Hello Neighbour, a prominent property technology (PropTech) lettings company, has raised concerns about the financial burden placed on landlords by high street letting agents, claiming that they squander up to £1 billion annually on exorbitant renewal fees. In response to this issue, Hello Neighbour is advocating for the outright ban of such fees.
Renewal fees, which vary in scale, are at the centre of Hello Neighbour’s critique, with the company asserting that the average renewal fee stands at approximately 8.5%, inclusive of Value Added Tax (VAT). This equates to landlords surrendering an additional £2,550 to letting agents when their current tenants choose to renew their leases. A company spokesperson characterized this charge as “literally money for nothing.”
The spokesperson emphasized, “That is just for the second year. If a landlord is fortunate enough to retain the tenant for a third year, the expenses continue to accumulate.”
Intriguingly, Hello Neighbour has yet to provide the source for this data, prompting further investigation into the veracity of their claims by industry watchdogs.
However, Hello Neighbour’s grievances extend beyond renewal fees. The company argues that letting agents are increasingly steering landlords towards 18-month or two-year tenancy agreements from the outset, ostensibly to offer long-term security for landlords and expedite tenant placement. Yet, this strategy results in higher upfront fees for landlords.
As with the renewal fee statistics, Hello Neighbour has been asked to substantiate this assertion with research data, further fuelling the scrutiny of their claims.
To combat what they deem as unjust fees, Hello Neighbour launched the “Stop Renewal Fees” campaign on Friday. The campaign’s primary objective is to “educate the market and equip landlords with the questions they should be asking their agent so they understand what they are signing up for.”
The company is encouraging landlords across the United Kingdom to pledge their support to end renewal fees for good by signing up for the campaign.
Phil Shelley, the chairman of Hello Neighbour, expressed his frustration with the situation, stating, “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 absurd that landlords are required to pay such sums each time their tenants opt to stay for another year.”
Shelley continued, “Punishing landlords for having desirable properties that tenants wish to remain in is illogical. Invariably, these renewal fees are passed on to tenants through increased rents, which many landlords resort to in order to maintain viability. In reality, both landlords and tenants bear the brunt, while letting agents’ profits continue to soar.”
He concluded, “We are committed to putting an end to this, and that’s why we are launching our ‘Stop Renewal Fees’ campaign today, to educate landlords and make them aware that there is a better way. Together, we can bring about lasting change in the letting industry.”
Hello Neighbour’s campaign aims to stimulate discourse surrounding this issue and potentially reshape the landscape of the property rental market in the United Kingdom. As the campaign gains momentum, industry stakeholders and policymakers may need to address the concerns raised by Hello Neighbour to ensure a fair and equitable rental environment for landlords and tenants alike.