If you are renting a home for the first time, lettings agency fees can come as a nasty surprise. Get prepped on what to expect with our short guide.
In 2016 Autumn Statement, the Chancellor, Philip Hammond announced he would place an outright ban on lettings agent fees charged to tenants.
The Government has now confirmed plans to implement the ban on all new tenancies signed after June 1, 2019.
One of the Government’s main concerns with letting agent fees is that, while they must be clearly advertised, they’re not regulated or even uniform. That means upfront costs to rent a home can differ according to location and agent.
But that's not to say you can't get a benchmark. Here's a round-up of the kind of fees you could encounter before the ban takes effect:
Before you move in...
Holding deposit
Potential cost: £200-£500
This is a sum charged by the lettings agent to ‘reserve’ the property and take it off the market. The amount varies but one week's rent is a good benchmark.
However, as the amount is subtracted from your main deposit (between four and six weeks’ rent) which is returnable, a holding deposit is not really a fee. You'll only lose the money if you don't proceed to signing the agreement after the property has been taken off the market.
Contract/ administration fee
Potential cost: £350
This fee covers drawing up the contract (usually an Assured Short hold Tenancy agreement) as well as any other administrative tasks such as the inbound inventory, phone calls and photocopying.
Reference checks
Potential cost: £75-£100 per person
This pays for the agent to run references on you and anyone else named in the contract. They’ll usually contact your current employer and/or previous landlord. If you are using a guarantor, they’ll be referenced too.
Credit checks
Potential cost: £50-£100 per person
This pays for the lettings agent to conduct a credit check on you using a credit reference agency such as Experian or Equifax. Even if just one of you is responsible for paying the rent, the agency may still credit check both of you.
Once you're in the property...
Tenancy renewal
Potential cost: £150-£180
This pays to renew your contract at the end of the tenancy agreement should you choose to stay on at the property. This is also the time at which the landlord is at liberty to put the rent up.
Amendment to contract
Potential cost: £100-£120
This could be payable if you require the existing contract to be amended. For example, you want to change the term or swap a housemate.
Unpaid rent
Potential cost: Around £30 per payment
You will need to set up a standing order so your rent comes out of your bank account directly. However, if there’s not adequate funds and the payment bounces, your lettings agent or landlord may charge you (your bank might too).
Early termination
Potential cost: Up to £300 per person
If you want to leave before the tenancy agreement ends and your landlord doesn’t agree it, not only will you be liable for the outstanding rent, you could be hit with early termination fees too.
When you're checking out...
Checkout fee
Potential cost: £100-£300
This will pay for the outbound inventory, where the agent will check everything is in order with the property when you leave and that it’s been cleaned to the appropriate standard.
Deposit deductions
Potential cost: Up to the cost of your initial deposit
If the lettings agent finds any damage to the property or any items missing from the inventory, they could deduct the cost from your deposit.