Letting Agent Fees & Charges
The fees charged by letting agents for a tenancy setup are often a nasty surprise to many new tenants. Charges vary widely from agent to agent, and area to area. Average fees are around £250 plus VAT, but whilst many smaller agents can charge as little as £125, the standard tenancy setup fees of several of the larger chains have been creeping upwards, and in some cases now top £500 plus VAT. This means that if you’re paying say £700 a month for a one bedroom apartment for an employee on secondment, the agent’s fees and charges aren’t far short of an extra month’s rent!
What does a letting agent do for their fee? They should be checking ID, confirming immigration and visa status for each occupier, getting credit checks done and assessing affordability, and seeking references from previous landlords and employers. Much of this work is often outsourced to a specialist agency, who do the work for a fixed fee. Then it’s a case of preparing, negotiating and finalising the tenancy agreement – often as little as an hours work, and then receiving and processing the initial monies. In addition to the tenancy setup fee, most agents will add charges of up to £250 for inventory preparation and checking at the start of the tenancy, and many also add fees for deposit registration with a deposit protection scheme.
The Consumer Rights Act 2015 s.83 was intended to force transparency on fees and charges on the lettings market. Agents are now required to display a list of all charges for both tenants and landlords at their premises, and on their web sites, with Trading Standards able to issue fines of up to £5000 for non-compliance. However, industry compliance has been mixed, with many agents still burying their fees in an out of the way place! If the fees issue concerns your employees, then a simple rule to follow is “Can’t see the fees? Then walk away!”
How best to negotiate the fees minefield? It’s a competitive market, so don’t be afraid to shop around. In our experience, members of ARLA, the Association of Residential Letting Agents (www.arla.co.uk) provide a good quality professional service, and many of them have fees close to the £250 industry average. If when you’re house hunting you find a property on the market with more than one agent, then book the viewing appointment through the agent who has the cheapest fees.
If you’d like to check out an agent before entering into a transaction with them, we’d suggest first of all looking at which professional bodies they are members of. Top tier letting agents tend to be ARLA members; many more are members of the National Association of Estate Agents (NAEA). If an agent doesn’t have any professional memberships, it’s likely that they don’t meet the membership criteria, so treat them accordingly. Note that there are also a number of review sites like www.allagents.co.uk, where clients have posted a range of reviews.
In our next newsletter, we’re going to be looking at the thorny issue of property management during a tenancy, and what to do about landlords who fail to meet their repairing obligations.