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Investigation: How Letting Agents Are Using The ‘Cost of Living’ Crisis To Hike Rental Prices

Introduction: In a daring experiment, I assumed the role of a tenant and embarked on a quest to explore the current state of the rental market. What I uncovered was a startling reality: letting agents, driven by profit margins, have firmly established their presence on the front lines. Let me elaborate on my findings.

Rising Costs Amidst Economic Uncertainty: A year has passed since my last investigation, coinciding with the onset of the Ukraine conflict, and significant changes have ensued. Back then, a room for rent in Gravesend, Kent, averaged £525 per month, while a single-bedroom apartment could be secured for £720, with slight variations based on factors like views and garden/balcony size.

Effects of the Cost of Living Crisis: One might wonder whether the ongoing cost of living crisis has triggered a domino effect in the rental market. The answer is a mix of yes and no. Interest rates have been gradually increasing to mitigate the risk of a recession. Naturally, this implies that monthly mortgage payments will skyrocket, ultimately impacting tenants. However, the situation is more nuanced, as I discovered during my investigation.

Unveiling Exploitative Practices: One particular letting agent, Orange Property, has the audacity to demand up to £750 for a basic room in a six-bedroom house, devoid of any ensuite or redeeming features. Astonishingly, this exorbitant price cannot be attributed to the knock-on effect of the crisis mentioned earlier. Upon further examination, I unearthed that the property is mortgage-free, absolving it of any impact from interest rate hikes. Instead, the agency shamelessly capitalizes on the crisis as a pretext to inflate prices, similar to the market segment where highly leveraged landlords are compelled to charge extra to cover their borrowing costs. Admittedly, some landlords are indeed affected by this, resulting in nationwide price hikes. However, this trend applies to only approximately 35% of rental properties, as the remaining 65% of landlords own their properties outright through inheritance or years of mortgage repayment.

Blanket Increases and Unreasonable Expectations: Letting agents are currently implementing across-the-board rent hikes on all properties within their portfolios, aiming to maximize their gains. Tenants typically opt for renting due to their aversion to mortgages and the uncertainties associated with homeownership amidst a volatile economy—an experience I can personally attest to. Generally speaking, renting proves more affordable than owning a property across the UK as a whole.

Unrealistic Assumptions: However, it begs the question: who does Orange Property think their clients are? Millionaires? Naïve individuals willing to shell out £750 for a standard double room in a council estate? Do they assume there’s a group of wealthy fools eager to waste an outrageous sum on a glorified storage space? Such propositions are hardly enticing to Gravesend tenants. Conducting a rough estimation for the aforementioned six-bedroom property, I discovered that nearly £4,000 in rental yield is being generated for a rundown council estate property situated in an undesirable part of town. All this, despite the property having minimal or no mortgage obligations.

Unconvincing Justifications: The letting agent at Orange Property attempted to attribute these inflated prices to energy costs. Yet, this argument holds no water. After all, we’re at the cusp of summer, with heating and broadband being the sole relevant factors for the next six months, at the very least. Furthermore, I was informed that the price could be reduced if I didn’t require parking. So, to bring the cost down to £700 per month, I would have to relinquish the convenience of parking my car—an absurd proposition. The audacious fees imposed by letting agents never cease to amaze me. What’s next? Coin-operated ovens?

A Dire Outlook for Letting Agents: Given the current state of affairs, it is evident that employing a letting agent, whether as a landlord or tenant, is no longer a viable option. These agents largely delegate tenant queries to the landlords themselves, while primarily focusing on rent collection and unscrupulous means of charging tenants who are increasingly priced out of entry-level properties and rooms—all to satiate the greed of letting agents.

A Solution Emerges: Open Rent: In just two words—Open Rent—a viable alternative presents itself. It’s time to put an end to this madness and restore the relationship between landlords and tenants, dismantling the exploitative stronghold of letting agents. Open Rent offers free property advertising services at appropriate and fair rates, ensuring landlords receive the support they need to navigate all aspects of being a landlord.

Visit today and join the movement toward a fairer rental market, where landlords and tenants alike are empowered.

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