/ Home & Energy, Money

Are letting agents breaking the law on fees?

A picture of a house on a chalkboard

We’ve just mystery shopped letting agents and found that many aren’t being upfront about their fees. We think they’re breaking the law – so how are they getting away with it?

Buying a property remains out of reach for many, so renting has become a fact of life for millions of people. In fact, rental properties currently provide homes to more than 4.7m people in the UK.

When we investigated letting agents last year, we identified upfront fees as one of the biggest concerns for renters. So we’ve undertaken a mystery shop of four branches each of four different agents in London – Foxtons, Barnard Marcus, Martin & Co and Your Move – to see if they were upfront about the fees tenants could expect to face.

Letting fees are clear as mud

Our snapshot research at these letting agents revealed some worrying results. For a start, none of them provided information about fees in any property listings on their sites, on Rightmove.co.uk or after tenants had registered online.

Out of all the branches, only one agent at one Foxtons branch proactively gave fee information to a customer who registered at their branch or called to arrange a viewing. On top of that – not one of our mystery shoppers was provided with a written list of charges.

But even more worryingly – in some cases, our shoppers were either not given fee information when they asked for it, or were not given the correct or complete details.

So how can potential tenants hope to shop around for a letting agent when it’s made so difficult to compare fees? Ultimately, tenants could be vulnerable in this situation – particularly in competitive rental markets like London’s. After all, once you’ve found a property you want, you’re unlikely to let it go, even if it means paying-up for expensive fees.

Unfair and unlawful

As far as we’re concerned, the lack of transparency with letting agents’ fees is not just bad practice – it’s unlawful. We believe that the current failure of letting agents to show fees upfront is a breach of Consumer Protection Regulations, because they are not providing material information in a manner that is clear and timely.

So we’ve written to the four agents listed above to share our findings, demand improvements, and remind them of their legal responsibilities. We want to see increased transparency and an end to hidden fees as we think tenants deserve much better.

Have you had any bad experiences with letting agents? Was your agent upfront about its fees, or did you find yourself facing a hefty bill when you came to sign the contract?

Comments
carole noble says:
10 March 2013

I think the fees are outrageous, my daughter left halls in London last year and took a rental with 3 friends. The fees charged for check upon check of them and for various other stuff that the agent claimed they needed was ridiculous. It put hundreds on their deposits and bonds required which was to me an absolute rip off.
All in all agents know that students have to have accommodation at the end of the day, and therefore its a like it or lump it scenario. The accommodation is more than often nowhere in line with what they charge, and trying to get things done is virtually impossible such as repairs etc etc. It is about time that more regulations were introduced and a sealing on what can be and cannot be charged made legal.

Please make sure that when your student children move in that you take lots of photographs of the condition of the property AND any furniture and white goods. When they leave make sure that you repeat the process thoroughly. As sure as eggs is eggs the letting agent will automatically deduct an amount from the deposit, usually at a level where you are not sure that it is worth challenging and they must make hundreds of thousands from this wheeze. Letting agents were trying to charge my daughter and her friends for damage and graffiti which had obviously been the same for years, cleaning (which I think is the landlords responsibility and surely factored into the rent), which in this case was unnecessary and for leaving items in the fridge that had to be thrown away (they hadn’t). Because of all the photos we felt we had good evidence of their sharp practice and they refunded all the money (after the threat of legal action). I think they send out the same letter each year to all the tenants who are moving out. No doubt they are not the only ones.

Simply Rent says:
20 March 2013

We are a Residential Letting Agency based in the north west of England and have been operating for 20 years. We have never charged tenants any fees for renting a property and have been appaled by reports of fees charged by other agents. If an applicant makes a false statement on an application form we make a small charge (£25) but otherwise our application and referencing process is entirely free of charge to tenants. Neither have we ever accepted money for accepting contractors onto our register and nor do we add any mark-up to contractors bills for work which we arrange. As an established Letting Agency we would be delighted to see regulation or legislation to force all such fees and charges to be declared up front.

You should open some branches in the South East. With business ethics like that, you would make a killing 🙂
I have rented for many years and the agents have always charged numerous fees to the tenants. Your post is a breath of fresh air.

Mrs B says:
29 March 2013

I have been a Landlord for 15 years and I am also appalled at the fees these agents are charging.
I have just had the misfortune of using YourMove Lettings and believe me when I say I will never ever use them again. Apart from the fact I had to pay a huge amount for just “Tenant Find” only service (twice as much as a previous agent) plus an additional fee for them holding the Bond. I was £7 short and they refused to sign the new tenant until I had gone to the office to make a debit payment – cheques not accepted or payment over the telephone. They have added a clause to my tenancy agreement, without discussion with me, that all gas & electricity supplies for the new Tenant have now to be with Spark Energy Ltd., My Tenant, although having spoken to Spark Energy, agreed not to move to them have still gone ahead and taken over the supply. Where do I come in this as I own the property and all previous Lettings agents have put clauses in that my tenant has to ask permission from me before moving the supply. Furthermore they have written that if I do not use YourMove to arrange the next Gas Certificate I will have to supply them with the Original copy that I get. I asked for Tenant find not Management of any kind so who the hell do they think they are – Over my dead body – is the answer. LANDLORDS AND TENANTS BEWARE OF THIS UNSCRUPULOUS COMPANY – How do they get away with this and when will there be some legislation about these robbers?

Mrs B says:
3 April 2013

I might also add that I have found this “Company” charged my tenant a £300 Fee. What the hell is going on with these greedy Lettings Agents. Obviously I am not using them to manage my property I want my tenants to have better care than this and in future I will not ever again use such a letting agency.

James says:
22 April 2013

Your tenants have the right to change their utility supplier. You are correct that once upon a time a Landlord could insist that suppliers were not changed however this was remedied with the Unfair Terms in Contracts legislation set out by the OFT.

While Your Move appear to have been a little bullish, for every Landlord that will pay monies owed there are several that wont. In the case of a find only service it proves virtually impossible to recover monies from a Landlord.

In terms of the commission fee, presumably you chose to instruct Your Move.

simon whaley says:
3 April 2013

I have posted many times in forums and tenant groups about this ,however Which? Has had a very innovative approach here basically using the ASA rules and I hope this is a way forward following resistance from the government on this .
The two major portals could impose regulation on the letting agent industry if they so wished by making all fees involved in a tenancy mandatory with the property listing ,Rightmove and Zoopla are quite cold to this idea as they think wrongly it will damage revenue
I am sure licensing will be in place very soon and as a landlord would welcome it as it is not just an issue for tenants but everyone in the PRS.
As with everything there are always shades of grey ,I have been giving some thought to the increasing number of online or DIY letting agents ,when licensing comes in how do these businesses regulate the fees that are charged by landlords for whom they only offer an introduction service? Or if there is a published scale of fees from each landlord on their listing and a differing sum is charged to a tenant who is legally responsible the online letting agent? Rightmove?
Does this spell the end of online letting agents who do not control the whole process from application to handover?
Simon Whaley
Private Landlord Directory

eric says:
11 April 2013

We are about to leave a property and have been handed an invoice for a “Check Out Fee” this was never mentioned at the beginning of the lease, and has never happened in the past. Also they now say you are not allowed to hire carpet cleaners and have to use a “professional cleaner” this is also different from when we moved in. Does anyone know if this is legal?

James says:
22 April 2013

You are only obliged to adhere to the terms of the Tenancy Agreement you signed. If is specifies that you are responsible for the cost of the check out then you are.

It is not unusual for a professional clean to be required, however it should only be required if the agent/Landlord can demonstrate it was professionally cleaned prior to you moving in. Why not ask for some evidence?

If you are obliged to carry out a professional clean then hiring your own equipment is unlikely to be acceptable no matter how capable you are.

Claire says:
17 September 2013

Although James – ok – but she should know what the details of the fees are though!! – if they arent open and transparent about what the fees are in the first place. i.e. how much or where to find how much these are!

GEORGE ATHANASAKOS says:
15 April 2013

We are a family of four , went to London to find to rent a property , what all agencies required us where 500 pounds to reference – credit check all of us !!? Why do they credit/reference check family members – 18 year old boys and housewifes with no income or credit reference history and dont follow what they do in rest of Europe to have a lead tenant in such situations ? More specifically they asked 500 pounds for these checks + 200 pounds for admin fees + 150 pounds for inventory fees + 100 pounds for check in fees. SHAME ON THEM THAT THEY ARE TRYING TO STEAL THE MONEY OF HARD WORKING FAMILIES AND SHAME ON THE UK PARLIAMENT THAT DOESNT PROTECT THOSE FAMILIES !

New tenant says:
19 June 2013

I am in the process of moving into a new rental place and the agents fees are going to be £724.93 plus vat £144.99 gives a whopping total for administration and referencing fee of £869.92!!
This seems very high, but what can you do when shopping around would mean shopping around for a whole new property and this is the one that we like? They have you cornered.

L Hurd says:
14 July 2013

I recently competed a credit application for a rental property and was successful, unfortunately fater waiting almost 4 months the property became unavailable . The agency refunded my deposit and told me the credit check fee £238.00 would not be refunded as the credit checks had been carried out and this was the fee for the service. The manager of the agent proceeded to advise me that it wasnt his fault the house had fallen through and I wasn’t entitled to have a refund. Completey distraught and upset ,I am now £238 pounds down and now have to find some where else to live.
If any body can give me advise if I am entitled to a refund I would much appreciate it. Many thanks

This is a rant about Seekers letting agency in Maidstone.
I rented a property on a 6 month fixed contract and paid the usual extortionate fees up front for credit checks etc… When the time came to renew the contract I was given the option to renew for another 6 months for a fee of £82.25. In order to reduce the amount of fees, I asked if I could renew for 12 months and was told that this was no problem but that the renewal fees would be £164.50. I cannot understand how a different end date on the contract could possibly justify doubling the fees. When I rang up to challenge, the reason that I was given by the helpful manager was “What can I say? We’re all in this to make money, love.”
I then decided not to renew and just allow the tenancy to default to a statutory periodic tenancy. I was then charged the same £82.25 for this renewal and, following a request for a breakdown of this fee, I was instructed that it was for all of the general admin in the renewal of the tenancy and re-registration of the deposit on a periodic basis.
I challenged this fee only to find that it was held back from my deposit when I checked out of the property a year later.
Practices like this by agents like Seekers, helps proliferate the negative image of letting agents across the board.
I also applaud Simply Rent who posted here for their practices – outstanding and showing how it should be done.

Helen says:
19 August 2013

I’ve just expressed an interest in renting a house with two friends and we’ve been sent the breakdown of fees. £519 admin fee + £113 reference fee + £120 check in and out fees. That’s £250 each before the month’s rent in advance and 6 weeks deposit. I spoke to another agent last week and they had a flat fee, no hidden extras of £90 per person. How can they be allowed to have such wildly different t&c’s. It’s so unfair. Is there any way of negotiating with an individual agent to take away some of the admin costs? It’s criminal to charge so much.

Helen says:
19 August 2013

This is the response I received when I asked for a break down of admin fees.

“The fee is the payment for our administrative teams work in preparing and drawing up the legal documentation for the shorthold tenancy agreement between yourself and the landlord. In this, of course the landlord pays their own charge for this.”

That’s not exactly a break down is it.

peter ignjatovic says:
16 September 2013

hi speaking as an agent that lets out property as I have nothing to hide then what ever rules you wish to bring in then please do. but being an honest man I can not see why things should be hidden under the table. being up front with tenants and landlords is some thing I have always dun.
only those agents that have some think to hide are the ones that will have the biggest problems and so there fore will be the ones that will be forced out or will have to change there ways.
So bring on the new rules enforce the new Regulations it`s some think I will well come.
As for contractors that do any work when I can get them to turn up I don`t charge for giving them the work. I always inform landlords up front how much the job will cost and no work is undertaken until they have given full permission to do so. They have the chance of getting some one else into do the work for them but if they ask me to sort things for them then i charge a fee of 25% on top.
my defence is that no one, landlords or tenants are forced into coming into my office and no one pays any money until all parties have agreed that they wish to sign up for a property. over time I have found that being strait honest up front is the way to be gaining respect from all parties and getting on with the job of being an lettings agent.( besides I like my windows to have glass in them not ion bars )

Claire says:
17 September 2013

Hi I am in the process of finalising my deposit returned from renting a flat out for three years. It is of course first subject to myself and the landlord being in agreement on what to deduct.

The Letting agent has sent me the Check Out Report in a letter which states ” As agreed with you previously at the commencement of your tenancy the cost of this report has been deducted from your deposit accordingly”……

I have subsequently written back and asked them for confirmation of “details and reference of the agreement made at the start of the tenancy regarding the cost of the check out report to be deducted from my deposit including full details of the cost”..

This is because I dont recall seeing these or making such an agreement, ,.,it is probably hidden somewhere in the contract but with no fees given and I certainly wasnt given any list of fees at the start of the tenancy. There are also no list of fees on their website! I will see what comes back, but until I have full evidence in writing Ill be sticking to my guns. I will challenge them when they come back if the evidence is flimsy and not upfront ion the basis that they are unfair and unreasonable as knowing them these are likely to be in the order of £70 and they are likely to try and give some reason that I must pay them or I should have known and there is nothing they can do. I wont be ripped off.

Has Which any other advise it can give me, strengthen my case?

Hello There,

We have been in a property for 12 months. We just got a letter from our estate agent asking for a rent increase. This is all good and well, but for this ‘new’ contract they are asking for £210 PER tenant (in this case a total of £630) just to process this. I mean, essentially, it’s the same contract isn’t it? And this ISN’T a new tenancy.

How on earth can they get away with this? And suggestions on the best way to handle would be appreciated.

THanks

peter ignjatovic says:
19 September 2013

hi can you give more information on the back ground and make it more clear as to what you are being asked to pay. what it your rent now, and what you are being asked to pay as the increase per person
is the £210.00 for the new contracts per person or just fees or the new rent you are being asked to pay.???

Thanks for your response, Peter.

We have lived in the property for a year. Our rent is currently £1350, the agency has asked to increase to £1400. The problem, from our perspective is the next paragraph, which states, verbatim ‘COSTS- the charge to draw up a further tenancy agreement is £210 inc. VAT per party. This will need to be paid prior to raising any paperwork.’.

The tenants are one party the Landlord is the other. It’s not per tenant I assume.

Aaah, this would clarfiy matters. I still thinks it’s exorbitant given we are not moving, but it’s less shocking

It is high. Renewals can be a lot of work but we only charge £70+Vat each side.

Good news on letting agents – new rules should protect millions of tenants and landlords: https://conversation.which.co.uk/money/letting-agent-fees-renting-house-flat-law-complain/

mr chips says:
28 May 2014

yesterday me and my parents, went to view a house. We signed a small contract the agent had with him, he showed us a list of fee,s already written in at time of viewing. He told us he would need £360 from us to take the property off the market and stop further appointments. Upon leaving my mother had second thoughts, as we realised we would not get all our property in the single lounge area, this forced us to cancel. We cancelled over the phone, the lady on the other end told us we would get our money back and i asked for a reciept and she said i would get one in the post. Ok i thought, that,s that take care of, about hour and a half later, ryan the guy who showed us around phoned up asking about us not taking going ahead to sing a tenancy of which we had not done yet, i explained again, he tried to convince me he had spoken to the owners and they were comfortable on points we had raised, he then asked if i would like to go back for second time and view the property, but this property was for my parents not my self, i got off the phone and went and chatted with my parents about ryans phone call. My mother made it clear the property would not work for us, because of room issues ie she could not get her belongings in the house, it made no sense to move there. I got back to ryan and explained yet again. He told me he would get my fee, soughted out for me, a little later, he phoned again. He told me he had spoken to his manager and the £360 we had paid not less than 2 hours ago is not retrunable, just shy of nearly £400. I told him the lady who i spoke to early said i would get my fee,s returned and now ryan is saying after being on and of the phone with me that i would not get my fee, s back, it seemed he was playing for time to extend the time they hold the fee,s to me. I said well you lady at the office assured me i would get my fee,s back and receipt in the post and now an hour and half later your saying i can,t have me fee,s back. Also taking into account he went to see another property with other folk for a viewing before returning to the office. Ryan told me on site i would recieve an email with a link to carry out reference checking i never recieved them. so my understanding is he never did this, how could he if i never filled them out online. He said that once his office had transfered the money to home let, the money is non returnable. But he never told me this on site when viewing the property. Im very angry at letting agents now, a lot of fee,s are just silly and pure nonsense. When we were to move in on moving day, the cost to us would of been £1750 in costs before we did anything at all, this was with edward birchill,s. Thats hell of a lot of money just get a roof over you head. its got out of hand and its got silly for renting, and a lot of these fee,s need to stop and removed, its just a money making scheme and they are just pushing and pushing they don,t care if you loose money or not, they are just not bothered. I found letting agents to be arrogant and mis leading in there daily activities, with under handed practice,s. We worked so hard to get this money, now if they don,t pay back the £360 i have start to save yet again.

so the question is, what is it they are actually doing with this money ?
is there more to letting agents than meet the eye, i think so. To me a lot of charges have been invented to make more money, modern day folk are very under handed and misleaing. You call the older generation, but you are not a patch on them i would trust them not modern day people, too many are on the take in a lot business,s.

You have made life very very expensive to live.

I WOULD LIKE FEE,S REMOVED ON LETTING AGENTS, I THINK WE SHOULD TAKE THESE PROBLEMS TO THE HOUSES OF PARLIMENT AND BRING THIS MATTER RIGHT TO THE VERY SURFACE AND SHOW LETTING AGENTS UP FOR WHAT THEY ARE.