Update: AWESOME NEWS!
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 (in England only) from charging tenants with certain fees, which includes ‘admin fees’, ‘referencing fees’ and various other charges.
If on or after the 1st of June 2019 any tenant in England is charged with any of these “Prohibited payments” it will be deemed unlawful and punishable by hefty fines. For more details, please refer to the ‘Tenant Fees Act 2019’ blog post.
This “admin” fee malarkey that agents charge is more often than not… a bit of a shameless scam. Actually, it’s daylight robbery as far as I’m concerned.
I’ve never understood this, so I’m hoping someone kind, gentle and sexy can shed some light onto the matter…
Most high-street letting agents charge both tenants and landlords fees during the process of finding-tenants, which actually makes no sense to me. I understand why agents charge landlords, but why the tenants?
An example of overpriced Letting Agent Application Fees
So, yesterday evening I was having a gander on Facebook and reading through my community’s status updates. One of my friends was having a bitch about a letting agent that was charging a ridiculous amount for a tenant application fee. I found it quite amusing, especially the comments, so I thought I’d share.
Bless my friend. She’s not the most coherent creature you’ll encounter, but you get the gist of her amusing tantrum.
Her agent wanted £240 for an application fee. The agent justified the price by suggesting they provide the best credit checks and references in the business. I’m going to go out on a whim and call bullshit. I don’t care if their credit checks/references come with 22 carat ribbons attached around them; there’s no way £150 + VAT for references can be justified, nor a £50 + VAT fee for a credit check. They use a third party credit check company just like most other agents use; and those other agents seem to manage ok by charging a more reasonable application fee.
Here’s a list of Tenant Credit Check Services For Landlords – you can get fully comprehensive credit checks for approx £20. If agents want to make a small profit for arranging the credit check, then fine, by all means put a cherry on top, but make it reasonable and justifiable.
How much is the average application fee?
I know that the local agents around where I live charge tenants approximately £100. At least it was that last time I checked about a year ago. I’m not entirely sure if that’s a pretty standard rate across the country, or whether it drastically varies (clearly it does vary based on my Facebook buddy’s experience, but I’m not sure if that’s an exception or the rule).
Actually, I’m going to stop writing this post right now, and quickly throw the question out there on Twitter (quite a few Letting Agents follow me on Twitter)…
A few hours later…
Right, I’ve got a few responses, and here they are…
Ok, so it seems as though the prices do vary, and the premium is justified as “admin costs”, which I still don’t fully understand. What admin work is actually conducted for tenants to justify a £50 – £200 fee?
Let’s not forget, the client is the Landlord and NOT the tenant. So is it just me, or is it odd/unfair that a tenant has to pay a premium when Landlords are already paying through their noses for a service?
Tenancy Renewal Fees
What’s more frustrating and utterly infuriating is that most agents charge tenants the same admin fee again if a tenant decides to stay in a property longer than the fixed term in the tenancy agreement. The cost is commonly known as a tenancy renewal fee.
So, for example, suppose I’m a tenant and a letting agent finds me a property, which I sign a one year contract for. If I decide to stay in the property for longer than a year, I have to pay the admin fee again. Seriously, WTF?!? What extra admin work actually has to be done? IT MAKES NO SENSE TO ME, especially when the Landlord also has to pay a renewal fee (but that’s an entirely different rant all together).
I just assume that a lot of agents don’t even know WHY they charge that admin fee, they just do it because all agents do it… and of course, it’s profitable.
Every tenancy applicant pays a fee!
What’s even more fucking infuriating (notice how I’ve taken it up a notch) is that some agents charge EVERY applicant (even for the same property) the same admin fee, on the basis that they can’t/won’t guarantee they’ll even get the tenancy. WTF?
So for example, 4 couples could apply for the same property, and each person could get charged a “referencing fee” of £100, which totals £800 (8 people x £100). 3 of those couples could potentially lose £200 between them for nothing. Seems outrageous.
It’s an obvious cash machine for agents, and fundamentally immoral making thousands off people that won’t ever get the property they applied for, through no fault of their own.
If I were a tenant…
Assuming I was adamant on using a traditional high-street letting agent (as opposed to an online letting agent), I would do the following:
- Rates obviously vary from agent to agent, so I would get quotes from all local agents to see which one offers the most competitive rate
- Agents themselves have told me the rate is open to negotiation, so I would try and get the lowest rate possible
- If rates seem excessive, I would ask the agent what exactly I’m paying for. If the figures don’t stack up and I feel as though I’m being taken for a ride, I’d probably walk out based on principle.
- Find out exactly what the implications are regarding the extension of the tenancy agreement e.g. If I decide to stay in the property longer than the fixed term, am I liable to be charged another admin fee? Some agents don’t charge a renewal fee, some do, it’s best to find out. Moreover, if the agent says there is NO renewal fee, I’d get that in black and white. Remember, you’d be a fool to trust a fool.
- Ensure you’re only subject to admin fees on the basis of a guaranteed tenancy- not just for being able to “apply”!
As a landlord…
I only use online letting agents to market my property. They charge a hell a lot of less across the board, for both landlord and tenant- and no hidden fees.
I’d just like to say many thanks to those on Twitter that responded to my question. It’s a bit of a shitty situation actually; they were kind enough to respond, but I’ve kind of stabbed them in the back by saying it’s a bullshit fee. Sorry, guys.
Love and Peace.
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.