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Why are letting agents fees so high?

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One of the biggest hurdles to moving between rented properties can be the extortionate letting agents fees. The differences between agents can be vast, but often people might be forced to miss out on their dream property because of the extent of the charges. Why are these fees so high and is there anything that can be done to change them?

What do agents charge for?

When agents rent out a property on behalf of a landlord, they generally charge fees to both the renter and the landlord. Fees for tenants can include setting up the tenancy, administration costs, holding fees and credit checks. However, they don’t include any deposits or advance rents.

What’s wrong with these fees?

Many commentators within Government and other interested parties believe that the fees charged by letting agents are now out of control. Recently, the Commons Select Committee on Communities and Local Government described them as unjustifiable in many cases. There are no guidelines on how much agents can charge, though they do have to abide by an industry code of conduct which requires their fees to be transparent.

Often these fees are non refundable, meaning that even if the process stops not because of the tenant, they’ll still lose everything they’d already paid. Agents have also started the practice of including additional fees later in the process. Often these come as a surprise to the tenants after they’ve signed the contracts, meaning that they’d lose money if they backed out of the agreement.why are letting agent's fees so high

The extent of the charges could put people off moving, especially if they already have to pay rent whilst saving up for agent’s fees. This could prevent people from moving on with their lives, if they’re stuck in properties or areas that are no longer suitable or that are holding them back. For instance, a family with one child might be unable to extend their family because they can’t afford the fees associated with moving to a larger property.

The homeless charity Shelter has carried out research into the impact these fees can have on renters across the country. They found that the average charged by a letting agent is now £350, but that around a third are charging at least £400. This has led to a quarter of renters having to borrow money to cover the fees and one in six has had to reduce their food or heating budget to pay for them.

Is there anything that can be done?

The Government has started to step in to try and control the situation of letting fees. There are plenty of reputable agents around who charge a fair fee structure. However, with the ability to basically charge what they like, there are a minority of rogue agents who are taking advantage of renters with no other options.

The law is set to change, which will require all agents to be part of an approved scheme, making it easier for tenants and landlords to complain about unreputable companies. The Advertising Standards Agency will also be looking at how agents market properties, ensuring that the fees are clear from the start of the process.

Often you don’t have a choice who you rent a property from. However, it could be worth your while researching the local market and seeing how the fees of different agents vary. If there’s a wide difference, it might be better to choose your property based on the agent rather than which you like best.

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About Catherine Stern

About Catherine Stern

Catherine Stern is a freelance writer with a background in marketing and PR. She currently writes web content on a range of subjects, from finance and business to travel and home improvements. As a working single mum of two young boys she understands the pressures that today’s working parents face and the topics they want to read about.

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