When you’re searching for an apartment to rent in an expensive big city nowadays, sky-high rents aren’t the only headache you have to contend with. Leasing agents, those gatekeepers to every spare apartment, can all too often prove a nightmare as well, charging large fees for basic transactions and offering little in the way of service in return. In a new challenge to these agencies’ dominance of the market, a London borough is stepping into the fray with an interesting plan. They’re setting up a letting agency of their own.
Launched by the north London borough of Haringey, Move 51°North will function much like any other agent. There will still be one key difference—it will be a whole lot cheaper. As a report from the UK’s Citizens Advice Bureau last year discovered, Britain’s letting agencies are currently a bit of a rip-off. A simple transaction such as renewing an existing tenancy or having your references checked can cost £300 ($431). Some agencies even charged a similar amount for a credit check, even though the only work they did was forwarding details to a credit check company, who charged them £25 ($36) for the service. In some parts of London, agents’ fees for finding a new apartment to rent can be as high as £792 ($1139).
These examples are among the more extreme, but with an average cost of £337 ($485) per tenancy, letting agents fees can be a real drain on tenants in a city where, when rental contracts can be altered or canceled just six months after signing, people move a lot. Move 51°North’s fees will be much lower than this, albeit pegged at a level that’s still likely to prove profitable. Admin fees for entering an apartment will be a flat £180 ($259), while reference and credit checks together would be £72 ($104)—a significant drop from current averages. Renewing a tenancy where no conditions change should incur no charge at all.
The attraction for tenants may be obvious, but it’s too early to say whether or not the agency will be accepted by landlords. The deal the agency is offering them looks sweet enough, but at this moment, the number of apartments the agency is offering is precisely zero. Is this simply a case of a slow start? Or could it be evidence of a landlord boycott? London property owners can be very suspicious of any steps towards more ethical lettings, fearing they may end up paying for them somehow further down the line.
At the same time, the idea of city government getting directly involved in the rental market is an idea that is building momentum in London. Sadiq Khan, the Labour Party’s candidate for London’s mayoral election in May, has promised to set up a similar city-wide lettings agency if elected—a prospect that is looking increasingly likely. The idea of a state-initiated letting agency like Haringey’s may not have fully taken off yet. But in a city where the proportion of renters is growing steadily, the pressure to get a fairer deal for tenants is only likely to grow.