Kate Webb
Kate Webb

By Kate Webb

Government bans letting agency fees

The government will ban letting agency fees in the Autumn Statement. Shelter strongly welcomes the news as a bold step forward for renters.

Update: Renters have woken up to some rare and very welcome good news. The government is going to do the bold and just thing and ban letting agent fees to tenants.

Shelter has called for a ban on letting agent fees since 2013. We were moved to act after numerous people came to us outraged at the fees they had been charged. Every year seemed to bring an inventive new cost (how does a £50 fee for moving furniture sound?) and renters were angry.

Government figures show that tenants pay on average more than £200 in letting agency fees, on top of rent in advance and deposits. We found even higher average costs and that one in seven tenants have been charged more than £500. More worryingly, lower income tenants are charged higher fees on average.

Even if the headline cost of fees are made clear to tenants there is a lack of transparency about exactly what costs are being covered. We carried out mystery shopping and found inexplicably wide variations in pricing. Fees for reference checks ranged from just £30 to £220 and tenancy renewal could cost anything from £35 to £150.

Looking at the market in detail reveals quite why renters felt so aggrieved – and more importantly powerless. Landlords appoint agents to market and sometimes manage their property for them. Landlords can shop around for the best deal, so agents are incentivised to cut their costs to landlords to get as many properties as possible on their books. Have you ever been renting a flat and received a flyer through the door advertising “Zero fees to landlords”? Congratulations, you’re paying for that.

Tenants have no such power to seek a better deal. They shop around for properties, making choices based on size, location and rental costs. They are then stuck with whatever agent the landlord has appointed. Even if their fees are extortionate or their standards shoddy. The rental market has tenants over a barrel – and then charges them for the privilege.

We weren’t the only ones concerned by this unfair balance between renters, landlords and agents. The Office of Fair Trading drew attention to the unique tripartite nature of the market and raised concerns at the misaligned interests of renters and landlords and the potential for agents to hide their fees. Resolution Foundation and Citizens Advice followed suit, calling for a ban on fees to improve standards for lower income private renters.

Empowered no doubt by their postbag, politicians across the political spectrum began to call for action, most notably former Shelter grandee Baroness Olly Grender who’s been leading a private member’s bill to ban fees, backed by readers of the Debrief.

We are truly delighted the government is bringing forward a ban. This is an immediate expression of the prime minister’s promise to take on vested interests to help working class families. Because tenants have so little consumer power we have never believed transparency will be sufficient to end abuses. A ban on fees is the fairest, most transparent way to improve private renting for just managing families and we are delighted the government agrees.

PS please excuse the direct approach, but if you’re a fan of today’s news and want to help us do more to fix renting please consider donating to Shelter. We lost quite a lot of money in corporate sponsorship when we first came out against fees and hoped that it would be worth it in the end – it is.

43 Responses to Government bans letting agency fees

  1. Phil irving says:

    So who will pay the agent and re-imburse fees they have paid when a tenant as they often do pulls out of the tenancy at the last minute or fails referencing having lied to the agent about their status or are proved to be an illegal or a money launderer?

    • Helen Williams says:

      Your comment is not helpful when there are thousands in emergency accommodation or sleeping rough simply because they are unable to fulfill Letting Agents extortionate demands. You obviously read the Daily Mail…StopFundingHate

      • Dave Evans says:

        We charge £30 to process a tenants application, for this we have to confirm their employment status, check references, check they are legally entitled to rent (i.e. Not be an illegal immigrant because if we mistakenly provide housing to an illegal we are committing an offence), perform the inventory with tenant at check in and check out and also do health & safety inductions. And because it takes me on average half an hour to get from the office to a property and half an hour to get back again I am of course now committing an offence because I am working for below the minimum wage – another ill-conceived knee jerk reaction to a handful of bad landlords / agents. Most of us provide good accommodation and service at a fair price, please do not vilify all of us.

        • Fernando Hidalgo says:

          Main problem is that letting fees are not for the benefit of the tenant, are for the owner, therefore why the tenant has to pay for it?

          This creates a conflict of interests and quite often the tenant is the part losing but sometimes even owner and tenant loss as you can search online for thousands of complains from landlords to Estate Agents.

          Also tenants cant choose Agent. It is the owner that choose the Agent, therefore the owner should cover its cost. Unfortunately it is not easy to find a nice property for a good value. If you remove the the Agencies that have unethical practices you only can choose between a handful of properties.

          The letting “market” is broken and something needs to be done. Lets try this that seems to be working pretty well in Scotland.

        • Clint says:

          I’d rather pay a little more each month than pay the ridiculous fees they charge before even moving in. I paid 30quid for a reference check with a private landlord plus a months rent in advance. Through an agent it would have been 6 weeks advanced payment, 240 for the ref. Check for me and partner plus other fees that added up to 800 quid! One was 180 for an inventory check in an unfurnished house! Glad they’ve done the ban so honest hard working people are able to get a home

      • Roisin Gruner says:

        Husband & I are landlords, and we have no objection to paying our Agent for checks on prospective tenants. It’s for our benefit, like insurance. We don’t expect tenants to be liable for, say, our buildings insurance.
        Unreasonably high fees to tenants gives us a bad name and can get the landlord/tenant relationship off on the wrong foot.

    • Caroline Wilson says:

      Lettings fees are disproportionate to the value of the work carried out. Credit checks cost little as companies pay for a yearly license rather than per check. I think this is the issue here. Maybe have a statutory fee rather than everyone charging however much they feel like!

      • Tricia Scott says:

        I have to say that’s not the case for us. We pass on the straight charge to the tenant – It’s unfair to assume that all agents operate in this way. We don’t.

  2. Marshall says:

    This is great news indeed. Tenancy agencies are in desperate need of regulation. I was charged £180 for “checking references” and I know for an absolute fact that they didn’t. Downright fraudulent, but nothing I can do about it.

  3. Margaret says:

    Banning letting fees completely is not a good idea. Tenants will apply for dozens of properties without the intention of taking most of them. There is a cost to the agent of getting referenced via a professional company but the cost is actually very low. Tenants should be charged a small amount upfront to show goodwill. Fees should be capped and anything “non refundable” be outlawed. Asking for the deposit upfront before even being referenced should also be banned.

  4. John says:

    no fees were stated in my contract, but the agent IMPOSED 180 gbp fee, followed by intimidation.
    Even a bank does not charge 180gbp for certain checks… I have experience in this.
    the agent also accepted a tenant with bad references, therefore also misdjuged the tenant… which means agents may not be able to judge the references

    for all the agents, please read carefully:
    – people need to live in a house, and need a place where to sleep, therefore the have no choice than finding a house and sometime become victims of greediness and speculation
    – during the financial crisis, 2007, real estate agents may have played an important role to trigger an endless spiral that brought to a bubble
    – real estate agents can`t claim their speculation as a right, while people have the right to have a house if they can pay
    – real estate agents should clearly and publicly disclouse their income every year, so that we can see how much money they make and they have made for many years
    – rent is an important expense for any person, which currently is not sustainable anymore in London even for people with a salary or 40k

  5. Vicky says:

    All sounds good but I’m sure we will end up paying another way…..rent hikes, larger deposits!! They’ll find a way round it and screw us over still 🙄😞

  6. Paul Jeffery says:

    Lettings agents now crying foul play after years of warnings and sly behaviour. If the fees were fair then this wouldn’t be happening I know from my own career in housing that a reference check costs at most £20.00 so charging a tenant in excess of £100.00 is a complete joke. As for charging again over a £100.00 for a tenancy agreement fee when all they do is print off a document with amended details is disgraceful.

    I hope the government put safeguards in place to prevent landlords increasing rents to offset their losses when they are hit with these extortionate fees.

  7. Helen Williams says:

    Every time I have to renew my Tenancy agreement with my agency I have to pay £60 in cash. They will not accept card or cheque payments for this. Obviously it is undeclared income.

  8. Chrissie says:

    Banning fees is an excellent idea!! It can help a lot of those who are made homeless! Because of certain policy and regulations the council aren’t obliged to house everyone, which either pushes people to private rented or a life on the streets! My husband works full time and I’m a full time student working part time, it costs us £500 per month for our rent and cost us almost £2000 before we even moved in! I had no choice to move and paying that amount to move into the house left us in debt with a serious knock on effect which a year later we are still struggling for! The only people who would think this is bad idea would be landlords and letting agents, time to stop filling the pockets of the greedy and start looking after those who need a home !!!

    • Alice says:

      Hi Chrissie

      I am a student and writing a feature about the ban on letting agency fees for an assignment. I would love to quickly talk with you about your experience. If you are interested please email me at alicewojcik@gmail.com

      Thank you!

  9. Thalis says:

    I had to pay twice for guarantor referencing… something additional on top of the insane rent and fees as a student.

  10. Ben says:

    I am so glad to hear this. It cost me and my partner £144 to renew our tenancy this year and all the letting agent did was send us an electronic version of the exact same contract as last year – they didn’t even change the date on it (seriously!). I can’t believe it costs £144 for some office junior to send an email.

  11. Ben says:

    Tenant fees should have been capped not banned…. the cost will now be passed onto the landlord which will in turn = rent increases , probably by more than the initial fee…. and with supply of rental properties lower the the demand… Rental costs are just about to get a whole lot higher….

  12. Barry Durman says:

    Good news indeed. I am President of @41club which this year is supporting Shelter and highlighting to our 16,000 members the plight of so many families who don’t have somewhere to call home

  13. Maggie says:

    As an estate agent, this is terrible news. We are hard working decent folks and Phillip Hammond decided that we are to blame for the housing crisis. Our fees pay for the salary of hard working decent folks. The reason why house prices are so high is because of the immigrants. There’s simply far more demand than supply. You think banning fees is going to be the solution? I just the spoke with my clients and we agreed that we are simply going to increase rent to cover the cost of fees so there really isn’t going to be a difference anymore.

    • James says:

      You call yourself decent and then inform us all that you’ve spoken to your clients and are going to arrange for rents to be increased to cover the loss of your fees – how ‘decent’ of you! Also, please don’t blame immigration for the housing crisis, it’s a crisis that can be easily fixed by building affordable homes.

  14. A Cready says:

    I have rented for a number of years (after owning my own properties) due to unforseen circumstances. I agree with a reasonable fee for checking references and initial paperwork etc. I do not agree with a 120 pounds fee everytime I renew my tenancy every 12 months. What is this for?? I look after my house and garden and pay the rent without fail!

    • Fernando Hidalgo says:

      For the profit of the Agency. Let me guess… Andrews?
      Legally there is not need to renovate the contract but even if the landlord and tenant agree to stay in a rolling contract the Agency will refuse without explanation, therefore it is clear that it is only for their profit.

      Hopefully landlords will choose more wisely now that they have to pay the fees. I would never choose a contract like that as a tenant but if I like a house there is nothing I can do but to agree the Estate Agency that the landlord choose.

  15. James says:

    95% of tenants surveyed would also like to not pay any rent and for the landlord to do the washing up and cook breakfast for them.

    Get real. Rents will go up to cover the extra cost to the landlord. Say an agents fee is £300 the rent will go up by about £25 a month so year 1 is about neutral costs for all but in year 2 the tenant is paying more.

    As shelter has said the REAL issues is supply and demand build more houses and rent prices will come down.

    • Fernando Hidalgo says:

      No the probably wont go up. This method has been applied in Scotland and rent did not go up because the letting market is not based on cost, it is based on how much a tenant it willing to pay to rent.

      As you can see in other comments the current system also affects Landlords, so I think your ironic comment is not only not constructive but also plain wrong.

    • Geoff says:

      Your opening line betrays the complete grasping self-centredness of your attitude. It’s ridiculous to say 95% of tenants would like to pay no rent. Of course almost all tenants expect to pay rent – but they want to be treated fairly. Rents are far too high as it is, kept high by landlords who keep purchasing ever more expensive property (the price kept ever higher by ‘buy-to-let’ landlords) on a mortgage – and they expect the tenants to pay for their landlords’ property with ever higher rents. It is reasonable to charge the tenant for the legal paperwork of a tenancy, but such administrative costs cannot be great, no more than £30 or so, especially since most agreements are standard agreements already drafted and printed in bulk. The advertising of the property must surely be a charge levied entirely on the landlord, not the tenant. ‘Inventories’ if done are very often undertaken by the tenant. Deposits or part deposits are often withheld at the tenancies’ ends, very often illegally for what is simple wear and tear – but most of all, the high letting fees are unacceptable. It is the landlord who is already making serious money and/or capital investment out of renting out property who should pay the agent – if s(he)chooses to use one – it is the landlord’s choice, after all. I know from experience that the average agent’s
      ‘letting fee’ now very often equates to one month’s rent, or close to it, which means in effect, with the deposit, a tenant has to pay 3 months’ rent in advance, for which they only in effect actually get a month’s rent (two if they’re lucky enough to have their deposit refunded in full at the end). It’s high time letting agents’ (and landlord) scams should stop fleecing the tenants. Save your breath, your rents and charges are very high as it is – you’re rich enough. Have some decency.

  16. Catherine says:

    This is good news. As a landlord who tries to be responsible, I’ve been dismayed to see my letting agents in the past charge new tenants a high “letting fee”, while also charging me a high “finders fee”, then appear to do very little to justify these fees on either side

    • Ixion says:

      Bravo, Great to read an honest comment from a decent individual. I wonder how many properties remain empty for a long time just because of extortionate agency fees?

  17. Mrs Lillian Smith says:

    Rents should also be capped so that landlords would not have the incentive to refuse to renew decent tenants tenancy someetimes by double or treble which was shown in recent TV program showed. We have been in our property for 16yrs. Our tenancy went from a 5yr lease to one in which we can be given 2 months notice. I also thought I heard something mentioned on TV about the right to buy your property and the rent you had paid being taken into account when fixing an asking price. Obviously landlords couldn’t be forced to sell. However it would be nice to know as a sitting tenant (as it was called years ago). You could be given this option should your landlord decide to sell. This would give a lot of people more security.

  18. Mandy Evans says:

    Glad something at last been done

  19. Hello1 says:

    When I moved into my current privately rented house, I had to pay £520 in agent fees (admin, referencing, inventory, contract) on top of 1st months advance rent (£450), a deposit £550 (1 months rent + £100). On top of that there were moving costs (van hire). I have a full time job but only earn the minimum wage so I had to borrow money from relatives to pay for these fees. As the contract is only for 1 year, the letting agent is charging me for contract renewal (£140) every year as well. £140 for a piece of paper that is exactly the same as the previous one, the only thing they do is change the dates. Does is really cost £140 to print out a few pages? I wouldn’t mind paying £15 or so for renewal but £140 is ridiculous. About time the fees are banned, some agents are greedy!

  20. LEELEE says:

    As an agent, I have never stung tenants but offered fair prices for references, the fees we charged are between landlords and the tenant.

    These include costs for agreeing the let, the lease drafting, inventory, photographic evidence on inventory, Admin which is calls to and from the tenant, agreeing other terms for time s of white goods, sky dish ect.
    Keeping the tenants updates and the landlords, chasing referencing, bank checks, employers, character references, measuring up, further meetings with guarantors, You have to think of all the calls made up to and well after the check in and check out.
    Once management of a let which can be maintaining a contact between all parties for repairs, contractors calling out agreeing times ect, calls out of office times
    too these all cost the office time and money. You have staff which deal with these calls and they a wage which is to pay.
    Providing a service 247 costs money and time, the ban of tenant fees is unfair.

    Why should a Landlord pay for your referencing for then to be told it’s failed.
    Of course these fees should not be too expensive but at lease these should cover the costs to the agent.

    Rents will increase and lack of service will suffer onthe long terms which is ludicrous.

    This government needs to look at the bigger picture and not sting small companies that are trying to provide a better service to all, employ staff and provid income to people that need it.

  21. Paul says:

    I paid a little under £3,000 all in of which £1,800 of it was the deposit, agents are a joke!

    I also have to pay £120 every 6 months for renewal fees all because the landlord chose to use the agent which costs them 5 minutes of their time to print an existing document and change the dates.

    IMO agents should not be allowed to charge tenants anything at any time as “fees” relating to the tenancy agreement because the agent is hired by the landlord not the tenant.

    There should also be a law added that prevents any mention of the letting agent in tenancy agreements to prevent them abusing their powers for their own benefit.

    If the landlord wants all these checks and renewed paper work then he should pay for it not the tenant who just wants to live in peace!

    Either that or tenants should be able to hire their own Agent too to balance the system because clearly agents care more about their landlords than they do tenants!

  22. Barry Slaney says:

    I rent in Southern Spain,€420 (currently £350 a month),including council tax, fully furnished two bed modern.My rent has not gone up for 10 years,some agents charge a month’s rent fee one off, others nothing, the owner pays as there are so many empty flats due to overbuilding the whole of the Costa del Sol.Usual one month’s rent deposit. Most rentals are private agreements with a contract. I’m 82 next week and want to come back to freezing England, furnish a flat second hand from charity shops, but the agents’ fees and removal charges £gbp100 per cubic metre average figure to central Cambs. I’m staying in the sun, with beer £1.70 a pint, and decent wine €1.80 a bottle. Even winter fuel allowance £300 stopped by conservatives, but the pay it to millionaires who live in Italy, lower temperature average than UK winter due to the Alps, where no-one lives. Crazy Cameron and Iain Drunken Smith. Over 80’s should be means tested for W.F.A.

  23. Paulo says:

    I am looking for a new place but I can see several agencies asking for Agency Fees. Why are they still charging it if it has been banned?

  24. LaurenN says:

    So do we know when this will come in to effect? At the moment I (and I’m sure I’m not alone) am currently unable to move as the fees are so high it makes it impossible. Completely stuck here until something changes!

  25. Briggs says:

    Agreed when will this ban come into place please ?

  26. Catherine says:

    As a tenant, never been late paying my rent on time for almost 2years.
    I am now stuck in this awful situation! The ‘no dss’ clause that is rife at the moment. How have most of us fallen foul to the insinuation that we’re not to be trusted?
    I am a retired SRN. I don’t steal, I don’t take drugs and am tea total. What have I ever done so wrong to have that awful, slanderous statement glued to any application? I’m wondering when we might hear of the l governments standing up and telling the tenants, landlords when this long-overdue problem will finally be changed to help thousands of people like me find a much-loved home?

  27. Angela palmer says:

    So does this mean it is illegal for estate agents to charge for renewal of tenancy. My tenancy is due a renewal and I was robbed of £150 last year just to renew it. Plus a rise on my rent.

    As a single parent with 2 children under school age I struggle with the top up of rent let alone these extortionate fees just to keep a roof over our heads.

    I have just received a new price list stating if I want to decorate the property it will be a fee of £150 to amend the tenancy to allow me to do so!
    £150 reference fee
    £120 guarantor fee
    £50 missed appointment
    £15 copies of documents
    £150 tenancy amendments
    £100 tenancy renewal
    £25 reference request per person
    £100 periodical agreement fee
    £30 late fee
    £450 early release of tenancy

    Any advice would be very grateful.

  28. Donnette Knight says:

    Agencies are still charging high agency fees up to £250 just yesterday i looked at a property and was told i need to pay £250 admin fee and £150 referencing fee per Tennant this means 300 i will need also to pay 1month rent and 1 month deposit. I am unable to take the property even though I can pay the required deposit and rent so i am stuck why are agencies still charging is the band not in effect

  29. BRS ANNA M BUXTON says:

    Looking for a house as the tenancy is up on the one we’re living in.found one and rang the estate agent asking for a price breakdown including their fees… application £240 plus £60 for child over 18 £220 for tenancy agreement and £120 for infantry report all adding to £640 and not a penny is refundable.this estate agents we have dealt with last year and the fees were half that but when questioned why they’re higher this year they answered we will not move on the fees.it’s disgraceful 😣