Report: Letting Agencies: the price you pay

By: Kate Webb
Published: June 2013

Letting Agencies: the price you pay

More than nine million people rent their home from a private landlord in England, but renting is not fit for purpose. Shelter is proposing a range of measures to improve the private rented sector, including action against rogue landlords who fail to keep properties in adequate and safe conditions, and promoting the Stable Renting Contract to give families more predictability. Given the high level of unavoidable contact that renters have with letting agencies, and growing concerns over the poor service and high fees that many face, action to support private renters must consider the role of lettings agencies.

Letting agencies are contracted by landlords to find suitable tenants, and in many cases to manage their properties. Over 60% of all tenancies in England involve a letting agency, but renters have little choice over the agency attached to a property, and little power to negotiate terms with the agency chosen by the landlord. They become locked in a triangular relationship – between letting agency, landlord and tenant – where the interests of all three are often in conflict, and renters are confused by the different roles and responsibilities of agencies and landlords.

Our report demonstrates why there are growing concerns at the high costs incurred by renters using letting agencies. One in four people in England and Wales felt they have been charged an unfair fee and although agencies are contracted by landlords, it has become routine for them to charge renters for elements of the agency’s core service. For many, this creates a financial burden, adding to more general affordability problems for private renters.

This report calls for two key reforms to the lettings market:

  • Shelter is calling for new legislation to be introduced to ensure that renters cannot be charged for the costs of setting up a tenancy. Shelter believes all costs relating to finding tenants and setting up a tenancy should be negotiated between landlord and agency and charged to the landlord as the client.

  • This report endorses industry-wide calls for increased regulation. The commitment to redress is a welcome first step but the government must go further and bring letting agencies under the same regulatory framework as estate agents. This is a light touch approach which would end the existing legal anomaly and provide increased protection for renters and landlords.