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Letting agent charges out of control - Citizens Advice report

21 May 2009

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.”

Cases seen by Citizens Advice Bureaux:

A CAB in Staffordshire saw a couple with a small child who have some outstanding debts and are both in low paid work. They were charged £250 each for credit reference checks, and were told that they would have to pay a further £250 each if they wanted to remain in the tenancy beyond the six months fixed term.

A CAB in Hampshire saw a married woman aged 37 with dependant children. She paid a £345 administration fee and a holding deposit of £500 to a letting agent which she understood was refundable. Her credit check failed and the letting agent refused to refund the deposit. She paid out £845 for nothing and was angry as she had been told the deposit was refundable. She feels cheated and cannot afford to lose this sum of money.

A CAB in Nottinghamshire saw a man who is registered blind and who applied to rent a property conveniently located close to shops and buses. Although he could afford the rent, he didn’t realise that he and his guarantor would also have to pay £86.25 each for credit checks plus a further £86 administration fee. This was on top of the £450 bond plus £350 rent in advance. He didn’t know how he would be able to raise the money for these extra charges, which he had not taken into consideration when giving notice to his current landlord, leaving him at risk of homelessness.

Notes to editors on the report

*Let down: CAB evidence on letting agents and their charges is available at www.citizensadvice.org.uk or email Citizens Advice press office.

**The Government published a Green Paper - The private rented sector: professionalism and quality last week.  

***Citizens Advice carried out an online survey on its website for three months between August and November 2008. Visitors to its website who had rented through an agent in the last two years were invited to complete a short survey about their experience. There were 1,289 respondents to the survey from across England and Wales. In addition, 51 Citizens Advice Bureaux across England and Wales visited 424 letting agents in their local area and asked a series of questions about whether additional charges were made, whether the agent accepted people on housing benefit and whether they were members of a trade body.

Notes to editors

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more information in England and Wales see www.citizensadvice.org.uk
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality. For online advice and information see New windowwww.adviceguide.org.uk
  3. Citizens Advice Bureaux in England and Wales advised 2.1 million clients on 7.1 million problems from April 2010 to March 2011. For full 2010/2011 service statistics see: www.citizensadvice.org.uk/press_statistics
  4. Out of 22 national charities, the Citizens Advice service is ranked by the general public as being the most helpful, approachable, professional, informative, effective / cost effective, reputable and accountable. (nfpSynergy’s Brand Attributes survey, May 2010).
  5. Most Citizens Advice service staff are trained volunteers, working at around 3,300 service outlets across England and Wales.