Letting agency fees force renters into debt

12 June 2013

Young woman sitting on a bench

Shelter is calling for an end to letting agency fees, as our investigation shows that letting agency fees could be pushing renters into debt.

Shelter carried out mystery shopping with 58 letting agencies across the country and found that all of them charged renters fees to set up a tenancy, on top of deposits and rent in advance.

Average fees charged were almost £350, with almost a third of agencies charging renters more than £400 to set up a tenancy, and a further seven charging 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 - weren’t refunded even when, through no fault of their own, the deal didn’t go ahead.

Separate research commissioned by Shelter found that:

  • 1 in 4 people who have dealt with a letting agency in the last three years said they had to borrow money to pay for fees.
  • 1 in 6 reported cutting down on food or heating to meet the cost of fees.
  • 1 in 4 say that letting fees have stopped them from getting a new home.

Shelter is petitioning 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. Sign Shelter's petition

Our report, ‘Letting agencies: the price you pay’, shows that asking landlords to cover the costs of setting up a tenancy is a fairer way of doing business; as it is landlords, not renters, who have the power to choose one agency over another, to negotiate the fees charged and to terminate a contract.

Dorrington Residential, one of London’s largest residential landlords, is backing Shelter’s campaign. Franco Cirillo, Director of Dorrington Residential 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 at Dorrington 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.

‘Dorrington is able to run a successful residential investment business and give renters a fair deal by avoiding unnecessary charges, and we can’t see why other landlords – and the Government – don’t follow suit.’

Campbell Robb, Shelter’s Chief Executive said:

‘This shocking research reveals that letting agency fees are out of control. When renters have to find hundreds of pounds in fees each time they move - on top of deposits and rent in advance - it’s not surprising that fees are causing real financial hardship, and in some cases preventing people from moving at all.

‘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.’

Join Shelter’s campaign to end letting fees. Sign our petition

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