If you've ever had to deal with a letting agent, you may be so traumatised from the experience that you’ve resolved never to move house ever again.
You tiptoe around the property, praying that the ceiling doesn’t cave in – just so you won’t have to dial that dreaded number.
If you’re under 40, you’ll probably just have to get used to a life of letting agent misery. Recent research from the Resolution Foundation reckons that a third of young people will have to rent from “cradle to grave” – which is as morbid as it sounds when you consider how reliably awful some letting agents are.
Despite popular dissatisfaction, this is a sector that has seemed oblivious to the peril it is facing.
Property agents have been seen as one of the least trusted professions in the UK for years; a 2017 study from Ipsos Mori ranked the profession in the bottom five – just a fraction above politicians.
It’s a reputation that was damaged during the financial crisis when the country was struck with buy-to-let mania, allowing unscrupulous agents to test how much they could plausibly get away with.
And yet, this sector has made little effort to make amends over the past decade. The bad reputation is still exacerbated by hefty letting fees that are hidden within complicated structures.
Most people won’t quibble over paying a reasonable amount of money if they are getting a decent service, but the lack of regulation around this so-called profession means standards can vary dramatically, and some players are frustratingly incompetent
Property agents have a reputation for milking people out of money. This may be unfair at the higher end, but it’s an experience that anecdotally seems widespread.
You may have been led to believe that you are dealing with an attentive sales person, but after you’ve handed over hundreds of pounds in fees, the ghosting can begin. Suddenly you only hear from them when they want something from you – usually money.
Crucially, letting agents work for the landlord, not the tenant, meaning renters have little choice to take their business elsewhere, even though they’re the ones paying the fees.
In addition to rising rental prices , a two-adult household faces average letting fees of £404 every time they move house, and can fork out as much as £813, according to figures from campaign group Generation Rent.
Fortunately, the government is finally waking up to the dire state of this sector.
In November 2016, the chancellor revealed plans to ban letting agent fees. This announcement came as a welcome relief for those tenants that have been paying over the odds in one-off charges. But renters will be holding their breath for a while longer, as the ban is not expected to come into force until spring next year.
On the surface, cutting a source of income seems like bad news for business, but it could be hugely positive for the genuinely responsible players if it cleans up a murky world and restores tenants’ trust in the industry.
Last month, a government report came flying in the face of criticism that prohibiting fees could drive up rents. MPs pointed to Scotland’s experience, which has had a similar ban in place for six years, and hasn't even seen rents rise above inflation.
Even if rents did rise, research suggests that tenants would still find this preferable, as it would be easier to compare rental prices transparently with no risk of unexpected or hidden fees.
But there’s a different issue that is arguably a bigger threat to the industry than fees: the poor level of professionalism. This is another problem the government has recently set out to change by introducing a formal qualification for estate agents.
Most people won’t quibble over paying a reasonable amount of money if they are getting a decent service, but the lack of regulation around this so-called profession means standards can vary dramatically, and some players are frustratingly incompetent.
Again, some argue that toughening up the rules by forcing agents to sit exams is another slap in the face from a business perspective. Regulation is not a business’s best friend – but to date, property agents have had a pretty easy ride from a regulatory point of view compared to other industries.
The wealthiest tenants will be able to afford the “real life” agents, who will charge more in rent, but provide an excellent service
The rules being pushed through by the government mimic the changes which have reformed the UK’s financial advice industry.
The Retail Distribution Review, or RDR, was introduced in 2013 to improve transparency and fairness. It marked the end of the line for opaque commission payments and improved professional standards, putting a stop to cowboy “advisers” who were providing a shoddy service.
The RDR also sparked a decline in the number of financial advisers in the UK. Online advice services have since emerged to plug this gap, offering advice that is cheaper, faster, and increasingly popular as a result.
You can see the property agent industry heading in the same direction. The wealthiest tenants will be able to afford the “real life” agents, who will charge more in rent, but provide an excellent service. At the same time, the number of online agents like Purplebricks will rise to reach the mass market.
Despite this technological trend, the industry seems blinkered to the dangers, underestimating the threat posed by thriving online businesses, and millions of tenants who are fed up with paying over the odds to get little in return.
There’s a generation of renters who may not be able to afford to buy a house, but who are not prepared to put up with unprofessional letting agents forever. And while some agents are upping their game in response, many aren’t doing themselves any favours and show little interest in trying to win over younger generations.
Really, it’s not the imminent rules that letting agents should be panicking about. It’s tech-driven millennials who could well be the death of this industry.