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Why transparency is important in the London rental market

Posted by Lais on 28/04/2016
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As politicians come under increasing pressure to publish their tax returns following the Panama Papers leak, the public’s craving for transparency, especially in the lead up to the May elections is more important than ever before.

There appears to be unrest in the business community too. More than 50 business leaders signed an open letter to mayoral candidates, expressing their concerns over the London housing crisis based on a new report compiled by the Centre for Economics and Business Research.

The letter compiled by business group London First made front page news in the Evening Standard and warned that in the next decade, the housing crisis will be so severe it will hit workers in media, advertising, market research and software development. Advertising chief Sir Martin Sorrell, architect Sir Terry Farrell and Canary Wharf boss Sir George Jacobescu explain that the crisis is so dire, it threatens many industries by pricing core talent out of the capital with sky-high rents.

The report’s findings explain that a typical worker aged 22 to 29 would have to spend 60 percent of their net income on rent for an inner London studio flat.

This type of expenditure would force many to flat-share and reveals the extreme housing pressure, which is predicted to extend out now to young people working in arts, entertainment, and recreation this year alone.

The Traditional Estate Agent

Within the rental market, there’s also a lack of trust in the way estate agents trade. Many have a reputation for charging hefty admin and letting fees, and it’s apparent that Londoners have had enough.

A change.org campaign set up by Vicky Spratt, a features editor on The Debrief, has already generated 249.000 signatures from Londoners who are ready to take a stand in “Generation rent.”

A generation of young people will spend most of their adult lives renting. Alongside concerns about affordable housing, and those being priced out of the market by overseas buyers purchasing properties that sit empty, The Debrief petition is calling on the Housing Minister to take action on unfair agency fees.

In the campaign, Spratt states: “I’m about to move for what I would say is probably the 6th or 7th time in 9 years – my boyfriend and I just handed over £552 in letting agents’ fees in the process. Over the last nine years, agency fees have probably cost me over £2000 – and I’m only 28. This is money I’ll never get back. It turns out renting is a lucrative business if you’re on the right side of it – which I’m not.”

And the problem is clear. Letting agency fees in England are entirely unregulated. Letting agents can charge their own fees and sadly agents often profit out of regular tenant turn around making it difficult for many to find stability in renting.

Typically, a traditional letting agent can charge how they like for the following services;

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Spratt explained: “For instance, the fee charged by Foxtons to change a name on an existing tenancy is £210. ‘For what?!’ one friend of mine protested recently before she called them and offered to go in and print off the documents herself.”

Shaking up the market to make renting fair

At RentSquare, we want to challenge and redesign existing practices in the private rental industry.

In a recent Guardian article, Helena Trippe, the CEO of RentSquare explained:“The lettings market is very murky. Agencies charge high percentages and tenants sometimes pay a high fee to get a property. The agencies are also renowned for bumping up the prices of repairs. One landlord came to us because of the huge bill he had for changing a lightbulb.”

Helena has worked in housing management and lettings for the last 12 years. During the many years, she spent working in both the public and private housing sectors it was evident that something wasn’t working. Trying to explain why a third party was asking for unreasonable amounts of money was all too often frustrating for her.

To that end, the goal at RentSquare, alongside her other co-founders was to create a solution for everyday renters and ordinary homeowners who want to strike a fair deal.

For a flat fee of £180 or £340, if RentSquare arranges viewings, we connect tenants and landlords and close the tenancy agreement at those prices. Tenants simply pay £45 for background checks.

By using publicly available data, we freely share with everyone what a better, and fairer rent price looks like by finding that sweet spot between what tenants can afford and what landlords need to charge realistically to be successful and profitable. We firmly believe, that transparency and the power of information can make this possible.

We are also passionate about working with the government to challenge the property market. In page 16 of the housing manifesto of Zac Goldsmith, the Conservative MP, for Richmond Park and North Kingston, outlines a policy to “target high rent fees charged by some letting agents.” And to work with the tech community “like RentSquare” to follow the US trend for safely connecting tenants and landlords.

Sadiq’s manifesto also recognises the need of aligning rent prices with what people can afford as an important measure for London.

In the manifesto: London Living Rent, Sadiq will create a new form of affordable housing, with rent based on a third of average local income, not market rates. A new form of tenure, more affordable, and giving you the chance to save for a deposit.

Our mission is to make rent simple and fair!

We can help you with tenant-find, on demand property management or contract renewal services that don’t cost an arm and a leg.

You can also find the rent sweet spot for your property at www.rentsquare.io