Letting agent charges out of control - Citizens Advice

Private tenants are being badly let down by a system that allows letting agents to operate completely unchecked, routinely ripping off tenants by imposing unjustified and excessive charges and providing a poor or non-existent service, a new report from Citizens Advice says today.

The national charity is calling on the government to extend recently-announced plans to regulate letting agents, saying these must include a ban on the additional charges tenants often have to pay letting agents on top of their rent, usually for carrying out tasks that are no more than the routine business of letting and managing a property.

It warns there is no time to lose when the private rented sector is growing and landlords are increasingly using agents to find tenants and manage their property.

Let down, is based on evidence from Citizens Advice Bureaux advising on around 6,000 problems with letting agents a year, an online survey completed by 1,300 tenants who visited the Citizens Advice website between August and November 2008 and a survey of 424 letting agents' terms and conditions carried out by 51 Citizens Advice Bureaux across England and Wales.

This found that 94% of the letting agents imposed up to seven additional charges on tenants, not counting the tenancy deposit and rent in advance. While the amounts varied widely, in some cases these added up to well over £600.

Charges included a non-returnable holding deposit, a deposit administration charge, a reference check charge, an administration fee, a check-in inventory charge, a check-out inventory charge, and a tenancy renewal fee.

The charges often appear to bear no relation to the cost of the work involved. The charge for checking references ranged from £10 to £275, while the charge for renewing a tenancy ranged from £12 to £200. The report also uncovers considerable scope for double charging by agents, with tenants and landlords both being charged for the same service.

Almost three-quarters (73%) of the tenants in the survey were unhappy with the service they got from their letting agent. Common problems included difficulties in contacting the agent, serious delays in getting repairs carried out, inadequate safeguards for clients' money, and unjustified extra charges.

Most tenants said the agent was very helpful initially but this changed completely once they had been signed up to the tenancy. One of the biggest problems was getting repairs dealt with. Many tenants reported difficulties getting through to the agent and said when they finally did, they were met with an unprofessional and uncooperative response. The way some agents handled money also led to tenants being left significantly out of pocket, and in some cases the agent simply disappeared.

At present anyone can set themselves up as a letting agent without any need for professional expertise or experience, any rules or controls over how they hold and manage the steady stream of money they handle between tenants and landlords, or any redress scheme for when things go wrong.

Citizens Advice Chief Executive David Harker said:

"Government plans to regulate letting agents don't go far enough. They must include a ban on additional charges, which can be a huge barrier for people on low and even average incomes.

"There are so few controls over who can set themselves up as a letting agent and the charges they can make that it is tantamount to a licence to print money. The charges often bear little or no relation to the cost of the work involved and in some cases letting agents appear to make them up as they go along.

"People often think that renting through an agent is a safer option than dealing direct with a landlord, but our evidence clearly shows that it can be a risky business for tenants. While many tenants receive a good service, others are not so lucky, finding themselves paying through the nose for an unprofessional and unresponsive service, sometimes forced to live in dangerous conditions and losing large sums of money if the agent goes out of business.

"Business for letting agents is booming as the recession forces more people into the private rented sector both as tenants and landlords. Allowing letting agents to go on operating completely unchecked in these circumstances is totally unacceptable. Regulation cannot come soon enough."