilst still only finding one tenant and without even having to amend the contract.
They then charge additional fees for the contract, the references, the inventory, holding the deposit and arranging safety certificates – this is all on top of the initial % fee and renewal fees.
For landlords that only sign a one-year agreement, the renewal fee recurs every time a tenant signs up for another year - with specific clauses in tenancy agreements that incur an annual renewal fee for as long as the tenant they initially found remains in the property, the money keeps rolling in for the lettings agent.
To combat these unfair fees, Hello Neighbour today launches its “Stop Renewal Fees” campaign to educate the market and equip landlords with the questions they should be asking their agents so they understand what they are signing up to.
Hello Neighbour is encouraging landlords across the UK to sign up to the campaign here and pledge their support to stop renewal fees for good.
Phil Shelley, Chairman of Hello Neighbour, said: “For too long, high street agents have taken advantage of landlords by charging fees for things that just aren’t fair - especially renewal fees. It’s crazy to think that landlords are handing over this kind of money every time their tenants simply choose to stay in their homes for another year.
"Punishing landlords for having a great property that people want to remain in is just absurd. Inevitably, these renewal fees get passed onto tenants through increased rents which many landlords need to do to make it viable for them. So in reality, both the landlords and tenants are the ones who suffer, while the letting agents’ revenues continue to soar.
“We are determined to put a stop to this and that’s why today we are launching our “Stop Renewals Fee” campaign to educate landlords and let them know there is a better way so we can change lettings for good.”