Letting agents to be forced to publish fees

New rules will force letting agents to outline exactly what they charge for their services.

Letting agents’ fees have long been a bone of contention for tenants. Not only do renters have to pay sky high rents but they are often forced to pay several hundred pounds for various admin tasks before they move in to a property.

The Labour Party has realised that getting so-called “generation rent” onside could be a vote winner so it’s announced a raft of tenant-friendly proposals which would become policy if the party came to power. For more read Is a rent cap the answer to the UK's renting troubles?

The Coalition is not quite so keen on helping renters, but it has introduced new rules obliging letting agents to fully publish their fees.

A vote in the Commons

Last week saw Labour force MPs to vote on the issue of letting agents’ fees. It wanted to see an amendment to the Consumer Rights Bill that would have banned letting agents from charging fees to tenants.

Labour MP for Walthamstow Stella Creasy said the practice of charging fees to both landlords and tenants for the same transaction was “a fundamentally anti-competitive corporate practice”.

However the amendment was defeated by a majority of 53, 281 to 228, with all but three Conservative and Liberal Democrat MPs present voting against it.

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Agents must publish fees

However, bringing the debate to the Commons did prompt the Coalition to take some action – albeit not enough to please Labour or renters.

New rules mean letting agents will be required to publish full details of all the fees both to set up a tenancy and during it. The Government says this will close off the opportunity for rogue agents to impose unreasonable, hidden charges.

The full tariff of fees must be published both on the letting agent’s website and prominently in their offices. Any agent who does not comply with these new rules will face a fine.

At the moment, agents have to abide by Advertising Standards Authority rules which say adverts must contain information about compulsory fees, but they don’t necessarily have to list the fees, so publishing a full tariff is a significant change.

Should letting agents’ fees be banned?

Tenants’ campaign groups have long called for a ban on letting agents’ fees to tenants; they think all the cost of setting up a tenancy should be borne by the landlord. After all, it’s the landlord the letting agent is working for, not the tenant.

The fees in question tend to be for setting up a tenancy agreement, conducting an inventory, checking references and credit reports, and registering the tenant’s deposit in a Government-approved scheme.

The trouble is the fees often bear no relation to the work involved. For example, some agents charge £200 for an assured shorthold tenancy agreement (AST), a document which they will have on file which will need only a few quick amendments and printing for each property or tenancy.

Back when I was a landlord I paid about £12 for a credit check on a potential tenant, but letting agents will often charge a tenant upwards of £100 for this. It’s worth pointing out that they’ll be paying credit reference agencies much less than I was for bulk orders too.

Many agents charge renewal fees when the initial fixed term is up even though this involves minimal work for them – simply re-issuing the original contract with a date change.

Worse still, some agents charge both landlords and tenants fees for the same thing – and this is on top of the monthly fee landlords pay agents for their services.

In short, you can see why renters aren’t happy with agents’ fees: they’re a complete rip off.

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Would banning fees mean a rent hike?

Letting agents and other industry insiders who are against a ban on letting agent fees argue two main points: Firstly they say that if all the costs were piled on to the landlord they would simply up rents to recoup them. Secondly, they say that agents have to make money somehow.

Are they right? Should fees be banned or will that mean rents go up? Let us know your thoughts below.

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