Letting agents’ “hidden” charges prompt calls for tougher legislation

by Naked Tenant

Admin fees, insurance fees, cleaning fees, fees for charging a fee … the list is endless

The escalating fees charged seemingly at random by letting agents defy the laws of economics. I half suspect they make them up as they go along, daring each other to see what they can get away with.

Penalties are disguised as “admin fees” or “key money”. In fact, the names are as ingenious as the fees. I once heard of a tenant being charged a “finance fee”; that is, the agent had the audacity to charge clients a fee for charging them a fee.

Recently, when I was flat-hunting, I discovered admin fees ranged from £75 to £200. Then there’s an “inventory fee”, “insurance fee”, “checking-out fee” and a “cleaning fee”. Bear in mind the letting agent is likely to be charging the landlord a “finder fee”, plus a part of the rent, often 15%. Then they sting the tenant as well.

The agent letting the flat I was due to move into tried to charge me £150, claiming in mitigation: “We have to pay for our office costs.” In that case, surely, I should be able to invoice them for my own costs, as those removal vans don’t pay for themselves. (They agreed to reduce the fee to £100 as they wanted “to be reasonable”).

In order to amuse myself while sitting in the office signing my badly photocopied, legally dubious, rental agreement, I timed them. Producing the ready-copied documents and checking over my credit rating (which they seemed to do in front of me) took 10 minutes. Another two tenants were in the process of signing up (it appeared they were charged £100 each). That makes £300 for 10 minutes’ work. I wish I was paid that rate.

Now here’s the catch: the usual excuse for letting agents who charge fees is that they cover time spent checking references which, if true, might be reasonable. It’s just that I know, for a fact, that my (excellent, I’ll have you know) references were never checked, which means that if my landlord was also charged a fee, those arduous 10 minutes of pulling pre-printed forms from a file could have earned them roughly £500.

So here is the problem: I’m assertive and know my rights. But what choice do desperate renters have when faced with an agent who – as here – simply issues an implicit threat: words to the effect of “no fee means no flat”? Shelter chief executive Campbell Robb says it “is vital that tenants ask about fees or charges upfront as, unfortunately, once they get to the point of getting the keys it is very difficult to avoid paying”.

He agrees that even when tenants try to clarify the bill upfront, mystery monies still appear. “Many of Shelter’s clients point to ‘hidden’ charges when they are initiating or renewing a tenancy. Often people are unaware what these charges are for, and struggle to pay them on top of a deposit.”

Scotland tried to solve this with legislation. The 1988 Housing Act (Scotland) decrees no fees be charged to tenants, but agents have reacted by brazenly ignoring the law. Admittedly, there is a minority legal view that a small amount is justified, but just before signing my rental agreement I politely suggested the mooted charge may be, well, dodgy. My concerns were greeted with sniggers of disbelief.

But exactly what constitutes a reasonable amount? Keeping in mind the fact that an online credit check costs as little as £5, charging an individual tenant £150 seems extortionate. Ian Potter, operations manager of Arla, the Association of Residential Lettings Agents, had this to say: “Fees will vary from region to region and will depend on the specific services offered.

“However, for landlords and tenants, it is important to obtain clear, written information from an agent about which services the fee includes – and whether there are likely to be any further costs. Consumers should always ensure the agents they use are registered with Arla or theNational Association of Estate Agents, as they will have to comply with strict codes of practice. This means that, should a landlord or tenant feel the fees were unclear, they can lodge a complaint.”

Housing charities have long argued letting agents need tighter regulation. Robb says: “Shelter believes letting agents need to be regulated, so they are more transparent and upfront about charges. We also believe most of these charges should be made to the landlord, not the tenant.”

Last month government plans for regulating the private rented sectorwere published. Housing minister John Healey pointed out more than 3 million families live in private rented housing and, while the majority of tenants say they are happy, many do face problems with their landlord, and should have better help and protection. He said creating “local letting agencies”, where councils and good landlords work together to help people find better-quality homes in the private rented sector, would help sideline the “cowboys”.

These proposals have no timeline, and there is no mention of sanctions for landlords or letting agents who disobey the new rules, or who fail to register, so I suspect the astronomical fees are with us for some time yet.

By Penny Anderson

Guardian

http://www.guardian.co.uk/money/2010/mar/13/letting-agents-hidden-charges

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One Comment to Letting agents’ “hidden” charges prompt calls for tougher legislation

  1. I agree with a lot of what peoples comments are that I am reading here.

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