The topic of fees regarding a tenancy has been very much talked about recently in the media. The Tenant Fees Bill is currently being considered by parliament and it is hoped this will become an Act in 2019. The Bill sets out the government’s approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits in England. The aim of the Bill is to reduce the costs that tenants can face at the outset, and throughout, a tenancy. The advertised rent should show a tenant from the outset what a property will cost them, without further hidden costs.
Whilst some letting agents are pre-empting this legislation and charging ‘Zero’ fees, a large majority continue to charge until this becomes law.
Most Agencies and some landlords generally charge for their services. There are no legal limits to these charges:
- Agencies usually charge a fee for finding you somewhere to live.
- It is illegal for an agency to charge you a fee before they find you a property. If you are asked for money before you have made an agreement for a property, don’t pay. The agency may charge a ‘finders’ fee, but only once you have agreed to take a particular property.
- It is illegal for an agency to ask for a deposit which they will refund if they do not find you a property.
- Some Landlords charge fees but not all so be clear in your discussions what you will be expected to pay.
What do they do and what can they charge for?
- Letting Agencies advertise and let property on behalf of the landlord. There are laws designed to protect the consumer from unfair business practices.
- Agency fees vary considerably so compare a few agencies to see the difference and how you can save money.
- Any claims an agency makes about the accommodation and its facilities are regulated by the Trade Descriptions Act 1968. Agencies that give misleading information about the accommodation, its facilities or about their charges are likely to be committing an offence.
- From 27th May 2015 letting agencies must display a comprehensive list of everything (fees, charges, penalties) a tenant could be asked to pay at any time before, during and after a tenancy if they are involved in letting agency or property management work. Where a fee cannot be determined in advance, the list must describe how a cost will be calculated. All costs must include tax.
- The detail of the costs should be broken down and could include:
- Marketing the property
- Conducting viewings for a landlord
- Conducting tenant checks and credit references
- Drawing up a tenancy agreement
- Preparing a property inventory
- Right to Rent checks
- Other fees and charges (see below)
The agent must display the list at each office where they deal with tenants face to face and must be clearly visible. If the agency has a website they must publish the list online.
An agency may act simply as a Tenant Find / Let Only agency and sign you up to a contract and thereafter, you deal directly with the landlord. In other cases the agency or a different agency may manage the property too. In this case it is called a Property Management Agency. This means they act as an intermediary between you and your landlord throughout the duration of the tenancy, handling day to day matters such as taking rent payments and dealing with requests for minor repairs. They should not charge you anything they also charge the landlord for.
The agency is allowed to charge a holding deposit if you have agreed to take a property but have not yet signed the contract.
NB: This is not simply to halt the advertisement of the property, it is you committing to take the tenancy so be sure you want it before you accept it verbally and pay a holding deposit.
The finders/administration/registration fee and any holding deposit are likely to be non-refundable if you fail to take up the tenancy but should be refundable if the landlord cancels.
The Advertising Standards Authority have ruled that all non-optional fees should be prominently included in advertisements for rental properties. When viewing properties ask them which fees are optional and non-optional e.g. a holding fee which is often charged to stop marketing the property you have chosen for a short period of time whilst you consider signing the contract. This would be an optional fee because you can agree for the advertising to continue with the risk of it being let to someone else whilst you consider the contract. There is a greater risk here that you might lose the property.
The Enterprise and Regulatory Reform Act 2013, introduced legislation, which requires all letting and managing agents in England, to belong to an Independent Redress Scheme. Check which one your agent is registered with. If you have a complaint about fees which you feel are not transparent then you can complaint to your agent direct and if they do not resolve this you can complain to the scheme. If an agent is not a member of an Independent Redress Scheme you can report this to your local Trading Standards Office.
What can I do to make sure I am not paying unreasonable/unfair fees?
- Deal with an agency that has membership of a reputable self-regulatory body.
- Speak to a number of agencies to get a feel for what are typical fees.
- Be clear before you decide to register what charges you will be expected to pay, when you will be expected to pay them, and exactly what the charges are for.
- Do not pay a holding deposit unless you are sure you will want the property and that you want it taken off the market.
- Always view the property before entering in to an agreement. For safety reasons, do not go alone.
- Obtain an example of the type of tenancy you will be asked to sign, and seek advice on any clauses you do not understand before you sign.
- Total the costs: What are their charges? What is the rent? Does it include any services? Do you have to pay the water rates, and how much are they? How much do they want for the security deposit?
- Speak to the Student Advice Centre we can advise on how you can report illegal charges, false statements or any malpractice.