How not to feather the nests of rogue letting agents

A quarter of tenants have had to fork out unfair rental fees, but there is protection. Chiara Cavaglieri reports

A lifetime of renting is a depressing prospect for any tenant who has been ripped off by rogue landlords and dodgy letting agents.

The Generation Rent phenomenon is no flash in the pan and many people are locked out of the mortgage market, facing long-term, if not lifetime, renting. With housing stock so low, landlords are in a strong position to cash in, but rising rents are just one problem, as a new survey reveals that almost one in four people has been charged unfair fees by a letting agent.

The survey, by housing charity Shelter, found that 23 per cent of people have had to fork out for administration fees, credit and reference checks and renewing a contract which they felt were wholly disproportionate to the cost or amount of work done. Unscrupulous lettings agents are a difficult problem to tackle, not least because there is no mandatory code of conduct or set of standards that they must meet – rules that have been in place for estate agents for some time.

While it may be true that a small number of letting agents are giving the whole industry a bad name, many are concerned that agents who are regularly dealing with such large amounts of cash aren't regulated.

Tenants in Scotland had some good news last month when the Government announced that letting agents and landlords will be banned from charging any tenant fees other than rent and deposits. There are no signs that this will be extended to the rest of the UK, however, although voluntary professional bodies such as the National Approved Letting Scheme, Association of Residential Letting Agents and the Royal Institution of Chartered Surveyors do offer some protection. Ultimately though, tenants can do little to avoid hidden or excessive charges, unfair terms and broken agreements, and in any case, many lettings agents aren't members anyway.

"Unlike estate agents, letting agents are not required by law to offer a route to redress," says Liya Fateh, a director of letting and estate agent review website MeetMyAgent.co.uk. "Sadly, until there is uniform regulation, many tenants will continue to face poor service."

Meanwhile, despite being a legal requirement, some landlords are still avoiding putting their tenant's deposits in a tenancy deposit scheme and unjustly withhold that money at the end of the tenancy.

The introduction of tenancy deposit protection has been the most important piece of legislation in recent years for tenants, and goes a long way to preventing landlords from unfairly withholding deposits. Under the schemes, the landlord or agent has 30 days after receiving a deposit to protect that money with one of three Government-backed schemes: Deposit Protection Service, MyDeposits and The Dispute Service. Within this time frame they must provide their tenants with details of their chosen scheme, along with a signed copy of the deposit protection certificate and details as to how to get the deposit back at the end of the tenancy.

These schemes have the additional benefit of preventing landlords from serving a "Section 21 notice" (giving two month's notice to evict tenants) if they have failed to protect the deposit properly, although they are still free to get a court order to evict for other reasons such as rent arrears. All three schemes also offer a free alternative dispute resolution service and after this, tenants can still take their case to the small claims court.

But research suggests that more than half of all tenants were unaware of the deposit schemes when their tenancy began – so it's no surprise that some landlords are still able to flout the law. Critics also argue that while government measures such as this do have some benefit, they also create a confusing system for both tenants and landlords alike.

"This is only being made worse by the different sets of licensing and regulatory systems being put in place by some local authorities, the Welsh Assembly and the Greater London Authority," says Peter Bolton King from RICS, who wants to see an amendment to the 1979 Estate Agents Act to redefine the definition of estate agents to include letting agents.

Nor do the schemes protect holding fees or other charges that lettings agents levy and, crucially, because the protections in place are designed for short-term tenancies, many tenants are still concerned that if they make a fuss or complain about their landlords, they will simply be turfed out of their home. Today, most people rent under Assured Shorthold Tenancy rules, which allow landlords to terminate tenancies with only two months' notice.

If you are sharing and sign one agreement it is a joint tenancy and you are all jointly liable for the rent, but if each signs a separate contract, you have individual tenancies. If you are renting with five or more people it may be a house in multiple occupation, which will mean the landlord has extra legal responsibilities regarding things such as fire safety.

"To avoid a rogue agent and ensure you always have an independent third party to complain to for free – only use an agent who is NALS or ARLA registered – and check they are current members. Members of these organisations also sign up to the Property Ombudsman Scheme," says Kate Faulkner, from property advice site Designsonproperty.co.uk.

The contract must include all the information pertaining to rent, bills, how much notice you have to give, rules on pets, guests and exactly what you can change in the property. Watch out for clauses preventing you from switching to a cheaper energy supplier; landlords are not allowed to refuse permission to switch. Ask for a copy of the Energy Performance Certificate, gas and ideally, electrical safety certificates and check the heating and hot water work.

Proposed deductions are one of the main areas where disputes arise so request a full inventory, taking dated photographs of any damage or wear and tear to furniture, fixtures and fittings when you move in.

Shelter is calling on people to tell it of their letting agent experiences at shelter.org.uk/lettingagents

Tim Hunt, 32, a researcher from Barking, is £1,000 out of pocket after signing a contract for a flat in south London last year and handing over the cash to the letting agent as a deposit.

The deal fell through but when he tried to get his money back, this "deposit" suddenly became a non-refundable "reservation fee" instead.

Having being given a move-in date, Tim was told by the agency that the landlady wanted to push the date forward. He and his partner Marisa signed a new pre-contract, only to be told a few weeks later that they couldn't move into the house at all.

The landlady and agent are arguing that the other is liable and Tim is hesitant to take them to a small claims court, as he cannot afford legal help.

"Tenants do have quite good rights in principle but in reality it is costly to see them put into practice.

"They have taken my deposit, but there is nothing I can do without paying for a solicitor."

'They have my £1,000 but there is nothing I can do without a lawyer'

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