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Letting fees: Are they fair?

There have been growing concerns surrounding estate agency for some time now regarding a perceived lack of integrity and transparency throughout the industry. Many have called for greater industry regulation to protect customers who are in danger of being short-changed. One particularly emotive issue over the last couple of years has focussed on agent letting fees – can they really be justified?

Letting fees: Are they fair?

Why do agents charge a “letting fee”?

As well as having to pay a deposit up front, tenants are often also required to pay a letting fee which is generally seen as covering the administration costs associated with renting a property. This may include tenant reference checks, inventories and tenancy agreements for example.

How much do agents usually charge for these fees?

Letting fees can vary hugely depending on the agents themselves, geographical location and the nature of the property. Research done by Rentify shows us that these fees can be anything up to £600 although nationwide averages tend to fall between £130 and £260, with Bristol and London being the most expensive.

So why are these fees seen as unfair?

Customers have become increasingly concerned about the lack of transparency and consistency of letting fees. Potential tenants are often not even aware of these fees and what they consist of until they are well into the process of finding a property to rent. Tenants are seen to be at the mercy of letting agents who have been accused of hiding their fees and not offering value for money to their customers.


So why are these fees seen as unfair?

A mystery shopper experiment carried out by Which involving a handful of Highstreet letting agents produced some interesting findings. They claim:

  1. There was no detailed information about fees on property listings.
  2. Only one tenant was proactively given information about fees.
  3. No tenants were given a written schedule of charges.
  4. In some cases, tenants weren’t even given fee information when requested.

Many would also argue that agent fees are excessive for the services they include. Indeed, it is claimed reference checks cost an agent a mere £50 and tenancy agreements equate to around 90 minutes work, which suggests that fees in excess of £200 seem disproportionately high.

Some campaigners go as far as demanding that letting fees should be scrapped altogether, which is currently the case in Scotland. Heather

Kennedy from renters campaign group Digs says the “government should follow Scotland by making letting agent fees illegal”.

Is anything being done to make the process more transparent?

In 2013, a House of Commons Select Committee was set up to investigate the current letting fees system. The chairman of this committee, Clive Betts, felt that a full breakdown of fees, openly presented, was required by agents. Indeed, as of 1st November 2013 all agents must now disclose non-optional fees on adverts and websites. In 2014, the Labour Party pushed hard for an outright ban on letting fees and have encouraged the government to follow suit.

However, it is still up for debate as to whether these measures have gone far enough. Some are still sceptical as to the level of compliance from various agencies across the country.


Is anything being done to make the process more transparent?

So what do letting agents say about this?

The Association of Letting Agents says it’s impossible to give a concrete breakdown of all fees as many of them are variable. For example, larger properties naturally demand higher man hours and thus a higher cost. Others believe that letting fees are essential to maintain the levels of customer service as agents will simply not offer existing services if a fee is not paid.

An article in the Telegraph highlighted the increase in rental costs for tenants in Scotland as a direct result of the ban on letting fees. These costs have simply been transferred to the landlord and in turn onto the tenant themselves.

Lucy Morton from WA Ellis believes that landlords would increasingly favour blue chip corporate tenants so that reference checks could be forgone.

So what advice can be offered to tenants? offers some useful advice to tenants in order to achieve value for money when renting a property.

Firstly, get quotes from several agencies and select the most competitive. Don’t be afraid to negotiate as many agencies will have varying fees depending on the circumstances.

Secondly, ask exactly what you are paying for. If you feel you are being short changed then walk away.

Finally, many agents will also charge a renewal fee if you stay longer than your original fixed contract. Find out exactly what conditions apply to this fee, and if they claim not to charge one make sure you get it in writing!



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