A staggering annual expenditure of up to £1bn is shouldered by landlords in London due to unjust renewal fees, property-tech lettings firm Hello Neighbour revealed. In a bold move to rectify this imbalance, the company has initiated the “Stop Renewal Fees” campaign, advocating for a more equitable lettings industry.
The capital boasts over a million rental properties, with roughly 760,000 engaged with high street letting agents. Given that the average London tenant occupies their rental for two years, landlords find themselves paying renewal fees for approximately 380,000 properties annually. With fees averaging around 8.5% (including VAT), landlords are burdened with an extra £2,550 per property for mere contract renewals – an expenditure Hello Neighbour condemns as “literally money for nothing!”
This financial drain doesn’t just stop after the second year; it accumulates if tenants decide to extend their stay for a third year or beyond. But the costs don’t end with renewal fees. Letting agents often promote longer tenancy agreements, purportedly to offer landlords stability and allow tenants to “beat the queue”. However, this practice enables agents to levy maximal letting fees upfront for the entire term, despite only securing a single tenant and without any contract modifications. Subsequent charges for contracts, references, inventories, deposit holdings, and safety certificates pile on top of the hefty initial and renewal fees.
Moreover, landlords who opt for one-year agreements are subject to recurring renewal fees for each extension period. Certain tenancy agreements even feature clauses mandating annual renewal fees for the duration of the tenant’s stay, ensuring a steady revenue stream for the letting agent.
In response to these exorbitant charges, Hello Neighbour has launched its “Stop Renewal Fees” campaign, aiming to enlighten the market and arm landlords with the critical questions they need to pose to their agents, ensuring full transparency on what they’re committing to. The campaign seeks pledges from landlords nationwide to abolish renewal fees permanently.
Phil Shelley, Chairman of Hello Neighbour, expressed his indignation: “For too long, high street agents have taken advantage of landlords by charging fees for things that just aren’t fair – especially renewal fees. It’s crazy to think that landlords are handing over this kind of money every time their tenants simply choose to stay in their home for another year. Punishing landlords for having a great property that people want to remain in is just absurd. Inevitably, these 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 the landlords and tenants are the ones who suffer, while the letting agents’ revenues continue to soar.”
Shelley asserts his company’s commitment to this cause: “We are determined to put a stop to this and that’s why today we are launching our ‘Stop Renewals Fee’ campaign to educate landlords and let them know there is a better way so we can change lettings for good.” The campaign represents a pivotal step towards fairness and transparency in the lettings industry, potentially heralding a new era for landlords and tenants alike.