UK letting agents' fees cheaper than many countries, claims ARLA

The Association of Residential Letting Agents is keeping up its campaign against a ban on agents’ fees in England by showing how the industry’s charges compare with overseas.

In research presented to yesterday’s ARLA Conference in London the association says that the fees charged by UK letting agents are lower, compared to other major economies. 

In France, higher-end agency fees are at 12 Euros per square metre, or £416 for a 40 square metre Parisian apartment, while in the USA, fees equate to a month’s rent – $1,404 or £1,132 on average.

ARLA’s research, conducted with Capital Economics, also says that the UK Treasury is in receipt of £400m in employee taxes from letting agents which is at risk if there is a hit to employment in the sector.

Further, letting agent activity supports a huge range of jobs through spending with suppliers, such as maintenance firms and legal firms, which will all be put under pressure if activity falls. 

“Using government data, we estimate that letting agents spend around £1.4 billion annually on goods and services such as accountancy and legal fees, building supplies and government services. Overall the spending on suppliers supports around 17,000 jobs indirectly across the UK and £1.1 billion of value added” notes the report.

David Cox, ARLA Propertymark chief executive, says the lettings sector is worth about £4 billion and employs around 58,000 people all over the country. 

“The government’s Autumn Statement announcement that it plans to ban letting agent fees was the third big blow in as many years for agents, and exacerbate the threat to the private rented sector; an increasingly important tenure on which millions of people rely” he says.

“For many tenants, buying a property simply isn’t an option, and they must depend on the private rented sector to provide security, good standards and fundamentally, a home. Our findings show that landlords are likely to raise rents as a result of the ban on fees” Ward concludes. 

Yesterday we reported that ARLA’s research indicates there are 4,000 jobs at risk if an outright ban comes into force on letting agents’ fees. 

The research says letting agent fees account for around a fifth of letting agents’ revenues, and fund the cost of vital checks required to set up a tenancy agreement. 

If they are banned outright when the government publishes its consultation, agents will need to pass the costs on to landlords through higher agents’ fees. 

The research indicates that two in five landlords (41 per cent) expect they will need to pass on a portion of the inflated cost to tenants, and the research finds they will most likely push rents up by £103 on average per year. 

If landlords were to pass on the entire uplift in agents’ fees, tenants would be hit harder, typically seeing rent increases of £275 a year.

There would be a huge impact on the lettings sector as a whole, which employs around 58,000 people across the country.