/ Home & Energy, Money

Why are letting agent fees so high?

Moving house can be expensive. And for those of us who rent, one of the most significant and annoying costs can be the fees charged by letting agents. It’s even more annoying when it’s hard to find what these are.

I’d love to buy my own place. Sadly I have nowhere near the kind of money needed for a mortgage deposit – especially as I live in what the media loves to describe as ‘house-price-crazy’ London.  So, as I need a roof over my head, I rent.

Which is fine. Except that for many of us it’s hard enough to come up with the deposit to rent a flat – usually six weeks’ rent – let alone cover the admin fees letting agents charge.

We found in 2013 that the average admin and referencing fees (banned in Scotland) you’d have to pay was £310. We also found some tenants could be saddled with check-in and check-out fees, bringing the total closer to an eye watering £600.

A group called Waltham Forest Renters – based in the London borough I’m lucky enough to call home – recently carried out research that found a huge variation in fees. For a two-bedroom flat rented by two people with a guarantor, fees started at £150 and went up to a dizzying £792.

Letting agent fees must now be shown upfront

At least letting agents must now clearly publicise a full tariff of their fees both on their websites and prominently in their offices. But there’s no protection in law for tenants covering what agents can charge.

Since October 2014 letting agents have also been legally required to be a member of one of the three government-approved redress schemes – which have codes of practice agents must follow and act as mediation services. We worked hard to help win this legal change, so we hope tenants (and landlords) will exercise their right to complain about poor service including misleading and unexplained fees.

Any agent who doesn’t display their fees can be fined up to £5,000. The Waltham Forest group’s report claimed that 21 agents in the borough weren’t listing their full fees at the time their research was carried out. They say they’ve passed details of their claims onto the council for further investigation.

But, are the fees reasonable?

This week, the National Housing Federation found that rents in the UK are the highest in Europe and take up the biggest portion of people’s salaries.

And bearing in mind the cost of fees as well, is it any wonder my generation will spend many more years forking out our hard-earned cash in rent rather than saving for a deposit and paying off a mortgage?

Do you think the fees are reasonable? Could fees be levied at landlords as they’re the ones benefitting from the screening of tenants? Or should they be banned like they are in Scotland?


Would it help more if employers moved from London and the reduction in demand would lower the pressure on rents. And of course staff moving with employers would have more chance of buying their own property. : )

On the specific question from my experience it seems the letting agents are the people trying to extract the most from the system, closely followed by particularly “commercial” landlords.

Is there one on-line forum for people to make their complaints and specifics of charges and unfair practices to be posted? Even deploy a couple of specialist solicitors to take on cases ….

Adam – would you like Which? to do something active in this area


I agree that there is a supply and demand equation at the root of this issue. Certainly the dispersal of more employment away from London would reduce the demand side for housing. It would also relieve many of our other problems but the desire to be centred in London seems to overcome all other considerations. I am sure the government expects that the build-up of pressure will eventually force relocation, but this is not necessarily the case; the pressure is being contained by the market’s ability to adapt itself to the situation.

There’s no question that private sector tenants are having to put up with higher and higher rents in return for less and less floorspace and facilities. Letting agent charges are just another parasitic drain on the market, especially serious if people have to move every year or two. So long as the market absorbs these impacts there will be no incentive for firms to relocate.The only thing that might precipitate relocation is a big hike in employment costs as employees demand higher pay to face rising rents but, again, the tipping point keeps receding. The immediate consequence of the overheated rental market is that we are fast reaching the point when many people in rented accommodation will never, ever, be able to own a property in London or anywhere else [especially now that mortgage rules are much tighter]. Another implication of the high returns to landlords and the agents that act for them is that more and more substandard homes come onto the market as lower-grade property gets converted for letting and this also soaks up some of the demand. Various adverse societal and community outcomes also flow from this scenario and I fear there is also a social problem emerging from the higher density of inner city living [to some extent evidenced in a Which? Conversation on nuisance neighbours].

To answer the questions posed at the end of Adam’s Intro: (i) Letting agent fees are probably not reasonable but they reflect what the market evidently can bear so it’s pure economics and reason doesn’t enter into it; (ii) The fees could be levied on landlords but since they recharge every expense back onto their rentals there would be no gain from doing so and it might actually make things worse; and (iii) Banning just referencing fees [it’s not clear in the article whether this is the only fee banned in Scotland] would be a help, especially in a frequent-turnover market, and unlikely to ricochet back onto rentals at full strength, but if the ban also included admin charges and check-in/check-out fees then I am sure that rents would rise over time to reflect the landlords’ higher costs. It should not be forgotten that managing agents are charging their clients 10%-15% [+VAT] management fees which are also finding their way back into rent levels – do management costs track rent levels so precisely that a percentage is the right formula? Landlords can also hedge a portion of their voids expenses and losses and other defaults into rent levels in a hot rental market like the metropolis.


These fees should be paid by landlords, not by tenants. The landlord receives revenue that can be used to cover these costs; the tenant does not. For sales of homes, the seller pays estate agents’ fees. Why should this principle be any different in the rental market?

It’s all about facilitating a misleading indication of price. If the landlord paid these fees from the rent received, then quoted rents would increase to reflect this. The current system allows the advertised rent of a home to exclude unavoidable fees, which gives a misleading indication of price, one of the most unfair and prevalent unfair commercial practices suffered by consumers.


There is no doubt that the impact of these upfront fees falls on the particular applicant for a tenancy at the time whereas if landlords paid them the cost would be spread across all their tenants some of whom might have been in place for several years without giving rise to any such expenditure. Which way is fairer is a mater of opinion.


John, I see no reason why a landlord would need to cross-subsidise these upfront fees from tenants in other properties they own, if they even have other properties. I am suggesting that landlords should fund these upfront fees from the rent they receive. There is no reason for these fees to fall on the tenant, as they are being incurred at the landlord’s request, for example for credit checks etc.


NFH, the tenant will end up paying for these fees one way or another. So if you ban fees from being charged directly to the tenant, an inflated rent will be used to recover them.

Incidentally, you pay a fee when you take out a mortgage. Can be a couple of thousand to set up. How are these fees justified?

It seems to me that “fees” in the whole of the financial sector are just another money-making exercise that is virtually impossible to control. Perhaps Which? could produce a register of approved agents whose fees are commensurate with the work done?


Agreed but I must say there are tenants out there who are rogues as well. Why not have a system of tenant register. Pay a small fee, prove identity Nat. Insurance and passport No etc. let credit check be done.create on going “tenant file.”Landlord pays small fee to access updated report and provides outgoing report for file + copy to outgoing tenant.


With the average house price in the London now reaching in excess of £400,000, young people hoping to get onto the property ladder has now become just a pipe dream. Mortgage availability favours only those fortunate enough to be able to afford a large deposit from the bank of mom or dad or cash buyers. Part of the problem is caused by wealthy foreign investors cashing in on the UK’s housing market snapping up all available affordable homes and renting them out through letting agents, coupled with the influx of an uncontrolled number of immigrants, leaving young people at the mercy of and exploited by unscrupulous and unregulated landlords.

We are living in an age where regulation has become the norm to prevent the exploitation of honest hardworking people who are being drained of almost every pound they earn through indiscriminate extra fees and fraudulent charges.

The whole housing market is in need of reform to prevent housing associations and private landlords placing unsuitable anti social disruptive tenants next to privately owned homes whose sole intent is to make as much noise as they see fit, scatter their rubbish around for all to see, allow their unruly and undisciplined children to vandalise their neighbours property and neglect to maintain their overgrown and unsightly gardens.

It’s high time for change.