Spiralling rents have recently brought landlords into the firing line; accused of exploiting those who can’t afford to get on the property ladder, but now the finger is being pointed at letting agents, as they are the latest to be labelled as ‘greedy’.
A letting agent is hired by a landlord to either find a tenant for a property, or to simply manage a property, dealing with rent, maintenance and tenancy issues. For this, the agency will charge around 10-15% with VAT on top. For example, a property attracting a monthly rental figure of £800, with the landlord opting for the full management option, he/she would pay around £1,728 per year to a letting agent.
However, the fees don’t stop there; additional charges will be levied for contracts, inventories, credit checks, references, checking in and checking out tenants, visits to the property and registering a deposit. These charges can come to hundreds of pounds, with some being charged to the landlord, and some to the tenant.
Citizens Advice says the additional charges often bear little or no relation to the cost of the work involved. Spokesperson Moira Haynes said: “Many letting agents routinely rip off tenants by imposing unjustified and excessive charges and providing a poor or non-existent service. In some cases, letting agents appear to make them up as they go along. These charges can be a huge barrier for people on low and even average incomes, who have no housing options other than the private rented sector. They should be banned.”
Agents charge anything from £200 upwards for an Assured Shorthold Tenancy agreement, the cost of which will normally be split between the landlord and the tenant. As a tenant, expect to pay around £70 for credit and reference checks, and the landlord could be expected to fork out a further £25 for a deposit protection scheme. The cost of the inventory is normally borne by both parties with the landlord paying around £150 at the start of the tenancy and the tenant paying a further £100 at the end. Add to this a possible tenant finder’s fee and renewal fees, if a rental contract has run out – both payable by the landlord.
Of particular concern to Citizens Advice, is the lack of regulation in the lettings sector; anyone can set themselves up as a letting agent, without any need for professional expertise or experience. There is a voluntary self-regulating body – the Association of Residential Letting Agencies (ARLA), of which some letting agents are members, but the association doesn’t play a part in regulating its members’ administration fees.