Housing charity Shelter has launched a campaign to end letting agency fees which are costing renters hundreds of pounds.
Shelter carried out mystery shopping research with 58 letting agencies across the country and found that all of them charged fees to renters to set up a tenancy, as well as deposits and rent in advance.
Average fees charged were almost £350, but almost a third of agencies charged renters more than £400 to set up a tenancy, and a further seven more than £700. These charges are in spite of the fact that letting agencies typically receive separate fees from landlords to set up a new tenancy on their behalf.
In some of the letting agencies investigated by Shelter, fees charged to renters – sometimes hundreds of pounds - were not refunded even when, through no fault of their own, the deal didn’t go ahead.
Shelter is calling on politicians to end letting agency fees charged to renters to set up a tenancy, including ‘administration’ fees, ‘holding’ fees, credit check fees and ‘check-in’ fees.
Franco Cirillo, Director of Dorrington Residential, one of London’s largest residential landlords and which is backing Shelter’s campaign, said: "It isn’t right that prospective tenants are asked to pay hundreds of pounds in fees, as well as deposit and rent in advance, for a service that landlords commission. We only work with letting agencies who agree not to charge renters any fees at all. It means that we can focus on the rent, and clear up any confusion about who letting agencies are actually working for."
Campbell Robb, Shelter’s Chief Executive said: "This shocking research reveals that letting agency fees are out of control. Anyone who’s tried to find a rented home in the past few years knows that affordable, decent places to live are in short supply, and often snapped up within hours. The high demand for rented homes means that renters can’t shop around, but instead have to deal with the letting agency their landlord has chosen. They have no choice but to swallow their anger and stump up their cash.
"People often forget that the landlord is the real customer of a letting agency, but the fact that renters also pay fees leaves both expecting the agency to act in their interests. This adds up to a confusing situation that leaves landlords in the dark and renters powerless.
"The only way to fix our broken lettings market is for the Government to stop renters being charged for the costs of setting up a tenancy. This would put landlords in a stronger position to negotiate the best deals, restoring healthy competition to the market and releasing renters from the burden of paying out hundreds of pounds in sky-high fees."
Caroline Kenny, Executive at the UK Association of Letting Agents (UKALA) comments: "We are completely against overcharging. UKALA members operate under a strict code of conduct that helps ensure communication, transparency and fairness underpins all dealings, financial or otherwise, between landlords, letting agents and tenants. Unfortunately however, there are unscrupulous agents operating within the industry who are overcharging tenants and damaging the industry with their dishonest practices.
"UKALA believes that agents should ensure that any fees and charges are made clear in advance of entering into any business relationship. Crucially, so long as information about potential costs is provided in an accessible, transparent and understandable manner, consumers can decide on where to place their business based on all the relevant information.
"Matching prospective tenants with suitable properties is resource intensive and can be extremely costly. The bulk of any agency's costs are covered by the fee paid by their landlord client. However, it is not always appropriate for the landlord to meet pre-tenancy costs, particularly when they are associated with proving the suitability of an applicant. It is therefore appropriate for a prospective tenant to contribute towards the administration and referencing process before a tenancy begins. This demonstrates commitment to the prospective tenancy, safeguards against an applicant securing multiple properties simultaneously, to then reject all but one at the last minute, and protects agents and landlords from applicants who provide false information.
"Tenants ultimately benefit from these processes being carried out professionally. Proper process, such as the inventory check-in and check-out, helps to protect the tenant."