Upfront "agency Fees"

[inflating]

tenant 447. The two posters above are mistaken. Agents often try to hold on to the "admin fee" or holding deposit but it's totally illegal:

See this OFT doc on unfair tenancy terms:

http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf

In particular: page 92: supplier's right to cancel without refund:

"Withholding refund

Unfair term:

The tenancy application fee is non-refundable. If you or any of the prospective tenants are rejected by the referencing agency and the tenancy does not go ahead as a result, the above payment will not be refunded.o the

Way of revising term:

Term deleted."

Write a letter to the Agent demanding immediate repayment or you'll take them to the small claims court. Mention the 2005 OFT ruling and they'll know they haven't got a leg to stand on....

tenant 447.

An AST is a consumer contract and there are laws against unfair terms in consumer contracts. The OFT ruling in 2005 went through a whole range of AST terms that it considered unfair including the one you signed.

An unfair term is un-enforcable and by law they must give you your money back. You can't sign away your statuory rights, and a full refund if the supplier pulls out is one of them.

Write them a letter demanding your money back as they were the ones who decided not to proceed with the tenancy. State the the term in their contract was specifically ruled as unfair by the OFT back in 2005. Tell them if you don't recieve your money in 7 (or 14) days you will be taking the matter to the small claims court.

It's easy to make a claim in the Small Claims Court and they will have to re-imburse you for all costs after they lose (which they will)

Agents like this simply rely on the fact that 95% of tenants don't know their rights and get bamboozled and give up... They need to be put in their place.

I've just spent some time going through this recently, as my letting agent was trying to extort £85 for the privilege of him not having to re-advertise after my 12 month AST expired.

There was nothing in the contract specifing any fees, so none were due.

The Unfair Terms in Tenancy Agreements 2005 is guidance only - not law. From what limited research I have done the letting agent does not have to abide by this.

The other two OFT powers are;

The Unfair Terms in Consumer Contracts Regulations 1999.

The Unfair Contract Terms Act 1977 which is an Act of Parliament , therefore law.

I would contact your local Trading Standards and Citizans Advice, they may be able to add some weight to your arguement without resorting to court.

Be firm with them, it worked for me.

The parasitic industry is in urgent need of regulation. Blame Mr Shapps..

BBC News

One of the most useful threads I have ever come across on the web, speaking as a tenant. Thank you Gadget, etc.

I have written to various bodies several times on the issue of agents' ridiculous and growing fees. I have never received a satisfactory response and never been told that an unfair term specifically existed in a pdf somewhere for me to refer to in a court room.

Thank you to the posters on here as this has been very helpful to me, although I'm abroad now I'll be dealing with various agents again when I return to the UK in the near future. It is becoming harder and harder to find one that does not extract the urine with their upfront fees and fees for everything else from checking in to receiving keys, fees for breathing in the corridor, fees for laughing on a Tuesday and what have you.

If you would like to add your voice to control fees at what surely is by now a hugely parasitic industry, email Shapps and the OFT.

You may be interested to know, credit checking can be done by landlords directly at various websites, and agents that buy such checks usually pay £30 or less, sometimes much less

Edited August 3, 2011 by inflating

[Swansea Estate Agent]

We get charged around £40 per applicant for full credit and referencing, but we do charge more than that just like every other agent.

A bulk of the application fee is to cover our time where we deal directly with the applicants requirements. It is not just the simple process of taking details, passing them on and waiting for the results. There are other costs including time spent on the viewings (when tenants turn up as well as not turn up), paper, ink (ok both small costs), phone calls, advertising etc.

What it boils down to is a decent agent will understand how much money is going out of the business with all the above costs plus more and wages. They will then know how many properties need to be let each week/month to cover the costs and hopefully make a profit otherwise what is the point of running a business. Most fees are then decided on all of the above plus to be competitive with other local agents.

Yes fees have increased like rents have, but many of these go hand in hand. Many agents charge on a percentage of rent or number of weeks rent to base fees.

I don't agree with what many agents do which is to make several different charges. We charge one fee which covers everything and it is £175 per adult applicant. Many of which we will put through just one adult of a couple to save them money and make sure of the deal. We would only need to put the other through the application if one of them is not earning enough or fails the checks.

Another reason why fees are going up is because it is the market. Sales are down and many agents are needing to recoup money, so they shamefully raise letting fees.

The problem with the industry is that it is not regulated.

[tim123]

We get charged around £40 per applicant for full credit and referencing, but we do charge more than that just like every other agent.

A bulk of the application fee is to cover our time where we deal directly with the applicants requirements. It is not just the simple process of taking details, passing them on and waiting for the results. There are other costs including time spent on the viewings (when tenants turn up as well as not turn up), paper, ink (ok both small costs), phone calls, advertising etc.

These are costs that are the LL's responsibility.

It is not the slightest bit reasonable to bump up the tenant's referencing fee to cover them

tim

[Rozza]

A bulk of the application fee is to cover our time where we deal directly with the applicants requirements. It is not just the simple process of taking details, passing them on and waiting for the results. There are other costs including time spent on the viewings (when tenants turn up as well as not turn up), paper, ink (ok both small costs), phone calls, advertising etc.

Why does the tenant pay for this? Pay to cover other tenants who didnt turn up, advertising for the landlord as well?

You seem like a reasonable agent from your other postings so this has surprised me, however if this is what you charge your tenants for then there is something seriously wrong with you.

Tenant fees should cover ONLY fees applicable to the tenant, if referencing is £40 then fair enough add on £10-15 to cover your time sending off their application, but at the end of the day agents are employed by the landlord and its about time they all realised that the landlord should be paying the fee.

If i could ever prove an agent i have been through used my fees to cover things like advertising (which i cant) they would find themselves on the sharp end of a lawsuit

[inflating]

The problem with the industry is that it is not regulated.

Thanks for posting and I know you generally post sound opinions such as the one above - I agree with that - although I don't agree with the need to charge tenants for things like appointments, paperwork etc, because you already charge the landlord an introducer fee and/or monthly management fee anyway. No offence, but I think the sweeties need to be taken away from some agents' buggies - viewings, checking tenants, the whole thing - it's the business of being the landlord's agent and the costs associated with that are charged to the landlord. Some agents say that landlords would charge more if tenant fees were reduced - well since that was first said to me landlords have increased rents anyway and fees to tenants have in some cases doubled. I've seen agents that ask for about £500 in total, a well-known chain does for a start, and in Dorset a good few milk tenants for that much. A business that acts as agent for a client such as a LL has no right to take money from both parties in the transaction. If I open any service business, the cost of finding a customer is one I must bear or pass on to the person or body for whom I found the customer, I do not have the option of saying to the customer "Before I take your order, you must pay me for checking you out and the paperwork involved in introducing a stage which protects my own interests and boosts my own profits." It is entirely inexcusable and yet this government and others let it go on. Charging a tenant for the credit reference check of £12 to £40 is bad enough, but the other fees just do pong of agents' sheer greed.

These are costs that are the LL's responsibility.

It is not the slightest bit reasonable to bump up the tenant's referencing fee to cover them

tim

+1

Why does the tenant pay for this? Pay to cover other tenants who didnt turn up, advertising for the landlord as well?

You seem like a reasonable agent from your other postings so this has surprised me, however if this is what you charge your tenants for then there is something seriously wrong with you.

Tenant fees should cover ONLY fees applicable to the tenant, if referencing is £40 then fair enough add on £10-15 to cover your time sending off their application, but at the end of the day agents are employed by the landlord and its about time they all realised that the landlord should be paying the fee.

If i could ever prove an agent i have been through used my fees to cover things like advertising (which i cant) they would find themselves on the sharp end of a lawsuit

+1

I have told Shapps and the OFT numerous times. They do not act. Everyone renting that is reading this thread, if you add your weight they may be forced to act and start treating tenants as customers and not cash cows

[Damocles]

Thanks for posting and I know you generally post sound opinions such as the one above - I agree with that - although I don't agree with the need to charge tenants for things like appointments, paperwork etc, because you already charge the landlord an introducer fee and/or monthly management fee anyway. No offence, but I think the sweeties need to be taken away from some agents' buggies - viewings, checking tenants, the whole thing - it's the business of being the landlord's agent and the costs associated with that are charged to the landlord. Some agents say that landlords would charge more if tenant fees were reduced - well since that was first said to me landlords have increased rents anyway and fees to tenants have in some cases doubled. I've seen agents that ask for about £500 in total, a well-known chain does for a start, and in Dorset a good few milk tenants for that much. A business that acts as agent for a client such as a LL has no right to take money from both parties in the transaction. If I open any service business, the cost of finding a customer is one I must bear or pass on to the person or body for whom I found the customer, I do not have the option of saying to the customer "Before I take your order, you must pay me for checking you out and the paperwork involved in introducing a stage which protects my own interests and boosts my own profits." It is entirely inexcusable and yet this government and others let it go on. Charging a tenant for the credit reference check of £12 to £40 is bad enough, but the other fees just do pong of agents' sheer greed.

You have made exactly the same points I was going to make. If agents want to charge tenants it has to be on the basis that they owe tenants a duty of care - and it is difficult to see how they can do that without a conflict of interest arising.

There was a time when specialised letting agencies made their money solely from commission for finding tenants and for rent collection/management. The problem is that these days there are too many agents and too many of them are looking for ways to bump up their income.

Regulation is required urgently to protect not only tenants but landlords.

[Guest tbatst2000]

It could just be that they're gel-haired ******wits.

Most likely, no point in looking for complex answers when there's a simple and obvious one available.

[Swansea Estate Agent]

These are costs that are the LL's responsibility.

It is not the slightest bit reasonable to bump up the tenant's referencing fee to cover them

tim

Why are these the LL's costs? An agent charges the LL a fee to find a tenant and to find a tenant an agent needs to spend money advertising, signs etc.

There are hundreds of different costs that an agent picks up and they need to be covered or the agent will not survive.

Nobody like to pay money especially if they feel that it is too expensive, but at the end of the day people pay these costs and business gets done.

We charge what we need to charge to cover overheads not what we can get out of people.

We get LL's complaining about fees too.

(Edit) To add, most of the fees as stated are to cover time spent. We work for the tenant as well as the landlord to make sure that everything is done correctly and that both parties are happy. A tenant expects agents to show them around a property when they want which is usually after office hours or weekends. We do this to improve our chances of letting a property although I understand most large companies only do viewings when it suits them or block viewings. If a LL uses an agent, then the tenant needs to go through the whole process if they want that property. Most of this boils down to cash rich people investing in property long distances away from where they live and have no alternative other than using agents. If this was not the case, then most LL's would let the property on their own and there would not be fees.

Edited August 10, 2011 by SwanseaPropertyAgents

[Swansea Estate Agent]

Why does the tenant pay for this? Pay to cover other tenants who didnt turn up, advertising for the landlord as well?

You seem like a reasonable agent from your other postings so this has surprised me, however if this is what you charge your tenants for then there is something seriously wrong with you.

Tenant fees should cover ONLY fees applicable to the tenant, if referencing is £40 then fair enough add on £10-15 to cover your time sending off their application, but at the end of the day agents are employed by the landlord and its about time they all realised that the landlord should be paying the fee.

If i could ever prove an agent i have been through used my fees to cover things like advertising (which i cant) they would find themselves on the sharp end of a lawsuit

It is a cost that covers the agency. Well for my agency it does. It is the average cost to let a property that needs to be covered by both the LL and tenant plus make a small profit which every business is in business to do. With regards to advertising, yes we advertise the property for the landlord and their fees are used for this, but if we don't advertise in all the right places, then tenants don't find us.

It costs us £5 to have a sign put up, £5 to alter it to 'Let Agreed' and £5 to have it removed. This is an example of a cost that most people don't think of. Obviously there is £1,000 per page in the property paper, £750 per month on RM, £300 per month on Zoopla, wages, other overheads such as rent for the offices and 100's more.

They all need to be covered and the fees that we charge are what we require to cover them.

I don't understand how you could prosecute an agent for how they have used your fees! By the way, I am explaining why agents charge certain fees or at least why we do. Did you sign an agreement or something to say that the application fee was totally to be used for referencing?

You all seem to understand how much it costs to do a credit check and referencing, so what did you think the rest of the fee was for?

Some agents charge a lot more than we do and locally we are the cheapest that I am aware of. Some charge the same, but then stick 20% VAT on top which we don't.

We work for the tenant too, not just the LL. If a tenant went to a private LL and did not pay fees, then they risk lots of issues especially if they don't get proof of certificate's etc. I hear stories every single day from tenants that come in to the office looking for a new property because their private LL will not do anything about the leaks, damp, dodgy wiring, plumbing, windows, doors, ceilings, roof etc. and most of these issues have been going on for 12 months and longer.

If you go through an agent, then we make sure that the property that you will be renting is safe and sound. We will also make sure that LL's get repairs done ASAP even if we do not manage them because we do not want a bad reputation.

[Swansea Estate Agent]

Thanks for posting and I know you generally post sound opinions such as the one above - I agree with that - although I don't agree with the need to charge tenants for things like appointments, paperwork etc, because you already charge the landlord an introducer fee and/or monthly management fee anyway. No offence, but I think the sweeties need to be taken away from some agents' buggies - viewings, checking tenants, the whole thing - it's the business of being the landlord's agent and the costs associated with that are charged to the landlord. Some agents say that landlords would charge more if tenant fees were reduced - well since that was first said to me landlords have increased rents anyway and fees to tenants have in some cases doubled. I've seen agents that ask for about £500 in total, a well-known chain does for a start, and in Dorset a good few milk tenants for that much. A business that acts as agent for a client such as a LL has no right to take money from both parties in the transaction. If I open any service business, the cost of finding a customer is one I must bear or pass on to the person or body for whom I found the customer, I do not have the option of saying to the customer "Before I take your order, you must pay me for checking you out and the paperwork involved in introducing a stage which protects my own interests and boosts my own profits." It is entirely inexcusable and yet this government and others let it go on. Charging a tenant for the credit reference check of £12 to £40 is bad enough, but the other fees just do pong of agents' sheer greed.

I have covered a lot of this in the last couple of replies, but to add that I totally agree with you that some agents go way too far.

Some charge holding deposits, then an application fee, an inventory fee, a check in fee and then tenancy renewal fees.

Agents consider theirselves to be brokers and work for both LL and tenant which is the reason to charge both. I think we both/all agree that the problem is that the industry is not regulated.

However, I would imagine if agents were not able to charge these fees, they would then justify them somehow or even carry out in-house credit and referencing. Perhaps increase other fees like management etc.

If we raised our management fees from 10% to the general 12%, then I suppose we could reduce other fees.

[Swansea Estate Agent]

You have made exactly the same points I was going to make. If agents want to charge tenants it has to be on the basis that they owe tenants a duty of care - and it is difficult to see how they can do that without a conflict of interest arising.

There was a time when specialised letting agencies made their money solely from commission for finding tenants and for rent collection/management. The problem is that these days there are too many agents and too many of them are looking for ways to bump up their income.

Regulation is required urgently to protect not only tenants but landlords.

The NAEA exams and paperwork make it clear that agents are working on the behalf of buyers, sellers, landlords and tenants alike without a conflict of interest.

The only conflict is when agents own the properties theirselves and perhaps this is the major factor for increasing fees. I know many agents here that own substantial portfolio's. Again this could be part of a regualtion that should be introduced.

[inflating]

You have made exactly the same points I was going to make. If agents want to charge tenants it has to be on the basis that they owe tenants a duty of care - and it is difficult to see how they can do that without a conflict of interest arising.

There was a time when specialised letting agencies made their money solely from commission for finding tenants and for rent collection/management. The problem is that these days there are too many agents and too many of them are looking for ways to bump up their income.

Regulation is required urgently to protect not only tenants but landlords.

Thanks for posting, it's got out of hand in most cases, tenants being drained of their money by parasitic agents all over the place. There can't be many businesses allowed to charge a person an additional sum just for the privilege of buying something from their client. It's got to stop. The agencies need to charge landlords all costs for the business of finding and installing a tenant, it's as simple as that. Only where a tenant is wasting time should the tenant be out of pocket, ie losing their holding deposit if they pull out. Fees from the tenants will hopefully go the same way as fees from job candidates did, IF ENOUGH OF US COMPLAIN

Write to Shapps and the OFT if you get a chance.

Shapps grant at shapps.com

OFT enquiries at oft.gsi.gov.uk

Enquiries and Reporting Centre

Office of Fair Trading

Fleetbank House

2-6 Salisbury Square

London

EC4Y 8JX.

I have covered a lot of this in the last couple of replies, but to add that I totally agree with you that some agents go way too far.

Some charge holding deposits, then an application fee, an inventory fee, a check in fee and then tenancy renewal fees.

Agents consider theirselves to be brokers and work for both LL and tenant which is the reason to charge both. I think we both/all agree that the problem is that the industry is not regulated.

However, I would imagine if agents were not able to charge these fees, they would then justify them somehow or even carry out in-house credit and referencing. Perhaps increase other fees like management etc.

If we raised our management fees from 10% to the general 12%, then I suppose we could reduce other fees.

Thanks for posting, I don't agree with the fees but appreciate your taking the time to put your views and reasons down on the thread

Edited August 10, 2011 by inflating

[tim123]

Why are these the LL's costs? An agent charges the LL a fee to find a tenant and to find a tenant an agent needs to spend money advertising, signs etc.

Becuase they are functions that the LL could do for themself but chooses to get the Agent to do

tim

[Swansea Estate Agent]

Becuase they are functions that the LL could do for themself but chooses to get the Agent to do

tim

And that is why there is a business for agents and why agents exist.

I mentioned that many LL's live away or are too busy to deal with letting their own properties.

[tim123]

And that is why there is a business for agents and why agents exist.

I mentioned that many LL's live away or are too busy to deal with letting their own properties.

Yeah

How does any of that negate the assertion that they should therefore be paid for by the LL.

tim

[Swansea Estate Agent]

Yeah

How does any of that negate the assertion that they should therefore be paid for by the LL.

tim

Basically the LL pays the agent to find them a tenant. The tenant pays the agent to find them a property.

The fees can be broken down by any agent that is on top of their business to explain exactly how much is used to cover certain aspects of the work carried out for both finding a tenant and letting a property.

Tenants complain that the fees are too high or should be free or that the landlord should cover the cost because the tenant is doing the LL a favour by paying the mortgage and looking after the property (not all tenants pay the rent or look after the property). The LL complain about fees and feel that tenants should pay for the privilage of being housed and that the LL takes a risk (not all LL's are good LL's that supply safe properties or carry out repairs).

[Rozza]

Basically the LL pays the agent to find them a tenant. The tenant pays the agent to find them a property.

The fees can be broken down by any agent that is on top of their business to explain exactly how much is used to cover certain aspects of the work carried out for both finding a tenant and letting a property.

Tenants complain that the fees are too high or should be free or that the landlord should cover the cost because the tenant is doing the LL a favour by paying the mortgage and looking after the property (not all tenants pay the rent or look after the property). The LL complain about fees and feel that tenants should pay for the privilage of being housed and that the LL takes a risk (not all LL's are good LL's that supply safe properties or carry out repairs).

Firstly, thanks for keeping answering

I think you are wrong in that "tenant pays the agent to find them a property", the landlords pays you to advertise a property, tenant sees advert, tenant contacts you, therefore tenant should pay nothing for this fee (akin to when i see an advert for kenco on tv and go to sainsburys to buy some i dont then phone itv and pay to have it advertised)

The tenant SHOULD pay for referencing i can accept that, a bit on top of this to cover admin costs is acceptable.. beyond that the agent works for the landlord, and lets be very clear about that the agent DOES work for the landlord, for example i imagine at renewal time most agents contact the landlord where they think it is applicable and say "we can get you more for your property", why if they are working for the tenant do they also not contact the tenant and say "you could pay less to rent this property"

Simply because they dont work for the tenant, to do so would create a conflict of interest, by being agent for both parties to a contract.. This could put the agent in a very tricky spot legally if ever there was a full on legal dispute about something

If i want to rent a property i expect to pay the rent, i begrudgingly pay for referencing (this isnt for my benefit so really LL should pay if they want it done, but for now ill leave that) every other cost is for the landlords benefit, therefore the landlord should pay for them, if these costs then get passed on in rent then thats a different argument for later.

[VacantPossession]

.. beyond that the agent works for the landlord, and lets be very clear about that the agent DOES work for the landlord

This is absolutely correct, and I would like to post clear facts about the concept of an agent and the law regarding agencies of this kind. I am certain that any officlal body, advice organisation or any government department, legal office or similar who tells you that ANY fee is legally demandable by a rental agency is utterly wrong, UNLESS you as a tenant had specifically retained an agent for the purposes of finding or obtaining a flat or house for you.

It is crystal clear that in the vast majority of cases, letting agents are NOT acting for you, the tenant. They are acting SOLELY for the landlord, who engages their services and therefore is the sole party who can be charged. After the agent has been engaged by the landlord, the agency then advertises on behalf of the landlord to attract tenants. Therefore the tenant is not retaining the agency and is NOT a client - the landlord is the agency's client. In these circumstances no agent is entitled to charge even a penny for their "services" to you, since in fact they are not providing any service at all. The service of vetting you, assessing you and then processing the lease is something you did not request and therefore you are not legally obliged to pay.

I would go as far as to say that even the so-called "referencing" should strictly be a matter for the agent and the landlord. In other words there is no legal basis here either upon which you should be charged. It is NOT the tenant's obligations to prove he is worthy beyond truthfully filling in applications forms to vouch for your true identity and possibly references. Beyond plain and simple info which is cheap to obtain, the landlord and his agent should bear any extra search costs themselves. (After all, you do not make a second hand car dealer pay for your research into his honesty). But even in this case the questions asked of you must be reasonable and should never breach your privacy in terms of personal data that is unneccessary or beyond what is strictly required for the lease.

Unless an agent has a special function (for example is a notary), he or she can only act for ONE person at a time. To act for two different parties means there is a prima facie conflict of interest which compromises the relationship. The moment an agent asks and receives a fee from the tenant, he then owes that tenant a duty of care, but this of course conflicts with his duty of care to the landlord. It would be similar to a defendant and plaintiff having the same lawyer in a court case. That is untenable.

Now, in practice, due to misinformation and ASSUMPTIONS made by agents, landlords, tenants, and entirely incorrect advice distributed by so-called advice experts, we are in a situation where everyone believes that levying a fee to a tenant is perfectly ok. It is not. The problem is, if you refuse to pay the landlord's agent the demanded fee, the agent has the effective power to tear up your application, or report you to the landlord as a "troublemaker". This is an abuse of power but is difficult to fight, except in the following way:

If the agent charges a small fee, then it might be best to swallow the expense and go along with it. If however the agent demands an unreasonable fee (say, over £50) for drawing up the agreement (which can be downloaded more or less for nothing), then the solution is to pay it, and immediately after you have moved in demand the fee back, threatening legal action if it is not returned. If the referencing fees look excessive, then I think there is a case for demanding that back as well. Most referencing in terms of credit or ordinary ratings are obtained in bulk by letting agents at a lower fee than the average consumer pays for their own data from the ghastly organisations like Experian or Equifax (see the history of abuses and fines on these organisations). Some letting agents additionally retain specialist reference agencies who often (illegally) trawl through some very questionable avenues to find out extra information that is either on the cusp of, or is in flagrant breach of your privacy and data protection rights.

None of the above paragraphs are gratuitously loaded in favour of the tenant and I am not posting this in order to give undeserved protection to tenants. But there are vast numbers of letting agencies currently in existence who are often unscrupulous and entirely ignorant of their legal position, and who are exploiting the ignorance and vulnerability of perfectly honest tenants.

As a final point, the information commissioner, the Data Protection Act, and the credit rating regulations are ENTIRELY weighed against a prospective tenant, even though they at first sight appear not to be. The reason is simple. Any organisation registered under the DPA has sweeping powers to find out all sorts of information about you, but there is absolutely no opportunity under the DPA for you to find out anything about them. For example, your landlord might be attempting to let his property to you while at the same time being threatened with repossession, and the only way for you to find out is to pay for your own research at the land registry and other agencies. While the letting agent is making credit enquiries about you, he might well have bad credit himself. These facts are much more difficult to find out than all the info available about you. This is a major flaw in the Data Protection Act. It is weighted far too heavily on the side of the credit agencies, property agencies, solicitors, financial institutions and, frankly, appallingly cavalier abuses of the very law which purports to protect you.

In summary, an agent cannot act for two potentially conflicting clients at once, unless he has notary status, but that is not relevant to letting agencies. Fees cannot be rightfully charged to a person who is not the client of that agent. The moment a fee demanded of the tenant, the agent is now implying that he is ACTING on your behalf, and therefore cannot fairly act in the interest of the landlord at the same time. If you pay a fee of any kind for processing of your agreement, the agent is now acting with a CONFLICT of interests. This is conjecture, but dual fees of this kind could possibly give a tenant the right to INVALIDATE any agreement made upon a conflicting agency position, since it is not legally possible for an agent to act on opposing parties at the same time. The agreement might then be said to be over-ridden by a statutary tenancy which would come in to force. In practice this would be difficult to effect.

The European regulations on consumer contracts now has a SUPERIOR weight over traditional UK Landlord and Tenant law. Despite complaints about the EU these regulations represent a sea change in legal history, since tenancy agreements, and the fees they envoke, are now in effect regulated by the concept of what is REASONABLE for the consumer, who is now assumed, quite rightly, to have the law on his or her side by default. But I doubt more than a tiny percentage of letting agents are aware of the significance of these regulations, since they repeatedly produce lease clauses which are unenforceable and which can safely be ignored by the tenant. There are only a few golden rule that in practice apply to tenancy agreements: No clause in them should be unbalanced or weighted in favour of one or other party. If your letting agent stuffs a hundred obligations in your direction, but the landlord only has a couple, then right from the start those clauses are invalid and not enforceable.

Edited August 13, 2011 by VacantPossession

[inflating]

This is absolutely correct, and I would like to post clear facts about the concept of an agent and the law regarding agencies of this kind. I am certain that any officlal body, advice organisation or any government department, legal office or similar who tells you that ANY fee is legally demandable by a rental agency is utterly wrong, UNLESS you as a tenant had specifically retained an agent for the purposes of finding or obtaining a flat or house for you.

It is crystal clear that in the vast majority of cases, letting agents are NOT acting for you, the tenant. They are acting SOLELY for the landlord, who engages their services and therefore is the sole party who can be charged. After the agent has been engaged by the landlord, the agency then advertises on behalf of the landlord to attract tenants. Therefore the tenant is not retaining the agency and is NOT a client - the landlord is the agency's client. In these circumstances no agent is entitled to charge even a penny for their "services" to you, since in fact they are not providing any service at all. The service of vetting you, assessing you and then processing the lease is something you did not request and therefore you are not legally obliged to pay.

I would go as far as to say that even the so-called "referencing" should strictly be a matter for the agent and the landlord. In other words there is no legal basis here either upon which you should be charged. It is NOT the tenant's obligations to prove he is worthy beyond truthfully filling in applications forms to vouch for your true identity and possibly references. Beyond plain and simple info which is cheap to obtain, the landlord and his agent should bear any extra search costs themselves. (After all, you do not make a second hand car dealer pay for your research into his honesty). But even in this case the questions asked of you must be reasonable and should never breach your privacy in terms of personal data that is unneccessary or beyond what is strictly required for the lease.

Unless an agent has a special function (for example is a notary), he or she can only act for ONE person at a time. To act for two different parties means there is a prima facie conflict of interest which compromises the relationship. The moment an agent asks and receives a fee from the tenant, he then owes that tenant a duty of care, but this of course conflicts with his duty of care to the landlord. It would be similar to a defendant and plaintiff having the same lawyer in a court case. That is untenable.

Now, in practice, due to misinformation and ASSUMPTIONS made by agents, landlords, tenants, and entirely incorrect advice distributed by so-called advice experts, we are in a situation where everyone believes that levying a fee to a tenant is perfectly ok. It is not. The problem is, if you refuse to pay the landlord's agent the demanded fee, the agent has the effective power to tear up your application, or report you to the landlord as a "troublemaker". This is an abuse of power but is difficult to fight, except in the following way:

If the agent charges a small fee, then it might be best to swallow the expense and go along with it. If however the agent demands an unreasonable fee (say, over £50) for drawing up the agreement (which can be downloaded more or less for nothing), then the solution is to pay it, and immediately after you have moved in demand the fee back, threatening legal action if it is not returned. If the referencing fees look excessive, then I think there is a case for demanding that back as well. Most referencing in terms of credit or ordinary ratings are obtained in bulk by letting agents at a lower fee than the average consumer pays for their own data from the ghastly organisations like Experian or Equifax (see the history of abuses and fines on these organisations). Some letting agents additionally retain specialist reference agencies who often (illegally) trawl through some very questionable avenues to find out extra information that is either on the cusp of, or is in flagrant breach of your privacy and data protection rights.

None of the above paragraphs are gratuitously loaded in favour of the tenant and I am not posting this in order to give undeserved protection to tenants. But there are vast numbers of letting agencies currently in existence who are often unscrupulous and entirely ignorant of their legal position, and who are exploiting the ignorance and vulnerability of perfectly honest tenants.

As a final point, the information commissioner, the Data Protection Act, and the credit rating regulations are ENTIRELY weighed against a prospective tenant, even though they at first sight appear not to be. The reason is simple. Any organisation registered under the DPA has sweeping powers to find out all sorts of information about you, but there is absolutely no opportunity under the DPA for you to find out anything about them. For example, your landlord might be attempting to let his property to you while at the same time being threatened with repossession, and the only way for you to find out is to pay for your own research at the land registry and other agencies. While the letting agent is making credit enquiries about you, he might well have bad credit himself. These facts are much more difficult to find out than all the info available about you. This is a major flaw in the Data Protection Act. It is weighted far too heavily on the side of the credit agencies, property agencies, solicitors, financial institutions and, frankly, appallingly cavalier abuses of the very law which purports to protect you.

In summary, an agent cannot act for two potentially conflicting clients at once, unless he has notary status, but that is not relevant to letting agencies. Fees cannot be rightfully charged to a person who is not the client of that agent. The moment a fee demanded of the tenant, the agent is now implying that he is ACTING on your behalf, and therefore cannot fairly act in the interest of the landlord at the same time. If you pay a fee of any kind for processing of your agreement, the agent is now acting with a CONFLICT of interests. This is conjecture, but dual fees of this kind could possibly give a tenant the right to INVALIDATE any agreement made upon a conflicting agency position, since it is not legally possible for an agent to act on opposing parties at the same time. The agreement might then be said to be over-ridden by a statutary tenancy which would come in to force. In practice this would be difficult to effect.

The European regulations on consumer contracts now has a SUPERIOR weight over traditional UK Landlord and Tenant law. Despite complaints about the EU these regulations represent a sea change in legal history, since tenancy agreements, and the fees they envoke, are now in effect regulated by the concept of what is REASONABLE for the consumer, who is now assumed, quite rightly, to have the law on his or her side by default. But I doubt more than a tiny percentage of letting agents are aware of the significance of these regulations, since they repeatedly produce lease clauses which are unenforceable and which can safely be ignored by the tenant. There are only a few golden rule that in practice apply to tenancy agreements: No clause in them should be unbalanced or weighted in favour of one or other party. If your letting agent stuffs a hundred obligations in your direction, but the landlord only has a couple, then right from the start those clauses are invalid and not enforceable.

Very interesting to read and some advice in there which I intend taking next time I have to rent in the UK - I shall be asking for my fees back once I move in and go to the county court if they don't hand them back. I bet they don't hand them back! They will say "You agreed to pay them when you signed the AST" and the legal argument will rage on, but I will take them to court for sure and be interesting to see what the districy judge decides

(I have previously written to TPTB and pointed out the conflict of interest angle and had my remarks ignored, btw, got some long letter saying pretty much nothing they can do blah blah blah, take action in a court if unhappy with an agent blah blah blah)

[VacantPossession]

Very interesting to read and some advice in there which I intend taking next time I have to rent in the UK - I shall be asking for my fees back once I move in and go to the county court if they don't hand them back. I bet they don't hand them back! They will say "You agreed to pay them when you signed the AST" and the legal argument will rage on, but I will take them to court for sure and be interesting to see what the districy judge decides

(I have previously written to TPTB and pointed out the conflict of interest angle and had my remarks ignored, btw, got some long letter saying pretty much nothing they can do blah blah blah, take action in a court if unhappy with an agent blah blah blah)

Good luck with that. Any agreement you make either under duress or because of unreasonable charges or clauses renders those parts of the agreement, and fee, invalid and not enforceable. But it is sometimes a problem getting it back as there is no distinct criminal angle. However you could legitimately lower the rent for one month equivalent to the fees wrongfully claimed. Might be wise to do this on the third or second month and explain clearly why you are doing it.

[tim123]

Good luck with that. Any agreement you make either under duress or because of unreasonable charges or clauses renders those parts of the agreement, and fee, invalid and not enforceable. But it is sometimes a problem getting it back as there is no distinct criminal angle. However you could legitimately lower the rent for one month equivalent to the fees wrongfully claimed. Might be wise to do this on the third or second month and explain clearly why you are doing it.

"sign here or you don't get the house" does not count as duress.

Agreed it could be void for other reasons.

tim

[inflating]

Thanks for the tips on that, Tim & VP.

What I'm wondering is whether their defence can successfully be argued as "You agreed as part of the contract" and the district judge would leave it at that and they would win? Surely I would need to legally voice my opposition to the fees at the time of signing the AST, perhaps a letter stating that opposition or signing 'without prejudice'? However, I imagine that they would then tear up the AST and tell me to show myself out of their lettings office

[Swansea Estate Agent]

Firstly, thanks for keeping answering

I think you are wrong in that "tenant pays the agent to find them a property", the landlords pays you to advertise a property, tenant sees advert, tenant contacts you, therefore tenant should pay nothing for this fee (akin to when i see an advert for kenco on tv and go to sainsburys to buy some i dont then phone itv and pay to have it advertised)

The tenant SHOULD pay for referencing i can accept that, a bit on top of this to cover admin costs is acceptable.. beyond that the agent works for the landlord, and lets be very clear about that the agent DOES work for the landlord, for example i imagine at renewal time most agents contact the landlord where they think it is applicable and say "we can get you more for your property", why if they are working for the tenant do they also not contact the tenant and say "you could pay less to rent this property"

Simply because they dont work for the tenant, to do so would create a conflict of interest, by being agent for both parties to a contract.. This could put the agent in a very tricky spot legally if ever there was a full on legal dispute about something

If i want to rent a property i expect to pay the rent, i begrudgingly pay for referencing (this isnt for my benefit so really LL should pay if they want it done, but for now ill leave that) every other cost is for the landlords benefit, therefore the landlord should pay for them, if these costs then get passed on in rent then thats a different argument for later.

Don't get me wrong I understand all your points and those raised by others. With regards to the Kenco scenario. You pay Sainsburys money because they earn a commission off the sale price because they are the middle man between you and the product supplier. Everything is the same in life unfortunately.

Perhaps the LL should pay for everything if they wish to have tenants referenced etc. However, they see it a different way and most tenants do not see it from that perspective. Letting out a property that you own is not an easy thing to do unless you are in it for the money. A lot of LL's are not investors especially these days and they want to make sure that the property is not let to just anybody.

We do not charge for tenancy renewals or for any other extra's that I hear LA's charge for. Some have 4 or 5 different charges to tenants when moving them in which is a joke.

[Swansea Estate Agent]

"sign here or you don't get the house" does not count as duress.

Agreed it could be void for other reasons.

tim

That is the main point. A tenant will be asked to look at the LA's terms and conditions which they need to agree to which gives an explanation of the fees and the whole process. Then they are required to sign a tenancy agreement.

If a tenants does not agree with the LA's T&C's, then the agent are unable to put them through the referencing process. If they don't agree with the tenancy agreement, then the LL will not allow them to move in.

A LL wants to make sure that everything is done correctly and that is why they use an agent.

[Rozza]

Perhaps the LL should pay for everything if they wish to have tenants referenced etc. However, they see it a different way and most tenants do not see it from that perspective. Letting out a property that you own is not an easy thing to do unless you are in it for the money. A lot of LL's are not investors especially these days and they want to make sure that the property is not let to just anybody.

Why would you let out a property except for the money, The key point you have raised here is ... the landlord wants the tenant referenced, therefore they should pay for it, thats how it works in any other business apart from the shark pit that is property (all aspects of it not just letting)

We do not charge for tenancy renewals or for any other extra's that I hear LA's charge for. Some have 4 or 5 different charges to tenants when moving them in which is a joke.

Good on you for this! Sounds like the right way to do it to me.