A new report from Citizens Advice says letting agents’ fees should be banned to protect tenants in the private rented sector.

The charity claims that new evidence uncovered by their update study shows that tenants are frequently “ripped-off” by hidden fees charged by letting agents, which they say average £337.

The charity’s Still Let Down report says letting agents have refused to adopt measures that were supposed to bring transparency and competition to the market:

More than four million households in England were renting privately in 2013-14 (19 per cent), up from 11 per cent a decade earlier. Around half of private landlords use letting agents to market and/or manage their properties. As the numbers of private renters has risen, so too have the number of problems with private renting coming through the Citizens Advice service.  In 2009, we published a report, ​ Let Down, examining the problems renters face with letting agents.  Since the publication of ​ Let Down, other consumer groups have highlighted the problems that renters have with letting agents, in particular the high fees often double charged to both landlord and renter.  A number of studies have called for greater regulation of letting agents, including reports from government and the industry itself. 

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Most agents charge for checking references, but the CA finds that costs can range from as little as £6 to £300. Tenants can also be hit, they say, 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 says the CA. Almost half of the 353 agencies polled by Citizens Advice are reported to charge an average “check out” fee of £76.

The Advertising Standards Authority (ASA) requirement that agents should give clear information about fees on their websites and in their offices appears to be having little impact according to Citizens Advice.

The key findings of this research were:

  • Over half (56 per cent) of renters surveyed were dissatisfied with the service provided by their letting agent.
  • Not only do most letting agents (88 per cent) still impose additional charges but charges remain high. The total average fee for a tenancy as reported by letting agents is £337.
  • Fees vary wildly and inexplicably for example renters and agents reporting charges from £6 to £300 for checking references.
  • These charges place a substantial burden on prospective renters, with 89 per cent of renters telling us these charges were a problem.
  • Nearly a fifth of letting agents’ (18 per cent) said they were still not a member of a redress scheme, despite being required to be since October 2014. Meanwhile only 4 per cent of renters knew the name of the scheme of which their agent was a member

The report’s key recommendations:

  • Letting agents should be banned from charging fees to renters for functions that are part of the routine letting and management process.
  • Letting agents should be required to belong to a trade body and trade bodies should operate a shared ‘banned list’ to drive the worst traders out of the industry.
  • To give renters clearer routes to redress we believe a single redress scheme should be appointed.

Other experts have argued, following the Scottish experience when fees were banned, that these charges are simply part of an agent’s running costs and would otherwise be transferred to the landlord, and then added to rents.

It is also clear from this evidence that of the 50% who rent directly from private landlords, without the intervention of letting agents, many do so with little or no fee costs.

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