My personal first choice of charity to support is usually Shelter. They do amazing work. Many people think that they work with the homeless to get them under a roof, but in fact many of their campaigns are to make the housing market fairer for those already in a home.

Current campaigns, for instance include building more affordable housing, fighting the incredibly unfair bedroom tax and dealing with rogue landlords.

But I have noticed that some people are tweeting about a campaign that they currently have to end letting agent fees. This tweet from @KellyMarieLD is a good example:

1 in 7 renters who used a letting agency paid more than £500 in fees. Sign @Shelter’s petition #endlettingfees http://t.co/Mzbjth4HUO

— Kelly-Marie Blundell (@KellyMarieLD) July 2, 2013

This particular campaign, I think, is ill thought through.

Let me just be absolutely clear: estate agents are indeed not a nice lot, are venal and generally a dishonest, short-termist, hateful bunch of BMW Mini-driving oiks.

But regardless of how much we dislike them, they perform a role (however inefficiently) in the process of linking the UK’s 9 million privately renting tenants with their landlords. They perform various services for the landlords, such as showing prospective tenants round flats  (compact and bijou, Mostyn, compact and bijou), performing credit checks, gathering references etc. They might do a generally slapdash and awful job of this and charge an absolutely scandalous amount for it, but that’s a separate matter. The market has driven itself to the bottom and stayed there for many years; but these services are provided, however badly. And for that, these bottom-feeders do require some recompense.

Unfortunately.

At the moment they are paid by the tenants. The market has set the rate for these services, however high and profiteering that may be. This is the value that the market has set on the agents’ time and effort.

Now Shelter feels that these fees are totally unfair and should be made illegal.

But if the tenant doesn’t pay them, the agent will still want to be paid and the only other party in this contract is the landlord. But the landlords themselves are a profiteering bunch of capitalists. What they will do with costs is incorporate them into their financial model, add an uplift for opportunity cost of that money and raise rents accordingly.

The landlord, rationally, will spread this over the normal tenancy (probably 12 months), but not give a discount after this.

The result of Shelter’s proposal, I suggest, is likely to be an increased overall cost to anyone renting more than 12 months, who will effectively be paying those inflated fees on an annualised basis, but to the landlord instead of the agent.

Now I know that fees are illegal in Scotland, but have not seen any good studies on the effect on long term rents, compared to the similar time period in England where fees are still allowed.

But I know one thing for sure; those agents aren’t going to do that work for free and in the end the only income stream either the landlord or agents have is the tenants.

Maybe the solution is not to ban the fees, but better regulate landlords and agents, and set some centralised fees to provide equilibrium in the market?

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