Can Letting Agent charge £600 under different headings?

[rkavp]

Hi, I was looking for a property to rent and I liked one and paid the holding deposit of £100. then after two days, I was asked to pay additional £400 to take the property out of market. I was asked to sign an agreement (two months before move-in date) which says I need to pay up to £600 to the agent as a one-off charge which is non-refundable to move into the property. the breakdown is like this. contract fee £200, admin fee £118, reference fee £153, check-in fee £111. I never paid so much to the agent before. I heard about admin fee and reference fee before, but not all these other fees. he says that these fees are newly introduced this year, because the laws have changed and they have to pay to the solicitor to prepare the tenancy agreement, for deposit protection scheme and homelet etc. is this reasonable for the agent to charge so much before renting the property? why do they charge so much to rent a property? isn't there a law to stop them from looting the tenants like this? also is there a limit on how much they should charge as admin and reference fees? unfortunately, I signed the contract in a bit of hurry (this contract is different from the actual contract which I will be signing before moving in) without checking these charges properly which turned out to be a very costly mistake. I was in a hurry because I have been looking for some good properties for quite a while and I liked this one and I didn't want to lose it and start hunting around for properties again, so I paid the holding deposit immediately. I am thinking of going to citizen advice now to see if they can do anything for me at this stage. if you have any suggestions, Please let me know.

[mind the gap]

I am afraid that if you have signed something agreeing to pay these ridiculously high charges then you may well be bound to pay them whether or not you accept a tenancy.

How much have you actually paid them so far?

[Springfields]

wow, well as mtg says if you have signed to say you will pay then you could be liable, however you could argue that if certain stages of the process haven't taken place as yet they can't charge you.

I would certainly argue that there are no out of pocket expenses for them past you paying the initial £100.

Are they one of these agents who only charge the tenants rather than the Landlords for the marketing of the property?

[rkavp]

thanks for the replies. I paid £500 so far as a holding deposit, but this money will go towards the £600 fee I mentioned earlier and I will have to pay for deposit, one month rent and extra £100 for the agent fee before moving into the property. I understand that it was my mistake to not check the fees before signing, but I am just trying to see if there is a way to minimise the damage.

[Paul_f]

Hope you were given all this information in writing before you entered into any financial transaction, otherwise you have a good case for asking for your money back.

Also any charges made to you by an agent have to 'reasonable' so if you feel they are unreasonable then contact ww.consumerdirect.gov.uk. They can't make a holding charge non-returnable per se as they must 'perform' a service to justify your payment and give you a breakdown of their calculation as to how any amount was arrived at if you request one; (it can't be a fee as you are not their client).

[Wickerman]

Hope you were given all this information in writing before you entered into any financial transaction, otherwise you have a good case for asking for your money back.

Also any charges made to you by an agent have to 'reasonable' so if you feel they are unreasonable then contact ww.consumerdirect.gov.uk. They can't make a holding charge non-returnable per se as they must 'perform' a service to justify your payment and give you a breakdown of their calculation as to how any amount was arrived at if you request one; (it can't be a fee as you are not their client).

I have a friend who has been stung for £150 for an application fee - this is the letter I wrote which some may find useful:


I write to you to request the refund of my application fee for the above property and to lodge a formal complaint with you regarding the unprofessional way my tenancy application was handled.

I visited the above property with my partner on ___________. I was informed by your employee (_________) that there would be an application fee of £150 that would take the property off the market. I paid your employee in cash and he gave me a receipt for the money. A copy of the receipt is enclosed.

At no time was I given an indication that I would require a guarantor and I was not informed of the terms and conditions of the payment of the application fee, especially with respect to the application not being successful. If I had known that you required a guarantor I would not have paid the application fee.

I request the application fee to be returned. I will accept there may be small incidental charges if you had to complete paperwork and will accept a reduced refund of £125 from the £150 paid. Please make cheques payable to __________ and send to my address above.

Please note that if I do not receive payment within 14 days of the date of this letter I will be taking further action. This may include a county court action against you. Non payment will also include a formal complaint to [your city] Trading Standards, who may be interest to know that from the information available to me you are conducting Estate Agent activities while not appearing to be registered with an independent redress scheme such as The Property Ombudsman, as all Estate Agents are required to be by law (under the Consumers, Estate Agents and Redress Act 2007).

Yours sincerely,



__________________

[Snorkerz]

Wickerman - was the agency a letting agency, or an estate agency which also lets properties? If the former, there is no need for membership of a redress cheme.

[Wickerman]

First thing I checked, Snorkerz - they definitely do sales. Their website lists 20 for sale at the moment so not doing much business - but definitely selling.

[Paul_f]

Wickerman - was the agency a letting agency, or an estate agency which also lets properties? If the former, there is no need for membership of a redress cheme.I think you will find that just because an agent is required to be a member of a redress scheme for property sales they are not automatically covered for residential lettings.

[thi]

thanks for the replies. I paid £500 so far as a holding deposit, but this money will go towards the £600 fee I mentioned earlier and I will have to pay for deposit, one month rent and extra £100 for the agent fee before moving into the property. I understand that it was my mistake to not check the fees before signing, but I am just trying to see if there is a way to minimise the damage.

I've never heard this one before but it is quite normal and acceptable to pay an application fee of £125 - £150, followed by a deposit and months rent in advance. There is a good deal of work involved in the tenancy application process and wages/fees to be paid!

In my experience an application fee will usually secure a property pending sucessful referencing. It is often only when a person is referenced that the need for a guarantor is established, and sometimes as a result of incorrect information on the original application form.

I would suggest that a holding deposit as you describe, which is not to be used as part of the tenancy deposit or first months rent, is unreasonable! Have you established who is getting this 'holding deposit' - landlord or agent? Sounds like nice work if you can get it!

[rajeshk4u]

Such charges are neither good for the Landlord or the tenant. When a tenant has paid £600 in fees, they feel they have been robbed. Such letting agents are dangerous, because tenants do not look after the property out of revenge. Tenants don't realise that this money is going to the agency and not the landlord.

I feel such fees charges are unjustified, if as a landlord I am paying a letting agents their commission, then why should they take a further £600 from the tenant too?

I have no problem in them say taking an application fee e.g. to cover their admin work to process the tenant and they go the extra mile by picking up tenants from the local station etc...

Last year, I appointed a fancy letting agent and I never understood why they were having trouble renting out my property. I could see the people liked the flat, but they never seem to sign up. Prospective tenants were put off by the charges. I only found out, when tenants managed to track me down 'directly' by asking neighbours and explained they had been asked for £700 in fees. So I made a direct contract with tenants.

[mind the gap]

I feel such fees charges are unjustified, if as a landlord I am paying a letting agents their commission, then why should they take a further £600 from the tenant too?


Because some agents are greedy.

[Springfields]

Such charges are neither good for the Landlord or the tenant. When a tenant has paid £600 in fees, they feel they have been robbed. Such letting agents are dangerous, because tenants do not look after the property out of revenge. Tenants don't realise that this money is going to the agency and not the landlord.

I feel such fees charges are unjustified, if as a landlord I am paying a letting agents their commission, then why should they take a further £600 from the tenant too?

I have no problem in them say taking an application fee e.g. to cover their admin work to process the tenant and they go the extra mile by picking up tenants from the local station etc...

Last year, I appointed a fancy letting agent and I never understood why they were having trouble renting out my property. I could see the people liked the flat, but they never seem to sign up. Prospective tenants were put off by the charges. I only found out, when tenants managed to track me down 'directly' by asking neighbours and explained they had been asked for £700 in fees. So I made a direct contract with tenants.

I don't agree that the tenant will not maintain a property from being charged over the odds for application fees.

I do agree that these charges are unjustified and are doubled up between LL and TT. With some agents its certainly an eye opener looking at the LL and TT fees side by side.

Locally the majority of the agencies compare their prices to other agents to see what they can get away with charging, rather than viewing the competition to ensure they are the more competative. I think we are pretty much the only industry who view pricing policies in this way.

[Lawcruncher]

Such charges are neither good for the Landlord or the tenant. When a tenant has paid £600 in fees, they feel they have been robbed. Such letting agents are dangerous, because tenants do not look after the property out of revenge. Tenants don't realise that this money is going to the agency and not the landlord.

I feel such fees charges are unjustified, if as a landlord I am paying a letting agents their commission, then why should they take a further £600 from the tenant too?

I have no problem in them say taking an application fee e.g. to cover their admin work to process the tenant and they go the extra mile by picking up tenants from the local station etc...

Agreed as to the first two paragraphs, but not the last. It is as you say - an agent earns commission. Commission is a fee payable according to results. It is swings and roundabouts - some lettings sale through and others take their time. Why should landlords or letting agents be compensated for time-wasters and deals that do not go through. I cannot think of any other business that works that way.

As to funds paid up-front see my thoughts here: http://www.landlordzone.co.uk/forums/showthread.php?t=13840

[thesaint]

I feel such fees charges are unjustified, if as a landlord I am paying a letting agents their commission, then why should they take a further £600 from the tenant too?



Would they make enough money to justify running a business without charging the tenant a fee?

[jeffrey]

Would they make enough money to justify running a business without charging the tenant a fee?
Whyever not? Let them charge their client (L).

[Springfields]

Whyever not? Let them charge their client (L).

I think its reasonable to expect a tenant to pay for their references when moving into a property. However if you charge for contribution to inventory, contract, deposit registration these are covered by the landlords fees.

[jeffrey]

I think its reasonable to expect a tenant to pay for their references when moving into a property. However if you charge for contribution to inventory, contract, deposit registration these are covered by the landlords fees.
Yes, it sounds reasonable. Still, the better way is for L to specify/collect the amount from T; and then pay own Letting Agent.

[roryl]

Would they make enough money to justify running a business without charging the tenant a fee?

Probably, they'd just make less money.

[dominic]

Locally the majority of the agencies compare their prices to other agents to see what they can get away with charging, rather than viewing the competition to ensure they are the more competative. I think we are pretty much the only industry who view pricing policies in this way.

This sounds like anti-competitive behaviour to me.

Why on earth the OFT (being the national enforcer of competition rules) I don't know.