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The subject of letting agent’s fees is a hotly debated topic in the property market, with every side of a tenancy having strong opinions.

This week the Labour party ignited the debate when shadow minister for housing Emma Reynolds wrote this open letter to agents:

“Private renting is now the norm for 9 million people, including 1.3 million families.Many face unstable short-term lets and high letting agent fees every time they move. There is little transparency about what people are charged, with renters paying £350 on average. These charges are unfair on tenants and are for services for landlords that they are also charged for.That’s why the next Labour government will introduce legislation to ban letting fees for tenants.But a solution is open to us now. I’m asking you to help renters with the cost-of-living crisis: please stop charging tenants these unfair fees now.

Emma ReynoldsShadow Minister for Housing”

Responses to the letter were immediate. Ian Potter from the Association of Residential Letting Agents said the plan could have an “adverse affect on tenants”.

“The challenge we have today is an unregulated market and a worrying lack of supply.

“Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.

“Political posturing on an issue that has such a great impact on people’s lives is unfair.”

It’s clear that Ian believes the fees to be a necessary part of the letting process and a ban could lead to increased rents.

On the other side of the coin, tenants’ campaign group Generation Rent posted their own blog on the subject. Director Alex Hilton wrote:

 “Supply and demand.

Oh you wanted more than that?

Ok.There is short supply and high demand for homes to rent. The balance between these forms a price that a tenant is willing to pay a landlord. So far not controversial.However, that is not how the relationship between tenant and agent is characterised. At the time of signing a contract, the agent is the gatekeeper to a single home with any number of keen tenants. The agent is not an actor in the market for homes to rent but a creator of micro-monopolies for single homes.This is the reason why letting agents behaviour, hidden fees, discrimination, poor customer service etc. is so rife, and indeed why these behaviours are rarer in areas where supply and demand for homes is in better balance.The relationship between agent and landlord on the other hand is vastly different. The landlord holds the home and agents are many in number, requiring no great skill and no qualifications at all. The agents have to compete with each other to win a monopoly over the tenancy of a landlord’s property. So agents won’t be able to hike up fees to landlords because the landlord will just go to a cheaper agent. This will lower agent fees until they are more reflective of their cost base, at which time they will have to start competing on other grounds, such as professionalism and customer service.By banning letting agents fees to tenants, less money will go to agents, that’s true. But landlords should expect lower costs and a better service as the effects play out. And more professional agents will be of benefit to tenants beyond the absence of exploitative fees. In fact, if this were implemented quickly and the market effects on agents flowed through quickly, that could radically undermine the case for mandatory licensing of letting agents.This is such a classic market solution to a social problem that I’m surprised it’s not Conservative policy.So like I said, it’s supply and demand.”


So it seems everyone thinks the move will have different consequences. Some in favour of tenants and some against. At InventoryBase we always keep up-to-date with the property industry and would love to know what you think?

Will the move improve the current rental market or have the opposite effect? Are you a landlord or tenant that feels strongly either way?  If so, tweet us @InventoryBase