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
Arts and Entertainment
TVShow's twee, safe facade smashed by ice cream melting scandal
newsVideo for No campaign was meant to get women voting
Arts and Entertainment
A photo of Charles Belk being detained by police on Friday 22 August
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
Arts and Entertainment
Amis: 'The racial situation in the US is as bad as it’s been since the Civil War'
booksAuthor says he might come back across Atlantic after all
Life and Style
Google Doodle celebrates the 200th birthday of Irish writer Sheridan Le Fanu
Arts and Entertainment
Vinyl demand: a factory making the old-style discs
musicManufacturers are struggling to keep up with the resurgence in vinyl
Property search
Property search
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Creative Content Executive (writer, social media, website)

£30000 - £35000 Per Annum + 25 days holiday and bonus: Clearwater People Solut...

Systems & Data Lead – Oxfordshire – Permanent – Up to £24k

£20000 - £24000 Per Annum 28 days holiday, free parking, pension: Clearwater P...

Digital Media Manager

£38000 - £40000 Per Annum: Clearwater People Solutions Ltd: Our client based i...

ICT Teacher needed, long term, potentialy permanent

£110 - £130 per day + Competitive rates of pay: Randstad Education Reading: IC...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?