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22 Tuesday Oct 2013

Letting agents fleecing tenants out of hundreds of pounds of hidden fees Posted by:

Letting agents are forcing tenants to pay up to £600 in non-refundable fees to rent out a one-bedroom apartment. That’s according to new research conducted by Bien Media client Rentify, the leading online service for tenants and landlords, highlighting the extreme and opaque nature of letting agent charges and fees.

Letting agents charge an average ‘administration’ fee of £220 to secure a rental property in London, the equivalent cost of nearly ten weeks of food shopping for the average person*. Nearly 25 per cent of the London letting agents surveyed charge over £300 in administration fees, with the most expensive agent charging £600 in East Ham – more than half a year’s worth of food shopping.

Unsurprisingly, the most expensive letting agents were all found in London. Bristol was the only city with a higher average fee of £251.

George Spencer, CEO of Rentifysaid:

“As if it wasn’t bad enough that letting agents charge these unnecessary administration fees to tenants, some of these charges are also passed onto the landlord so the agent makes double the profit. These fees lack transparency and are simply unfair. Sometimes they cause tenants to pull out of properties because they have not been disclosed upfront, or budgeted for.

‘The Advertising Standards Authority has ruled that from next month these costs must be clearly displayed in adverts alongside rental prices but there is no onus on agents to make their charges fairer, or better still, remove these unnecessary fees completely.

‘These figures are especially interesting in the light of Communities Secretary Eric Pickles’ recent promise to cut down on rogue agents through compulsory redress schemes. Perhaps Mr. Pickles could have gone further by seeking to introduce new regulations, such as a qualification scheme for agents. At the very least, Rentify’s research lends strong support to the view that urgent action is required.”

Key findings:

  • Letting agent administration fees varied significantly across different agents and areas, with some not charging any additional fees. Those that do charge them, on top of the standard deposit and one month’s rent in advance, say they do so for drafting tenancy agreements and conducting reference and credit checks.
  • Typically, the time spent doing this work is 90 minutes, which means the letting agent is charging the tenant £146 per hour to complete these tasks.
  • The survey also found that the average fee for a credit check was £50, a task that costs letting agents less than 20 pence if bought wholesale – usual practice for larger agents.

Mr Spencer added:

“Rentify is committed to saving landlords and tenants money. Our research exposes the need for greater transparency in the rental market. We charge a flat £15 fee for a thorough credit check with no other ‘hidden’ extras. It can be done.”

www.rentify.com

-ends-

 

Notes to Editor:

Rentify conducted a telephone survey of 1,000 high-street letting agents across six major cities in England. Agents were asked what they charge to rent out a one-bedroom or studio apartment. The survey included 20 per cent of London-based agents.

Some letting agents charge a variable fee (e.g. one week’s rent) so in these instances the total fee was calculated based on the average rent for a one-bedroom apartment.

*The average weekly spend on food and non-alcoholic beverages per person is £22.63, according to the Office of National Statistics (Families and Households, Labour Force Survey (LFS) 2012)

The administration fee therefore translates into:

London = Food shopping for 9.7 weeks

Birmingham = Food shopping for 7.2 weeks

Bristol = Food shopping for 11.1 weeks

Liverpool = Food shopping for 6 weeks

Manchester = Food shopping for 7.1 weeks

Nottingham = Food shopping for 8.2 weeks

 

Average administration fees:

 

Region

Average Total Fee

(Min – Max)

RENTIFY £15
London 

(Sample 777-20%)

£220

(£0 – £600)

Birmingham (Sample 81 – 40%) £164

(£0 – £484)

Bristol   

(Sample 52 – 40%)

£251

(£100 – £400)

Liverpool

(Sample 45 – 40%)

£137

(£50-£250)

Manchester (Sample 72 – 40%) £160

(£40-£354)

Nottingham (Sample 36 – 40%) £185

(£29-£395)

Average across full sample £208.48

About Rentify:

Rentify is the UK’s leading online service for landlords, helping them to market, manage, and make money from their properties. The company was established in 2011 and its’ first services went live in 2012, seeing 100,000 users register in less than a year. Rentify is backed by investors including Balderton Capital and D5 Capital.

 

Further Information:

Please contact Melanie Bien at Bien Media on 07875 175357 or melanie@bienmedia.com.