Autumn statement: Letting fees are awful, and Philip Hammond is right to ban them

Chancellor Philip Hammond enjoys a private joke somewhere in the Autumn Statement. Image: Getty.

A tragedy, in one graph:

Isn’t that awful? Isn’t that the saddest thing you’ve ever seen? A universally adored brand like Foxtons, losing a tenth of its value in an hour off the back of one bit of bad news? It couldn’t happen to a nicer firm. Perhaps it’s time for the inaugural CityMetric Christmas appeal.

Or we could not do that, on the grounds that banning letting agents fees is a thoroughly good thing, and estate agents are awful.

The move, which chancellor Philip Hammond is announcing in today’s Autumn Statement, will bar lettings agents in England and Wales from demanding tenants pay whatever fees they happen to feel like. (Those in Scotland are already barred from doing so.)

Lettings agents do have costs, of course: reference checks, credit checks, repairing the deliberate damage passers-by do to those minis in examples of what are basically hate crimes. In future, though, they’ll have to recoup them through landlords, rather than tenants.

The whiny, kneejerk, “pro-business” critique of this policy runs as follows. Any attempt to interfere in the operation of the free market will necessarily harm the weakest participants in that market. If letting agents pass their costs onto landlords, landlords will in turn pass them onto tenants. Ergo, the real victims of any attempt to stop lettings agents from torturing tenants any way they happen to feel like it will be tenants themselves.

This critique is, of course, a steaming pile of horseshit, spread about by the sort of people who have no shame about publicly announcing that they’ve not thought very hard about this and probably aren’t actually that clever. For one thing it’s obviously ridiculous. They’re banning parasitical middle men from demanding hundreds of pounds with menaces from renters whenever they have to do some photocopying – and you think that will actually harm renters? Are you high?


But no, let’s be fair to them and destroy their argument using actual logic. Yes, lettings agents do have costs. But there is no evidence that the fees they charge reflect those costs. Occasional CityMetric contributor Alex Parsons put together a report on this, available on the website lettingfees.co.uk. He found that the cost of new tenancy agreements varied from £48 to £450.

Administrative costs clearly don’t vary by a factor of 10: some of those letting agents are charging inflated fees, not because they have to, but because they can. By the time the fee is due, most tenants will have committed to their new home: the agents have them over a barrel. They’re price-gouging, and they should stop.

But there are legitimate costs, of course. Won’t these be passed onto tenants in higher rents? Very possibly – because, while the availability of property won’t change, the availability of money to pay for it will.

Even this is no bad thing, though, since at least they will be passed on consistently. At the moment it’s impossible for tenants to compare the real price of a new home, because are not shown in the advertised rent. Banning letting fees will introduce a much needed measure of transparency to the market.

There are other benefits to a ban. The added costs are likely to be more managable if paid as part of the rent, rather than in a single, upfront lump. It also means an end to unpredictable extra fees, when individual tenants leave houseshares or contracts otherwise need amending.

But if you’re still not convinced, there’s one more way you can tell that the real victims of this policy will be estate agents, rather than tenants. It’s this:

There is a reason that has happened: investors think this policy means that less money will now be going to Foxtons.

It’s a tragedy. A real tragedy, I tell you.

Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.

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Mexico City’s new airport is an environmental disaster. But it could become a huge national park

Mexico City’s new Norman Foster-designed airport, seen here in a computer rendering, is visually striking but environmentally problematic. Image: Presidencia de la República Mexicana/creative commons.

Mexico City long ago outgrew the two-terminal Benito Juárez International Airport, which is notorious for delays, overcrowding and canceled flights. Construction is now underway on a striking new international airport east of this metropolis of 20m. When it opens in late 2020, the LEED-certified new airport – whose terminal building was designed by renowned British architect Norman Foster in collaboration with the well-known Mexican architect Fernando Romero – is expected to eventually serve 125m passengers. That’s more than Chicago O'Hare and Los Angeles’ LAX.

But after three years of construction and $1.3bn, costs are ballooning and corruption allegations have dogged both the funding and contracting process.

Environmentalists are also concerned. The new airport is located on a semi-dry lake bed that provides water for Mexico City and prevents flooding. It also hosts migrating flocks and is home to rare native species like the Mexican duck and Kentish plover.

According to the federal government’s environmental impact assessment, 12 threatened species and 1 endangered species live in the area.

The airport project is now so divisive that Andrés Manuel López Obrador, the populist winner of the country’s 2018 presidential campaign, has suggested scrapping it entirely.

An environmental disaster

Mexico’s new airport sits in a federal reserve. Image: Yavidaxiu/The Conversation.

I’m an expert in landscape architecture who studies the ecological adaption of urban environments. I think there’s a way to save Mexico’s new airport and make it better in the process: create a nature reserve around it.

Five hundred years ago, lakes covered roughly 20 percent of the Valle de Mexico, a 3,500-square-mile valley in the country’s south-central region. Slowly, over centuries, local residents – first the Aztecs, then the Spanish colonisers and then the Mexican government – built cities, irrigation systems and plumbing systems that sucked the region dry.

By the mid-20th century, the lakes had been almost entirely drained. In 1971, President Luís Echeverría decreed the area a federal reserve, citing the region’s critical ecological role for Mexico City. The smattering of small lakes and reforested land there now catch and store runoff rainwater and prevent dust storms.

The new airport will occupy 17 square miles of the 46-square-mile former Lake Texcoco. To ensure effective water management for Mexico City, the airport master plan proposes creating new permanent water bodies to offset the lakes lost to the airport and cleaning up and restoring nine rivers east of the airport. It also proposes planting some 250,000 trees.

The government’s environmental assessment determined that the impacts of the new airport, while significant, are acceptable because Lake Texcoco is already “an altered ecosystem that lost the majority of its original environmental importance due to desiccation and urban expansion.” Today, the report continues, “it is now only a desolate and abandoned area.”

Environmentalists loudly disagree.

Make Mexico’s airport great again

I see this environmental controversy as an opportunity to give Mexico City something way more transformative than a shiny new airport.

Nobody can entirely turn back the clock on Lake Texcoco. But the 27 square miles of lake bed not occupied by the airport could be regenerated, its original habitat partially revitalised and environmental functions recovered in a process known as restoration ecology.

I envision a huge natural park consisting of sports fields, forests, green glades and a diverse array of water bodies – both permanent and seasonal – punctuated by bike paths, walking trails and access roads.

The airport will come equipped with new ground transportation to Mexico City, making the park easily accessible to residents. Extensions from the surrounding neighborhood streets and highways could connect people in poor neighbourhoods abutting the airport – dense concrete jungles like Ecatepec, Ciudad Nezahualcoyotl and Chimalhuacan – to green space for the first time.

The nine rivers that empty into Lake Texcoco from the east could be turned into greenways to connect people from further out in Mexico State to what would become the area’s largest public park.

Space could also be reserved for cultural attractions such as museums, open and accessible to passengers in transit.


New master plan

This idea is not as crazy as it sounds.

As early as 1998, Mexican architects Alberto Kalach and the late Teodoro González de León proposed rehabilitating the lakes of the Valley of Mexico. Their book, “The City and its Lakes,” even envisaged a revenue-generating island airport as part of this environmentally revitalized Lake Texcoco.

Under President Felipe Calderon, Mexico’s National Water Commission also proposed building an ecological park in Lake Texcoco, which was to include an island museum and restore long-degraded nearby agricultural land. But the project never gained traction.

Granted, turning a large, half-constructed airport into a national park would require an ambitious new master plan and a budget reallocation.

But in my opinion, evolution and change should be part of ambitious public designs. And this one is already expected to cost an additional $7.7bn to complete anyway.

Toronto’s Downsview Park – a 291-acre former air force base turned green space – has transformed so much since its conception in 1995 that its declared mission is now to “constantly develop, change and mature to reflect the surrounding community with each generation.”

Local communities neighboring Mexico City’s new airport were not adequately consulted about their needs, environmental concerns and their current stakes in the Lake Texcoco area. A revamped park plan could be truly inclusive, designed to provide recreation and urban infrastructure – and maybe even permanent jobs – for these underserved populations.

Presidential race

Three of the four candidates in Mexico’s July 1 presidential election wanted to finish Mexico City’s new international airport. But eventual winner López Obrador was not so sure.

Early in his campaign, he said he would cancel it if elected. Instead, López Obrador suggested, a former air force base could become the new international terminal. It would be connected to Benito Juárez airport, 22 miles south, by train.

López Obrador has since said he would support completing construction of the new international airport if the remaining financing came from the private sector, not the Mexican government. Currently, some two-thirds of the project is funded by future airport taxes.

The ConversationLópez Obrador’s promise to review and likely upend the airport plan could open the door to its wholesale transformation, putting people and nature are at the core of a plan ostensibly designed for the public good.

Gabriel Diaz Montemayor, Assistant Professor of Landscape Architecture, University of Texas at Austin

This article was originally published on The Conversation. Read the original article.