How widespread – or otherwise – is the practice whereby you are charged by another agent for a reference for one of their outgoing tenants?
The subject has been entertaining an ARLA forum and dividing opinions.
Some agents describe it as the norm, with prices ranging from £20 to £50, while others say it is a restriction of trade, holds things up, is a practice that should be on the way out – and is exactly the kind of thing that could prove ammunition for Shelter.
One person goes so far as to call it blackmail: “When my daughter was charged, it was ‘pay the money or we will not give you a landlord’s / agent’s reference and therefore you will not be able to move’. They had her over a barrel.”
Some agents, it appears, charge the fee even though it does not appear in the terms and conditions. Others put the facility in the agreement but rarely enforce a charge, regarding it as something that should be a matter of goodwill between agents.
David McMaster, a former ARLA president, says it is a growing practice among the big corporate agents, but is it really ethical, he asks.
One Leeds agent says that there are a few in his city who now charge for an outgoing tenant’s reference: “My opinion is that this is the final nail in the coffin and I refuse to do it. Bad tenants don’t usually ask for a reference and good tenants deserve a free of charge reference.”
Others think that supplying a reference is work for an agent, and charging for it is fair, so long as it is spelled out.
In Scotland, of course, such a fee could not be charged to a tenant by either a landlord or an agent, although there is presumably nothing to stop one agent charging another.
Agents also point out that local authorities are in the habit of charging – in the case of Reading Borough Council, apparently £60 – for providing a reference for former council tenants moving into the private sector.
What are your thoughts?
Comments
This is ridiculous. I have been renting from a housing association, and I daresay I was looking after the property more then the association itself. My tenancy started after nearly two weeks delay, as it turned out that "cosmetic works" had to be carried out. As an "apology" for this inconvenience (which cost me a lot of stress and money), the association... washed filthy carpets in that flat. The property was not even well cleaned not to mention dirty walls. I painted it all over the weekend when I moved in, only to notice that in the bathroom there is a leak, which occurs every time my neighbour takes a shower. After reporting this many times, what followed was a stream of inspections, which failed to get the cause of the leak, mainly because the flat upstairs was never inspected. Finally, the problem was fixed after over a year and lots of nagging from my side and lots of time wasted on waiting on repairmen, some of whom never came. I am finally moving out, and- the association states that my notice period must incorporate my tenancy start date. Fair enough, it says it in the agreement, but I still gave them enough time (5 weeks) so that I can move out on the last of the month. All I needed was a bit of good will. Instead, I received a cheeky letter demanding £25 for references (?!) and suggesting that if I recommend someone whom they accept as a suitable tenant and who commences the tenancy in the flat within seven days from my moving out date, I can receive a financial incentive. Now, lets be realistic: this can only happen with a massive stroke of luck,as this tenancy expires in the middle of the month.
Let's face it: in the UK its like you either have it all (you own your place) or nothing (you are faced with totally unjustified fees). Shame on one of the largest and oldest associations in the country, priding itself on "bringing homes to people" for such practices. I will definitely not be recommending anyone to go through hell of renting with them and even more- will try to do all I can to warn people against them. A lesson learned for me: sometimes it is worth to pay more to rent with a good agency, as long as you read the contract and ask about renewals and all the charges. If you cannot afford it, rent a room, it will be cheaper and at least you won't have as many responsibilities.
I had to pay 250pounds for a reference check with the letting agents before moving into a my flat. After about, 8 months the landlord called to let me know he would like to move back into the flat. We informed the letting agents about our situation and they found us a flat and asked us to pay 250 pounds again for another reference check. I asked what could have changed in the last 8 months but they were not at all helpful. I was in a desperate situation so had no choice but to do it. I feel very disheartened when i hear this is the norm. It seems like such a rip-off.
In our Terms of Business we do have provision for a modest charge of £20.
For most of our departing tenants we point this out, but tell them that in their case no charge will be made. These are the tenants where we have built up a relationship of mutural respect - they've looked after the property, so in turn we will look after them.
The rest, where they have been a pain, or have made unreasonable demands whilst in occupation, then we do charge.
Seems reasonable to me.
This is stupid and confusing!
Of course the tenant should not be charged - they do not have to request a reference. The people (usually an agent) who do insist on a reference (usually written) should pay for it.
There should be NO charge for a reference. My company does not require physically "looking in files" to check the outgoing Tenant out as all inspections and financial information is on our system with a click of a button.
I suggest other agents including our local franchise! nearby branch take stock of this and stop ripping tenants off.
I have been running a Letting business for over 13 years and I personally have never heard of an agent charging for a reference. Perhaps just not discussed amongst local agents but I don't recall any tenants mentioning being charged? Maybe our location?
Whilst we have never nor would we charge of a reference, I would like to point out the following:
1. Providing a reference does require an agent to review the file, maybe review/look back on the Interim inspections & reports, review the payment schedule and then type a response. All of which takes time and costs the agent in manpower & money.
2. Other professions would NOT provide such a service free of charge! Furthermore, if our bank writes to us or returns a payment, we are charged for the service. Barclays have just reported profits in excess of 1 billion pounds.
Again, I reiterate that we do not charge - but when other professions, such as solicitors/legal services etc., charge £50 - £75 a letter or £375.00 per hour, it is offensive that agents are accused of FLEECING or ROBBING applicants when they are in fact taking the time to provide an important report on how someone has lived and how they have conducted their finances & the tenancy.
3. Finally, in spite of not charging for this service and to add to the insult and workload, we are often 'bombarded' by agents or reference companies to provide this information within minutes of the request, emails, faxes and calls come on a regular basis hounding for a reply by return when we are often out of the office on appointments.
So, for a service we, like many agents provide FREE, it would be nice to see some patience.
The charging argument Nationwide - I do not agree with the Scottish ruling on charges. As long as they are reasonable and transparently detailed in the terms then it should not be expected that agents work for free. The argument to charge back to landlords or work it into the commission cost cannot work as we are being forced to continually reduce management fees not increase them. Having worked within the Sales and Rentals sector for 15 years it is evident that agents do and will continue to get bad press, whether they are professional or not. It is sad that the 1980's wide-boy image remains when most serious agents are professional, work very long hours and take an awful lot of abuse from the general public, whether buying, selling, renting or letting. It remains a battle to prove and validate our charges for services when often, we take on board other responsibilities during the sales or rentals process.
This type of practice cost me my job!
I refused to charge it. The process is what again gives this profession a bad name.
Sadly, it is often a fee charged by the corporate agencies more so than the smaller ones. However, some of them are not exempt either. Sadly, it is more likely to be an estate agent who has latched into lettings, more so than the other way around who once again tries everything in the book to up the profits.
Tenancy renewals are just the same! Since when do you need to renew a contract unless you are asked to? But that is another argument all over again.
Stop this practice NOW
We have never, nor will we ever, charge to provide a Tenant reference.
Our local franchise! agent charges their tenants £35 for what amounts to a faxed "tick box" document taking all of 5 minutes to produce.
As part of our referencing process (for local applicants) we carry out a home inspection - just to make sure the applicant(s) is looking after their current home as we would want them to look after our Landlord's property.
On many occasions, if we have bank statement proof that the rent has been paid on time and a good home inspection, we advise the applicant(s) to tell their agent to stuff the reference and their charge!
I have to say I am shocked that Agents would charge for a reference for a few simple yes and no responses.
Our tenants will not be charged, as some have said, it is a pleasure to give a good reference to a good tenant.
Letting property enables us to enjoy a captive market but that doesn’t mean holding the tenant prisoner. Is it any wonder our fees are being scrutinised? We may well run a business but this threatens the very core of its value, good will.
We build a reputation on word of mouth whilst some among us crave the instant gratification of a positive Internet review but when asked to do the same we demand remuneration.
A closed door hypocrisy that whilst lauding our ‘customer service’ selectively chooses its implementation based on money. It’s a mercenary act and we should all be embarrassed at yet another cost of doing business with an agent. How are we to be trusted when we use membership, redress and CMP to cloak the dagger of spurious fees? Let the other industries participate in this practice and let it be their epitaph.
Zero regulation has left us to our own devices and sadly this is the best we came up with. Greed will be our downfall, its given birth to the online agent and now incurs the wrath of many so isn’t it time we all swapped the big knot tie for more sensible attire?
There's nothing wrong with charging for the work you do - I wholeheartedly agree with the sentiment that we're businesses not charities.
However, there's a difference between charging for the work you do (and making an honest profit on it) and seeking to take every opportunity to screw a few more quid out of your tenant.
I'd say charging an outgoing tenant to provide a reference comes under the heading of trying to screw a few more quid out of them.
......And charge the company seeking the reference the fee.......
Spot on!.
@DevPaul and anyone else giving references
If it can be proved that you knowiongly made a wrong statement in a reference, and if it can be proved that this adversely affected the referenced party, such as a tenant losing a property or more especially someone losing a possible job, because of the reference, you can write whatever you like on the reference to try and limit your liability, but it won't save you from a damages claim.
Lying, whether deliberate or not, or misleading on same measures, cannot be indemnified against in terms of subsequent liability.
Plenty of damages cases over the years - one cost Cardiff University £25K about 20 years ago when a tutor said a student was such an emotional mess she probably wouldn't even complete her course.
A similar case cost an ex-employer a similar sum only last year (or late 2011) in similar circumstances. And that was on an employee who had left them three years earlier!!
Always tell the truth in references even if you end up stuck with the tenant from hell !!!
And charge the company seeking the reference the fee.
We always, at one time to a telephone request, give a verbal response for free (if it would be negative we declined altogether - read into it what you like). If a written response was requested a small fee charged (try getting a written response from any other profession for free) Nowadays the reponse, if it is, is just 'satisfactory', anything further can ask for trouble
Added by on 2013-02-12 11:37:47
Has a point!
Have followed this for sometime and managed to avoid my Soap Box so far - but no longer ....
I never have agreed with, nor will I ever start, charging for supplying a reference - if you've had a good tenant it's the least you can do for them!
And to those who say we are not a charity, I agree, but there was a time when the services we provided were covered by the management commission - and these services included taking inventories, carrying out inspections, undertaking repairs, providing references, etc.
There ... I can get down again
"You people who make no charge at all for your labour.
Are you really business people or a charity?
Get real and charge a reasonable amount. Something for free is not usually worth much!"
We are in the service industry; we just don't see it as a last chance to screw money out of someone who we have already earned out of.
A reference isn't enhanced in anyway by being paid for
We dont charge tenants for references its a pleasure for us to write a few words recommending them if they've been good tenants, the way i look at it they've made my job easier. However I know agents that'll give a reference to any Tom Dick or Harry as long as they get paid, they just maintain if they put the magic words 'Private and confidential without prejudice' as a header that'll cover them. We're an independent High Street Estate/Letting Agent all we have is our reputation.
You people who make no charge at all for your labour.
Are you really business people or a charity?
Get real and charge a reasonable amount. Something for free is not usually worth much!
It is a practice we will never do.
We rarely charge tenants for a reference however we do charge mortgage companies since they charge us and we have a list (very short) of local agents who charge and we in turn charge them.
If we are asked for a reference on a tenant who left some time before, we would then make a charge since that involves checking older records, emails, letters etc.
We don't charge for verbal references nor do we charge for printing a statement of account off, but we do make a modest charge, £25 for a written reference, which we resisted until Doncaster Council started charging, £35 for referencing a council tenant! For the record South Yorkshire Police now charge £52 for an employee reference.
Sorry meant to add some good points being made here and meant to add charge the other agent first since as already flagged up if not in your T%Cs as signed by the ex tenants you cannot charge them for it anyway especially if they are not yet actually ex tenants!!
If some third party wants to charge a fee that is between that party and the tenant. It has nothing to do with the Agent letting the property. There other third parties also charging fees for references why have you just highlighted Agents?
Here is a subject on which I can speak with a little experience and knowledge!!
When at NBS 20 years ago it was quite common to charge a modest fee for references usually from second mortgage companies. I don't recall charging other lenders because they asked so few questions.
But the 2nd mortgage ones - the names Lombard North Central and Cedar Holdings come affectionately to mind evan as I type this - had a very long list of questions usually at least 20+ AND, more to the point, wanted the Land Registry Title number and a couple of other details that meant we had to go to the Legal Dept to get the information.
So it took a bit of effort for which initially the fee was £7.50 and by 1994 when I left was £12.50
In terms of tenant references the most questions I have ever seen asked is about 5 if that, and usually very easy to answer.
ARLA rules used to be members should not charge each other - has that changed?
Charing the tenant for providing the reference means they are paying twice as they will have paid an application fee to include this cost to the new agent.
One other thought, a tip for you. The trouble with references is that it is easy to be creative without lying when they are completed, so when received by you they are next to useless. Here is the only question you ever need to ask when seeking a reference:-
Has the tenant always met all their obligations and liabilities in full and on time throughout the tenancy in respect of financial payments and treatment of the property on every occasion when such obligations have arisen?
Ask that and it is impossible not to be truthful, no wriggling room on that question!!
"How many Letting Agents would ask for the tenant to return the favour and provide a reference for them?"
Good point!
I would never charge a tenant for a reference. Last impressions and all that.
To be fair if you are providing a service then why shouldn't you charge. Why should you be expected to do it for free
However my firm doesn't charge and we put it down to being part and parcel of the job - also stops tenants having something to moan about!
We have a couple of agents in town who do this, the last one I saw was £35 plus vat. The tenant, against my advice, paid for it and we got a one line ref - 'The tenant moved in on xx/xx/xx and paid the rent on time' They point blank refused to answer the six short questions on our standard reference request letter and had the cheek to suggest that they might if we also paid them for a reference!! My reply is not printable here.
Personally I think its reprehensible for an agent to charge for what is a common courtesy to another agent or landlord and a service to a tenant who has rented a property from you and already provided you with an income.
"One Leeds agent says that there are a few in his city who now charge for an outgoing tenant’s reference"
Yeah VERY few - including the biggest - Linley & Simpson.
Disgrace.
As pointed out in the article, bad tenants rarely request references, good tenants deserve to be given a reference free of charge.
How many Letting Agents would ask for the tenant to return the favour and provide a reference for them?
Just a thought!
First came across it nearly 20 years ago. Nothing new here then!