Some letting agents charge extortionate fees for undisclosed ‘administration costs’ etc. The table compares fees charged by different letting agents (taken from This Is Money)
Letting agents are charging ever-increasing fees for all kinds of ‘services’ that are impossible for tenants to refuse. These fees are called ‘administrative’, ‘credit check’, ‘inventory’, ‘referencing’, ‘renewal’ and/or ‘cleaning’ fees. Really they are just extra charges put on the tenant for services that agents are already paid to do by the landlord. It is now standard in Hackney to pay at least £100 in letting agent fees just to apply to be a tenant in a flat, and Foxtons is currently charging £420.
These fees are unjustifiable and should be made illegal, as they have in Scotland, where it is now illegal for letting agents to charge tenants for anything other than rent and deposits. It is even possible for tenants to reclaim fees that they have been charged in the past (within the last 5 years). This legislative change by the Scottish Parliament followed a consultation on how to deal with unfair and illegal premiums being charged by agents.
This change in Scotland gives a good platform to start a similar campaign in England. However with the current government it will also be strategically useful to challenge the fees in the courts as well. In a 2009 decision, the High Court ruled that the fees that Foxtons had been charging landlords for finding them tenants were unlawful under the Unfair Terms in Consumer Contracts Regulations 1999 (“UTCCR”) because it was unfair under the definition in the regulations, which is:
5(1) A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.
(2) A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term.
The High Court ruling was a case brought by the Office of Fair Trading against Foxtons, after lobbying of the OFT by landlords. But the effects or letting agents fees on tenants are much more significant. We as tenants need to organise to lobby the OFT or similar group, or to bring a legal action ourselves to challenge letting agent fees charged to tenants under the UTCCR.
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 Current legislation explicitly prohibits charges for drawing up a tenancy agreement and furthermore it is an offence to require any premium as a condition of the grant or continuance of tenancy. This comes under section 82 of the Rent (Scotland) Act 1984 (imported into the Housing (Scotland) Act 1988 in respect of assured tenancies by section 27 of the Act). In accordance with Section 90, a premium includes any fine or other sum and any other pecuniary consideration‘ in addition to rent.