New research has found that the average two-adult household renting a home is paying up to £813 in upfront letting agent fees.
According to Generation Rent, the average fees for two adults are £404, but there can be additional charges if the tenant doesn’t earn enough and needs someone to guarantee the rent (average cost £152), or simply needs to move in on a Saturday (£62).
The news comes just before the consultation on the government’s proposals to ban letting agent fees closes on Friday.
There are also additional fees for tenancy renewal, which cost an average of £117 every six to 12 months. Check out at fees at the end of a tenancy can cost £120, while references for the next tenancy can be as much as £60 for two people.
The research found that 13 agents had charged tenants who accidentally overpaid their rent an average of £25.
Generation Rent is calling on the government to apply a blanket ban without exemptions for “in-tenancy” services and to create a system of compensation for tenants who are charged illegal fees.
Dan Wilson Craw, director of Generation Rent, said: “No one moves house for fun, and letting fees make an already stressful situation worse. They create hardship for renters who are forced to move, and make moving out of an unsuitable home unaffordable for many people.
“Tenants shouldn’t even be paying them. Landlords appoint their agents, so should be paying their costs – landlords can also shop around for the best deal more easily than tenants can.
“As the sheer range of fees being charged demonstrates, some letting agents are squeezing as much from tenants as they can. That’s why we need a blanket ban, with no loopholes that could be exploited by our less scrupulous agents. For an extra deterrent, tenants should be entitled to generous pay outs if they are ripped off.”
Generation Rent said that government measures forcing letting agents to publish their fees had not been wholly successful, with one agent in eight (12%) still not publishing fees on their website two years after the law was changed.
David Cox, chief executive, ARLA Propertymark, said: “Letting agent fees cover the cost of essential services during the lettings agreement such as reference checks, the drafting of the tenancy agreement, and the management of tenancy extensions or renewal. All these processes cost letting agents time and money to undertake.”
Research commissioned by ARLA Propertymark carried out by Capital Economics found that if a full ban comes into force, two tenants could end up paying an extra £206 per year in rent.
“Therefore, rather than making savings, this policy will end up costing tenants more the longer they live in their home,” said Cox.
Chancellor Philip Hammond said in his first Autumn Statement that letting agent fees would be banned after spiralling to hundreds of pounds.
The move aims to help 4.3 million households currently in rented accommodation who are hit with an average of £337 in charges on top of what they pay in rent.
Critics have branded the decision a draconian measure that could see landlords hike rents to recoup losses.
According to figures from Shelter, the removal of letting fees in Scotland did not cause any spike in rents. The ONS index shows that private rents have inflated by 5% in Scotland since the law on fees was clarified in November 2012, and in England rents have risen by 9% over this period.
Lots of renters complain they are hit with extortionate fees from letting agents for unnecessary administration costs.
They often include costs such as processing documents, bank transactions or credit checks and many tenants find themselves being hit with them at the last minute.
Fees are usually higher in cities than anywhere else and many tenants often find themselves getting into debt to pay them.
Generation Rent volunteers researched 1087 agents in 20 local council areas around England and have presented the results on www.lettingfees.co.uk.
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