Tenants in the dark as letting charges spiral out of control

Unscrupulous agents are levying fees of hundreds of pounds with no justification, says Chiara Cavaglieri

As private rental costs reach an all-time average high of £757 a month, some 69,000 people in private rented accommodation are now in arrears of more than two months, says LSL Property Services. With one in five households expected to rent by 2018, competition for each home already fierce, and availability changing on an hourly basis in some parts of the country, renters are not only trying to cope with rising costs for a roof over their heads, but are being stung by unscrupulous lettings agents inflicting huge administration fees.

For what amounts to a couple of hours work, letting agents are charging tenants as much as £600, according to new research by online landlord and tenants service Rentify. A handful of letting agents don't charge anything on top of the standard deposit and one month's rent in advance, but among those that do fees can be excessive. The average "administration" fee is £220 in London, but nearly 25 per cent of the London letting agents surveyed charge over £300. One hugely expensive agent in East Ham charges a colossal £600 and, outside London, tenants in Bristol face higher-than-average fees of £251.

Many letting agents have been accused of making fees up as they go along, charging tenants hundreds of pounds with no clear explanation or breakdown of what they are doing for the money. As many tenancy agreements last only six months, tenants are also paying through the nose again and again to renew their contract or move home.

Seemingly arbitrary fees running to hundreds of pounds for drafting standard tenancy agreements and conducting reference and credit checks, plus "holding" deposits to reserve properties and even check-out fees at the end of the tenancy, can be hugely profitable. The average cost of a credit check is just £50, dropping to a tiny 20p per check if larger agents are buying wholesale. Rentify says it charges a flat £15 fee for a thorough credit and reference check, with no hidden extras.

Agents already earn money charging landlords to rent out their properties, but many have long been doubling up by levying fees on tenants as well. Some agents are even making these fees non-refundable so tenants could fork out hundreds of pounds even if the agreement fails through no fault of their own.

"As if it wasn't bad enough that letting agents charge unnecessary administration fees to tenants, some of these charges are also passed on to the landlord, so the agent makes double the profit," said George Spencer, chief executive of Rentify. "These fees lack transparency and are simply unfair. Nor is it just bad news for one party, with tenants pulling out of properties because fees have not been disclosed upfront, or budgeted for, and wasting landlords' time."

Housing charity Shelter has warned that letting agency fees are "out of control" and it has launched an online campaign to end letting fees all together after finding that one in seven renters has been charged £500 or more. Meanwhile, the Advertising Standards Authority has stepped in to force agents to clearly display their fees in adverts alongside rental prices. This, though, this does nothing to compel them to make their charges fairer. The simple fact is that anyone can become a letting agent and there is no regulation to keep them in check.

However, the Government has recently announced plans to crack down on shoddy practices in the private rental sector. The new package of measures stops short of making letting agents hold a professional qualification, but it does support tenants looking for longer fixed contracts and introduces a compulsory redress scheme for all letting agents from next April. This scheme would give tenants somewhere to complain and, potentially, to gain compensation for poor service or hidden fees.

Proposals for the code also include requiring landlords to repay rent where a property is found to have serious hazards. This could mean allowing councils to recoup housing benefit so taxpayers' money is not used to support landlords who provide substandard property.

In the meantime, landlords and tenants alike are advised to stick to agents who are part of a professional body with a set of standards to adhere to. "With one in five households expected to be renting by 2018, it is of the utmost importance that both tenants and landlords fully understand the rental process and choose the 'right' kind of letting agent," said Isobel Thomson of the National Approved Letting Scheme (NALS).

Each letting agency is responsible for setting its own fees, but members of the Association of Residential Lettings Agents (ARLA) also operate under a strict code of conduct that compels them to be transparent about charges. Some key questions to ask any agent are: Is the agent a member of a professional body or licensing scheme? Is it a member of an ombudsman scheme? Which tenancy deposit scheme will deposits be paid into (a legal requirement)? Does the agent protect client money?

At present around 3,000 agents, representing 40 per cent of the industry, are not signed up to a voluntary redress scheme, so the new code should quickly eliminate less diligent agents.

Eric Walker, managing director of letting agent Northwood, said the SAFEagent mark is another voluntary initiative that offers some protection.

He explained: "SAFEagent is a signpost to letting agents who offer Client Money Protection, so if an agent absconds with funds or shuts up shop, clients' funds will be protected." Letting agents or landlords are also legally obliged to protect your deposit using a government-backed scheme, so you can get it back at the end of the tenancy.

Rogue agents aren't the only pitfall. Scammers posing as landlords on classified websites ask prospective tenants to transfer money as a deposit or fee, but then the "landlord" disappears.

Make sure you see a property before you part with any money.

Discover more property articles at Homes and Property
Voices
There will be a chance to bid for a rare example of the SAS Diary, collated by a former member of the regiment in the aftermath of World War II but only published – in a limited run of just 5,000 – in 2011
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
News
Elton John and David Furnish will marry on 21 December 2014
people
News
people
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
PROMOTED VIDEO
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
Voices
Joseph Kynaston Reeves arguing with Russell Brand outside the RBS’s London offices on Friday
voicesDJ Taylor: The great tradition of St Paul and Zola reached its nadir with a worker's rant to Russell Brand
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
News
i100
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Property search
Property search
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Austen Lloyd: Senior Private Client Solicitor

Excellent Salary: Austen Lloyd: SURREY - An outstanding high level opportunity...

Austen Lloyd: Construction Solicitor - London

Very Competitive Salary : Austen Lloyd: NICHE CITY FIRM - We are making a disc...

Austen Lloyd: Construction Solicitor - London

Very Competitive Salary : Austen Lloyd: NICHE CITY FIRM - We are making a disc...

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick