Tenant Reservation Fees Is A Con! Do NOT Fall Victim!

Tenant Reservation Fees

So, who watched Watchdog last week (Thursday, 12th April 2012)? Who, who, who?

On the Rogue Trader’s section of the programme, they exposed a couple of shit-for-brain letting agent cowboys ripping off innocent and unsuspecting prospective tenants with “Reservation fees”, and nothing gave me greater pleasure than watching them squirm on national TV as they were exposed.

What is a tenant Reservation Fee?

The bullshit fee (yes, it is bullshit) is paid if the tenant wishes to “reserve” a property for a set period (typically 10-14 days). Once the fee is paid, the letting agent cannot reserve, offer the property to anyone else, or let the property to anyone else during that period. That’s the theory anyways.

The letting agency Watchdog investigated were caught red-handed, accepting reservation fees from multiple prospective tenants for the same property. They were charging £200 a pop, so it’s not chump-change we’re talking about here; we’re talking ‘penis enlargement operation’ in Eastern Europe money. They should be peeled like an onion and launched into a bowl of balsamic vinegar. But I suppose being exposed on Watchdog is a good start. I’m sure it’s a cruel practise embraced by many agents around the country.

Being the jovial and caring person that I am, I’ve taken it upon myself to chop, slash and hammer together the episode of Watchdog for you. You should definitely watch it. It’s about 25mins long, so may cause problems to those with short attention spans, but it will be time well spent, even if it’s playing in the background while you’re making inconvenient love to your partner- just lay on your back and raise your neck over your partner’s shoulder. Trust me, I’m the first person to highlight when something isn’t worth watching, like that bullshit movie Donnie Darko- complete waste of time, which miraculously has a huge “cult” following. I should have known it was bullshit based on that; if it was any good, it would have a “regular people” following, not just a “cult” following, which implies a population of weird hippies that worship Satan and/or porcelain dolls. I’m going off track here. Simply, watch the video below, and throw “watching Donnie Darko” on the NEVER to-do list!

So, what did you think?

A bunch of absolute douche-bags, right? Right!

The worrying part was, the entire workforce of the agency seemed to be elaborately involved with the scam. They were clearly all trained to be part of the ploy. What confused me more, and what was not clearly explained is, how did/do agents actually get away with taking multiple registration fees, and then explain to the prospective tenant(s) that the property was not reserved for them, and then refuse to refund the money? What possible excuse could the agent provide, and how could any rational tenant accept that kind of situation? One thing is for sure, if I was the tenant, I would not rest easy until I got my money back.

I don’t want to reduce this blog-post into a petulant arsenal of childish attacks, but that greasy, pompous-arse motherfucker at the end portrayed himself as a proper condescending prick. His stupid tie didn’t match his stupid suit either. Yeah, that’s right, I took it to that level, and what?

Avoid agents that subject reservation fees

The “reservation fee” is just an unnecessary and ugly sister to the “tenancy deposit” That’s all it is. If a prospective tenant likes a property THAT much, the only requirement to reserve the property should be to pay the standard security deposit, and the landlord/letting agency should be happy with that. As soon as a deposit is received, the property should in theory, be secured.

The reservation fee is equally as shit as the Tenancy Renewal Fee. Ultimately, neither of those fees pay for any extra labour or service; it’s just another unscrupulous means of lining the agents pockets with more cash… for doing fuck-all. It’s genuinely mind-boggling.

I personally wouldn’t use a letting agent that charges reservation fees and/or tenancy renewal fees, because agents like that generally only care about one thing, and what’s precisely why I’ve flagged those issues/fees in my how to find a good letting agent guide. Check it out :)

So, let me hear your thoughts, folks…

Update: GOOD NEWS (for tenants in England)!

On the 1st of June 2019 the “Tenant Fees Act 2019” came into force, which is a legislation that focuses on banning and restricting letting agents and private landlords from charging tenants in England with certain fees, which includes ‘tenancy renewal fees’ (and various other charges).

If on or after the 1st of June 2019 any tenant in England is charged with a tenancy renewal fee it will be deemed unlawful and punishable by hefty fines. For more details, please refer to the ‘Tenant Fees Act 2019’ blog post.

Unfortunately, if you’re a tenant outside of England, you may still be subject to reservation fees!

9 Join the Conversation...

Guest Avatar
Ben 17th April, 2012 @ 16:03

I have to agree with you - Donnie Darko is a bullshit movie big time!!

Guest Avatar
Jeremy 17th April, 2012 @ 22:17

Yes, I didn't get Donnie Darko at all. But I was impressed with Patrick Swayze, he played the creep really far too well - maybe he was a good actor after all?

The Landlord Avatar
The Landlord 18th April, 2012 @ 17:25

Ha, glad you both agree!

Good thing this is exactly the direction I envisioned the comments to go in.

I have another reason to hate Donnie Darko now!

Guest Avatar
Philippa Lyden 24th July, 2012 @ 08:11

After driving halfway across the country at the crack of dawn to ensure my partner and I got stung like this yesterday. We paid our £300 fee and met the landlord, who told us he was going to see the other couple an hour later and then choose who he wanted to move in.

According to Northwood Lettings, this is not illegal, however they do not actively practice it either. Hm.

Guest Avatar
Jeremy 31st July, 2012 @ 23:13

Hello Philippa Lyden,

Read your agrement with Northwood carefully. If you've bought the right to have an exclusive option to rent the property and you've not been given that right then you have been defaruded. It's a crime of Fraud under the Theft Act.

Your easiest remedy is to demand the money back from Northwoods. Being a franchise this comes out of the branch manager's pocket, so they're not going to be helpfully explaining your rights to you. But they have a Head Office complaints dept and are in teh Property Ombudsman, so I think you've got a really good chance of getting your fee back.

They, in turn, should have a tight enough agreement with their landlord that they can recover the compensation you are due from him, as he has obviously mucked them about just as much as you.

Hope this helps.

Guest Avatar
pete 15th September, 2012 @ 09:05

It depends whether it is a holding/reservation fee or an administration fee or a deposit, and that partly depends on how much money they are asking for.

In my opinion, if the sum requested is say £ 100 then it could be said to be for administration in setting up the tenancy (depends on what other charges there are to be levied). If the money is taken and then put against the first months rent when the tenant moves in, then it is a reservation fee. If it is say half a months rent or more then most should be passed to the landlord if the tenant pulls out. If the money is taken as a deposit then it remains the tenants and should be registered as such.

The moral of the story is read the T&c's before you commit to signing or paying for anything and avoid a landlord or agent who either doesn't have clear t&c's or isn't a member of an organisation to who you can refer if there is an issue. Yes, these proper agents may well be more expensive, but if you want cheap, you'll get cheap!

Guest Avatar
James 22nd November, 2012 @ 10:25

There are a number of names for the fee you are talking about. Reservation, Holding or more appropriately the administration fee.

The fee is taken as a demonstration of intent on the part of the tenant. Put it this way a tenant is much less likely to waste time offering on multiple properties if he actually has to put money down to confirm interest.

The administration fee is used to pay for the admin in setting up the tenancy. Usually for the references, their portion of the tenancy agreement cost, offer letters, check-out fee and various other costs.

While Letting Agents are an easy target, there is a massive amount of paperwork involved if the job is done correctly. (Much more than a Landlord renting out privately needs to do). Naturally we get to hear the "but all you do is press print" comment all the time. However we have lost many members of staff who could not deal with the degree of administration required with a backdrop of ignorant Landlords and Tenants refusing to believe any work was being done as a result of whistle blowing programs that tarnish all agents with the worst examples. To propose that having done this work and the tenants disappearing we should simply give any administration monies to the Landlord does not make a great deal of sense. It sounds like you are looking for charities to run letting agents, not businesses.

In any event the consumer has protection in this area. The OFT requires that an administration fee cannot simply be withheld, there needs to be evidence of work and cost incurred for any monies to be retained by the agent.

The example in the video shows a crooked agent. However there are thousands that are hard working and law abiding.

Guest Avatar
Donna 9th October, 2014 @ 08:34

Well, it is true that Estate/Letting Agents are asking this reservation fee. 1: put under pressure, "in case the other person takes the flat" 2:the price for the fee ranges from £50 - £200, every time we are being told, it would come off the deposit once everything has been finalised. 3: you say, you wouldn't go with a Letting Agent who charges this, well, we have been looking at flats for a couple of months now and EVERY agent wants a reservation fee. We have no other option! We were even told that, yes, several people can pay the fee and the landlord will make his mind who gets the place. the people who do not, will get their money back. But that still means one is out of pocket...

Guest Avatar
Tomas 26th October, 2014 @ 11:26

I have similar problem. I've paid reservation fee in amount of 250£ to Archer Bassett agency which should be deducted from first rent when I become a tenant. Then they passed my application to other agency, cause the above mentioned agency was doing only viewings. I've passed all the checking and referencing, and I've become a tenant. But the second agency didn't know anything about the reservation fee I've paid to first, and I had to pay all rent and all deposit. That's way I've lost 250£ I should have got back. What should I do to get my money back? The papers I've receive from archer Bassett says bold that I should get that money back when I became a tenant.

















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