If you’re a potential tenant of a property, it’s vital that you’re familiar with letting agency fees. With charges that can affect your deposits and potential hidden costs, you’ll want to get to grips with the ins and outs to ensure you’re getting a fair and legal deal.
We’ve put together a guide to letting agency fees to keep you clued up about what’s normal, what’s not, and the things you should be aware of.
What’s the law surrounding letting agency fees?
By law, all letting agencies are required to publish complete details of the fees they charge. These should either be clearly outlined on their website, or displayed prominently in their offices.
The description of each fee and exactly what it covers must be stipulated. The quoted amounts must include VAT, and if any fee doesn’t have a set price, the letting agency must state how they calculate the final cost of that fee.
If any letting agency fails to comply with these new regulations, they run the risk of being fined anywhere up to £5,000 by the local council.
What do letting agency fees cover?
The following items are typically included in the administration fee charged by a letting agent prior to the start of a tenancy:
- To draw up the tenancy agreement
- To prepare and provide you with an inventory of the property
- For the cost of running credit checks on you
- To get references from the people you list as referees or guarantors
- Any administration charges that might arise between finding you a property to rent and you moving in
- To check that you have the right to rent
If you’re particularly drawn to a property, you may also be required to pay a holding deposit. This is typically requested by the letting agency in order to take the property off the rentals market while they run background checks on you and prepare the tenancy agreement.
Just be sure that the letting agency provides you with written information about where they’re holding your deposit, as well as when and if it will be returned to you.
Normally, the holding deposit will be deducted from the amount due to be paid as the full deposit. It is common, however, for this sum to be forfeited if you withdraw your application to rent the property.
Knowing what you should pay for is one thing, but it’s important to also be aware of your rights and know what you don’t have to fork cash out for.
What shouldn’t your letting agency fees cover?
First and foremost, you should know that letting agencies cannot charge you for registering with them, or for having them show you a property. It is a criminal offence.
The letting agent should not charge you for any routine inspections during your tenancy. These charges should all be carried by the landlord and included in their management fee.
You should not be asked to pay a fee by the letting agency if you and the landlord agree you can stay on in the tenancy after the fixed term ends.
Are there any extra fees that letting agents may charge?
The following are some additional costs that you may be expected to pay:
- Inventory fees – some charge you to check you in and check you out of the property
- Renewal tenancy agreement – some charge you if they have to renew the tenancy agreement
- Early termination – if you want to cut your tenancy short, some letting agencies charge you for the administration and marketing costs of finding new tenants to take over your tenancy. You will usually be held liable for the rent until such new tenants are found
- Late payment fees – if you pay your rent late, some letting agents penalise you for this and charge you a fee
Finally, do not sign any tenancy agreement until you have thoroughly read the small print and know exactly what you’re being charged for. Once you sign, it’s very hard to complain and change your terms of service. You can, however, contact the Property Ombudsman Service should any issue arise.