Letting agents’ fees should be banned to protect tenants in the private rental sector, Citizens Advice has said.
The charity’s call came on Friday – the same day the Consumer Rights Bill received Royal Assent, which will make it a legal requirement for all letting agents to display their fees both online and in their offices.
Under the Act, agents will have to show and describe their fees and what they cover, and state if the charge applies to the property being let or to each individual tenant.
The enactment of the Bill, which has been broadly welcomed by ARLA, follows an Advertising Standards Authority ruling that letting agents should display fees.
ARLA managing director David Cox said the new legal requirement to display fees was “a sensible alternative to an outright ban”. However, CAB said that the new law would have little impact.
Citizens Advice said it had evidence that tenants are frequently “ripped off” by fees often hidden by letting agents – to the tune of £337 on average.
These charges come on top of advertised rent prices and deposits, and can force people into debt, the charity said.
The Still Let Down report claims letting agents have refused to adopt measures that were supposed to bring transparency and competition to the market.
Most agents charge for checking references, but costs range from as little as £6 to £300, according to the study. Renters can also be hit by charges ranging from between £15 to £300 for simply renewing their tenancies. Some agents charged £300 for credit checks that are widely available for £25.
Even when moving out of a property, almost half of the 353 agencies polled by Citizens Advice said they charge an average check-out fee of £76.
Despite the ASA ruling in 2013 that agents should give clear information about fees, its study found that only a third provided full written details.
The report says people face a lot of pressures when looking for a property and the main priorities amongst tenants is location and the price of rent. The report claims fees often do not get disclosed until later in the process – only 25% of tenants told the study that they took fees into account when leasing a property.
The charity says it does not call for a fees ban in England lightly.
The report said that a fees ban was introduced in Scotland in 2012 “and there is no clear evidence to suggest it has led to an increase in rental prices”.
Almost 90% of renters told the report that the charges caused them problems. A fifth said they went overdrawn on their bank accounts as a result and 42% had had to borrow from friends and family.
Gillian Guy, chief executive of Citizens Advice, said: “Letting agents hold all the cards, meaning tenants are open to abuse.
“Renters are regularly stung by arbitrary fees which can range from modest amounts to hundreds of pounds.
“Our research confirms renters don’t shop around for letting agents, they shop around for properties – so the idea that transparent fees will solve these problems is misguided.”
The report also claims that despite a new requirement for letting agents to be a member of redress schemes, nearly a fifth are not.
Citizens Advice also recommends that agencies should have to belong to trade bodies, who could name and shame those acting unfairly.
In the last year, Citizens Advice said over 80,000 people came to it because of problems with rental homes.
* Despite ARLA’s welcome for the new fees regime, whose implementation date we will confirm to readers, managing director David Cox added: “In the interests of consumer protection, we would have liked to see legislation go further than it did and continue our call to make it mandatory for letting agents to be members of a client money protection scheme.
“We urge the new government to review this after the general election as the schemes provide guaranteed protection to both landlords and tenants should a letting agent abscond or misuse any money they are holding for either party, such as a deposit or rent.”
Comments (13)
It’s time they changed the record. They want agents to stop charging fees. Ok so the rents then will go up to cover the cost or landlords fees. Which will then open another can of worms from some bright spark stating that rents are far to high and we need to cap them etc. Or it will be landlords are being ripped off on fees being charged.
i agree we should just have set fees across the board so all agents fees are the same. As to banning fees. I really do think these people should live in the real world.
I have had tenants use the ‘im going to CAB’ in a tone meant to scare me…. usually they are in a default situation and dont like our legitimate means to protect our landlords, or they might not like our reasonable costs charged for damage done to the house they have left. So in my experience probably 95%+ of tenant enquiries to CAB relate to an issue caused by the tenant in the first place. The fun starts when CAB call us having heard a one sided story only to be told the truth…..
What ever happened to a free market and democracy? If the prices are truly crippling then the tenants can simply walk away and find somewhere else! Nobody is twisting their arms to pay the fee. I agree with nearly all the reply’s listed above. Good agents will welcome regulation of the industry but who will police and enforce it? This is simply election waffle by a party that has gone back to it’s dark old days.
I am disappointed by CAB scaremongering with utter unsubstantiated tripe. Well said marcH i agree.
Here we go again, completely ill-informed comment from an ill-informed organisation. We make the case constantly that landlords should work with professional letting agents. The legislation regarding private rental property is complex, the consequences of regulatory framework breaches are serious. For tenants, they are almost always going to be better served by renting a home from a professional letting agent. Tenant safety and security is a top priority for professional agents, so is thorough affordability assessment etc. pre-tenancy. Tenants want to carry out viewings, usually for more than one property, at times convenient for them, often evening and weekends, they also regularly want legal advice about the tenancy. None of the professional services provided by letting agents should come for free, we are in business, unlike Shelter and the CAB who get funding without performing. For tenants who can’t afford professional fees, social housing should provide the services, not professional property investors and their advisors.
In reply to ringi – I’ve seen some nonsense in my 40+ years in business but this is up there with the best. You are clearly not an agent so why come up with this stuff : we should be talking here about a fair return for the work we do on behalf of our landlord clients not about ridiculous penalties which bear no relationship to the supposed transgression. Sure, if the rogue agent conceals fees, let the applicant/tenant go to a redress scheme (made compulsory for all) but let’s not forget the time-honoured adage ‘caveat emptor’. The applicant is buying a service for which he/she should expect to have to pay something. If he/she is not happy with the fees advertised, they can always go elsewhere. Why do we constantly have to protect the consumer from their own mistakes ?
If an agent had to pay 10 times the charge back to the tenant, if they can’t prove the charge was listed in detail on all adverts etc, and a charge sheet given to the tenant at the viewing, then it may start to get enforced!
There could also be a £10,000 legal fee parable (by the agent) to the company that helped the tenant make the above claim, but only when the tenant wins the claim.
It’s easy for the CAB to jump on a Labour party band wagon in their bid to win votes. Not very well thought out – remember HIPS – yes that was another Labour initiative, cost Vendors a fortune and where is it now? Dumped! Letting agents are not a charity and it does worry me that without some financial commitment, an unscrupulous tenant could secure several properties through several agents leaving landlords out of pocket with no tenant. Several landlords I have spoken with about this are already considering selling up if this happens, especially landlords who own one or two (and there are a lot of them). In these times of housing shortages CAB & Labour should consider who props up the housing stock and perhaps think about how you will cope if the private sector housing market shrinks!
Letting agents should be able to charge tenants for the professional services provided – as Mark says, it’s business not a charity. Perhaps the legislation should concentrate on the level of fees being charged.
Few laws are effective when they are neither policed nor enforced
Absolutely. At the end of last year fees had to be specifically set out on the portals and websites. Only ourselves and one of our competitors has done this to date. According to Rightmove they only have to let us know. They should remove all agents properties till they have complied. Simple but I’m sure a very productive solution
100% agree with this. We have been upfront from the day dot with what we charge our tenants, vendors and landlords. We are also planning on including VAT in our fees with our next website update to make it even clear to people. Sadly the vast majority of agents around by us do not show fees and we suspect, use the information free available on us to “under cut” at every opportunity.
“over 80,000 people came to it because of problems with rental homes” that is a very vague statement; without details such as 70,000 people sought advice over rent arrears, 3,000 claimed retaliatory evictions 7,000 could not afford fees it is a sentence that is irrelevant because it has no context and is un-quantifiable. In isolation 80,000 is a big number but it represents less than 2% of all tenancies.
Shelter have been playing this daft numbers game for too long and as such both charities are failing to garner support from the very people able to help them, the industry itself.
Tenants can not expect to go through life without paid professional advice. We have a legal system that demands outlay to protect all parties to a contract so in place of fees from Agency to protect themselves and their clients perhaps there should be moves to require tenants have proper legal representation on their behalf with guarantees and warrants of their ability to fulfil their contractual obligations. One has to suspect faced with a minimum 4 hours of correspondence and administration from a solicitor at £150/ hour one suspects the satisfied 98% would prefer the dissatisfied 2% had kept quiet.
“Some agents charged £300 for credit checks that are widely available for £25.”
When will this drum stop getting beaten? The cost of a credit check can be much lower, but the work around setting up the tenancy in a complaint way will stop the CAB having more clients forming an orderly queue at their door. The likes of CAB & Shelter have money donated/given to them and unlike them we are not a charity or voluntary organisation.