Letting agents’ fees: 2021 review

In June 2019 new rules were introduced to prevent landlords and letting agents in England charging a range of fees to tenants. The rules were extended to existing tenants in June 2020. 

 

This has affected the fee structure for many letting agents and, a year on, the picture is still confusing for landlords. Many agents have changed the services they offer and have added new charges that landlords must pay. Some agent's fees have increased more than others, but landlords will need to check what is included in the service provided. At Letting Genie we have maintained our service levels and pricing structure across the board. 

 

Assured shorthold tenancies (ASTs), student accommodation, and licences are all affected by the tenant fee ban, although company lets and non-assured tenancies are exempt. 

 

The Tenant Fees Act (TFA) prohibits fees on almost everything but allows some permitted fees. The restrictions include payments to most third parties. 

 

Fees that aren’t allowed include: 

 

Allowable charges include holding deposits, rent, security deposits and charges for defaulting on the contract, although they are subject to additional restrictions as part of the legislation. 

 

Landlords can require their tenants to use a specific utility or communications provider and can charge for changing tenants, varying the tenancy, or allowing tenants to vacate the property early. 

 

Landlords or their agents can’t set rent at a higher level for the first period of a tenancy and reduce it later. This is intended to prevent any attempt to offset the ban on fees through an artificially higher rent for the initial period. 

 

However, a higher rent than normal would be allowed if it applied to the whole tenancy. For example, a landlord might increase the rent if a tenant wanted to keep pets. 

 

Holding deposits are limited to a maximum of one week's rent and they must be repaid if the tenancy doesn’t go ahead. 

 

Landlords have 15 days to decide whether to accept a tenant once a holding deposit is taken, although this can be extended if both parties agree to another date. 

 

Once a decision is made, the applicant must be notified within seven days, setting out whether the holding deposit will be refunded in full or whether any of it will be retained. 

 

Of those letting agents in the Milton Keynes area that publish their fees online, we discovered wide variations in the fees for tenant find, rent collection, and fully managed services. We have summarised a selection of them below. 

 

If, as a landlord, you decide to work with a letting agent it’s important to check what is included and excluded from your agreement with them. 

 

For example, some agents include property visits during the tenancy in their fees whilst others charge for this separately. Your statement of income and expenditure for HMRC might also be chargeable. 

 

Give special attention to clauses concerning tenancy renewals for existing tenants and the implications of ending your agreement with your letting agent during the tenancy or at the end of a specified period. 

 

If you are considering a fully managed service, check whether an administration charge will be made for any work needed on your property.