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.
At the end of last year in his Autum Statement, the Chancellor, Philip Hammond announced he would place an outright ban on lettings agent fees charged to tenants. The ban could kick in as early as 2018.
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, as things stand, 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...
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 weeks’ 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 Shorthold Tenancy agreement) as well as any other administrative tasks such as the inbound inventory, phone calls and photocopying.
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.
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...
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.
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).
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...
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.
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.
5 documents your landlord must hand over to you (by law)
1. A copy of the Government’s rental guide
This guide sets out all the information you should be given as tenant, your legal rights and what to expect from the rental process: How to rent: The checklist for renting in England
2. A gas safety certificate
If your rental home has any gas installations (such as an oven), your landlord must arrange an initial gas safety check as conducted by a Gas Safe engineer – and provide you with a certificate. If they don't you can report them to the Health and Safety Executive (HSE).
3. The paperwork protecting your deposit
Your landlord must hold your deposit in a government-backed Tenancy Deposit Scheme, so you'll be protected if there's any disputes at the end of the tenancy. You’ll be given the paperwork for the scheme which should clearly state the sum being held.
4. An Energy Performance Certificate (EPC)
This certificate rates the energy-efficiency of your rental home, from A (most efficient) to G (least efficient). Find out how to read an EPC.
5. Relevant contact details
Your landlord (or lettings agent acting on behalf of the landlord), should provide their full contact details including address and telephone number in case of an emergency.
It’s not law but it's good practice for your landlord to provide you with reports of any electrical inspections.