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A Guide to Letting Agency Fees

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 must publish complete details of the fees they charge. They must clearly outline these fees on their website or display them 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, the local council can fine them up to £5,000.

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 interested in a property, the letting agency may require you to pay a holding deposit. They use this deposit to take the property off the rental market while they conduct background checks 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 reduces the amount you owe for the full deposit. However, you may forfeit this sum 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.

The letting agency should not charge you a fee if you and the landlord agree that you can continue the tenancy after the fixed term ends.

Are there any extra fees that letting agents may charge?

You might have to cover the following additional costs:

  • 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 remain liable for the rent until 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, carefully read the small print, identify all charges, and sign the tenancy agreement only when you fully understand it. 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.

Phil Spencer’s Property Report contains information on local valuations and rental estimates you can use this to make sure you are not paying over the odds for a property. Get your full report here.

Last Updated: January 24th, 2025