Hackney Town Hall tackles ‘cowboy’ letting agents

Campaigning for affordable rent: Alex Hilton of Generation Rent

There were two reasons why Mark needed to live in Hackney. There was nowhere he could afford to live in Islington, where he grew up, and he needed to be near his stepfather, who lives in Hackney and suffers from mental health problems.

Mark has chronic neuropathic pain, which limits the use of his arms and takes up a lot of his time and energy. He receives £100 a week in disability allowance, along with housing benefit.

Landlords and letting agents are unwilling to accept that he will be able to keep up with rent payments. “I talked to a number of places who would immediately just ask you first question ‘what’s your income?’… if it’s less than twenty-six grand a year they’d say ‘no, sorry, not enough’.”

“It’s quite difficult to find access to individual landlords these days – in Hackney there are so many letting agents.”

Letting agents charge fees for making out the contract for a tenancy and for ‘referencing’. They also have a say in the size of any deposit required for a tenancy.

Mark was unable to save up for these fees or a deposit. He managed to borrow enough from relatives to pay, but has been unable to repay the loan. He sees this as a moderate form of a common situation.

A friend of Mark’s was recently evicted from her house in Islington and is expecting a baby. She came to live with Mark as a second tenant in his one-bedroom flat.

Having someone living in the living room wasn’t a problem in itself for the letting agent, but having a pregnant woman there was. “They said, ‘We’re not going to have you; you’re pregnant: you’re not going to be able to work are you?’”

In the end, the agent allowed Mark’s friend to move in on condition she paid double the normal deposit – on top of the deposit Mark had already paid. They also had to take a short contract of only five months.

Together, they pay £1,000 a month for what is now a two-bedroom flat with no communal space and no central heating. Mark’s housing benefit doesn’t cover the rent and he tops it up out of his disability allowance.

Mark joined the network Hackney Renters – also known as DIGs – to work towards a better housing market.

‘Dysfunctional’ lettings market

And now, a Hackney Council-run letting agent is on the cards, rumoured to be launching at the next Landlords’ Forum on 15 October. The agency would allow the Council to exercise more control over fees charged and the attitude taken in cases like Mark’s.

The move is welcomed by Keatons, a large letting and estate agent with a strong presence in Hackney.

On the specific question of letting agents’ fees, Keatons stated: “We are sure the Council would be able to establish their own marketplace with or without charging fees… Ultimately, the public will decide which level of service they wish to receive.”

Critics of letting agents argue that the market for their services is dysfunctional. Tenants are free to shop around different letting agents. But with demand for housing so high the important custom for agents is landlords, who choose between agents and decide which of them they want to manage their property.

‘Ethical’ lettings

The successful agent charges the landlord a fee for doing so, but is able to keep that fee low because they can also make money from charging fees to tenants. ‘Ethical’ letting agents who charge tenants low fees risk being undercut by other agents who are happy to pass onto tenants the cost of securing business from landlords.

A Council-run letting agency would try to offer a better deal to tenants. Councillor Philip Glanville, lead member for housing said: “We are committed through a new council social lettings agency to responding to the challenge of affordability for people, especially those on low incomes and in housing need.

“Rather than going to agencies and the property going to the highest bidder, we’re working on longer tenancies. We are trying to create a more stable rental market for those who struggle with market rents, and trying to help people stay in the borough in properties of a good standard.”

‘Extreme situation’

But DIGs – Hackney Renters – fear a council lettings agency could do more harm than good.

Owen Espley, a spokesman for DIGs, said that the organisation would welcome “an alternative to fly-by-night cowboy lettings agencies”.

However, DIGs fears that the agency could snap up all the good properties, leaving tenants outside the scheme with the dregs. “By entering the private rented sector the council risks competing with those already struggling to find safe, healthy housing to rent, and could risk making the situation worse not better.”

Generation Rent, which campaigns for new solutions to the housing crisis in Hackney and beyond, has similar concerns. The organisation’s director, Alex Hilton, warns that a council-run lettings agency would cause further problems for ‘ethical’ lettings agencies, potentially driving them out of business.

“Because the situation is so extreme, a council-backed letting agent might be essential for vulnerable tenants,” he said. “But it risks chasing out the good letting agents operating with small profit margins, leaving behind the real rogues.

“A longer-term solution for local people is a whole new secondary housing market, protected from bubbles, that offers genuinely cheap rents to all.”

‘Secondary housing market’

The Generation Rent website is eloquent about the idea of a secondary housing market. Watching the online presentation three or four times, you can get a rough idea of what it’s about. The plan is to have certain properties which can be sold at only a small, regulated profit.

You buy a house and the price you’re allowed to sell it at goes up by a few percent a year, at the same rate as a savings account.

So you can live in the house and get your money back (plus a little profit) if you need to, but you can’t retire on it – and you take all the investors who are buying property as a means of making money (rather than as a way of finding somewhere to live) out of the market.

It’s exotic and positive. But talking to people like Mark, you get the sense that there could be fewer problems if the rules of the existing system were properly enforced. He had to go through legislation with his letting agent himself, to prove their arguments were groundless.

Mark sees a council run lettings agency as “a poor second”. As a one-time head of a housing cooperative, he advocates greater provision of social housing and for laws to be more consistently and vigilantly upheld. He is concerned that a council-run agency may consolidate and formalise the practice of relocating social tenants outside the borough.

Espley, at DIGs, likewise advocates “throwing the book at the unscrupulous landlords and protecting tenants.”

There is a risk that placed alongside ‘the book’, a council-run letting agency could look a little like light reading on the side.