We've run the numbers and it's crazy but true – London's landlords are wasting up to £1bn a year paying unfair tenancy renewal fees, when renting their properties through high street letting agents.
There are over one million(1) rental properties in London and approximately 760,000(2) of those properties are using high street letting agents. With the average tenant in London staying in their rental property for two years(3), 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.
"Hello Neighbour has launched our “Stop Renewal Fees” campaign to educate the market and equip landlords with the questions they should be asking their agent, so they understand what they are signing up to." - Richard Jenkins, Co-Founder & CEO, Hello Neighbour
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 to “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 has launched its “Stop Renewal Fees” campaign to educate the market and equip landlords with the questions they should be asking their agent, so they understand what they are signing up to. Hello Neighbour is encouraging landlords across the UK to sign up to the campaign and pledge their support to stop renewal fees for good.
Here's a few words from Phil Shelley our Chairman on the matter:
"High street agents are taking advantage of landlords by charging fees for things that just aren’t fair - especially renewal fees. Why punish landlords for having a great property that people want to remain in, it's just absurd. Inevitably, 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 landlords and tenants suffer, while high street letting agents’ revenues soar. " -Phil Shelley, Chairman at Hello Neighbour
Hello Neighbour was founded in 2018 to combat the lack of transparency and fairness for tenants and landlords in the UK rental sector. With greater tech efficiencies and great customer service, Hello Neighbour is seamlessly combining the benefits of technology with our own experienced team, to make letting a property more affordable than competitors. Hello Neighbour doesn't charge renewal fees at all, and only charges a one-off fixed fee to the landlord of £890 (incl. VAT) with no additional costs to find and move in a tenant. This means we save landlords up to 73% of fees compared to traditional high street letting agents. We are already serving over 1,200 landlords, currently letting 200 new properties a month and have recently let our 2,000th property.
1. According to the latest Census, there were 1.03m occupied dwellings in London’s private rented sector in 2021, home to approximately 3m people - GLA Housing and Land Housing Research: Understanding recent rental trends in London’s private rented market , June 2023
2. 80% of 9000 landlords within the 2021 English Landlord Survey had agents register deposits on their behalf. In a separate survey run by Hello Neighbour 76% of landlords were with a high street letting agent.
3. Private Rented Sector Report – Propertymark, March 2022
4. Rightmove, May 2023
Powered by tech, driven by people, Hello Neighbour is a property letting and
management company. Managing over 12,000 tenant enquiries and nearly 200
new properties every month, we’re on a mission to change lettings for good.
Want to support Hello Neighbour's campaign to Stop Renewal Fees? Sign their petition here: https://www.hello-neighbour.com/insights/stop-renewal-fees-campaign-explained
All credit to Hello Neighbour, express permission was granted to repost.
Where do R&G stand on this?
It is well documented that R&G's principle value is to save Landlord's time and money, when we launched we didn't agree with a lot of the fees agents are charging, so we created our business with this in mind. We believe it is time that Bristol landlords also stop paying these fees, with companies boosting large profits, how does this impact the landlord's Return on Investment and in return how does this impact the rent's in Bristol?
TIme to take control, giving better deals to Landlords and more affordable rents to tenants.