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Phil Spencer MBE Founder Move iQ

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, letting agents in England and Wales must publish details of the fees they charge.

In England, landlords and letting agents can only ask tenants to make certain permitted payments, such as rent, a refundable tenancy deposit, a refundable holding deposit, certain default fees, payments for tenant-requested changes, and payments where a tenant ends a tenancy early without giving the correct notice. Wales has similar restrictions under its own letting fees rules. 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 rules, the local council can fine them up to £5,000.

In Scotland, most upfront fees charged to tenants by landlords or letting agents are unlawful. In Northern Ireland, letting agents cannot lawfully charge tenants fees for services carried out on behalf of the landlord, such as setting up or renewing a tenancy; if they do, tenants may be able to claim the money back.

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, in England or Wales the letting agency may require you to pay a holding deposit, which is capped at 1 week’s rent. Letting agents or landlords cannot ask for this in Scotland. 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 or first rent payment. However, you may forfeit this sum if you withdraw your application to rent the property or provide false or misleading information, depending on the rules that apply where you rent.

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, viewing a property, referencing, credit checks, inventories or drawing up the tenancy agreement. These charges are generally prohibited.

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 (this is irrelevant in England and Scotland as tenancy agreements cannot set an end date).

Are there any extra fees that letting agents may charge?

You might have to cover the following additional costs:

  • Inventory fees – although these should not usually be charged to tenants in England, Wales or Scotland
  • Early termination in Wales or Northern Ireland – 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 may charge a permitted default fee or interest where this is allowed and set out correctly, but the amount must follow the rules that apply where you rent

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.

In England, letting agents must belong to a government-approved redress scheme. In Wales, agents carrying out letting or management work must be licensed through Rent Smart Wales. In Scotland, letting agents must be registered with the Scottish Government.

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: June 2nd, 2026