Should letting agencies charge tenant fees?

The government is planning to debate creating a new law to ban lettings agents from charging fees to tenants. The costs of fees charged to tenants has been steadily climbing over the last few years, and it’s one of the reasons we have always decided to deal with potential tenants directly – it means we can avoid charging any kind of up-front fee to set up a new tenancy.

However, it’s not just a simple case of letting agencies pocketing the cash from desperate tenants.  While I think it’s likely that some of the less reputable agencies provide little benefit for the fees charged, there is quite a lot involved in setting up a new tenancy. This can include:

• Getting or renewing gas, electric and energy efficiency certificates
• Doing a complete inventory
• Negotiating the rent and terms
• Running a credit check
• Creating the contract
• Sorting out deposit protection

All these take time for the agency, especially if done properly. If the agency cannot charge for these they will either not get done, be done badly or the costs pushed on to the landlords. For many landlords, fees charged by agencies are already quite high, and this might be enough to encourage them to go for a cheaper agency that skimps on some of these things, or just to increase the rent, meaning you’ll pay for it for the length of your stay.

As owners, we do as much of this as possible ourselves, which means we don’t have to charge an upfront fee, but of course a letting agency has higher overheads.

What do you think? Should they be banned and potentially lead to a rise in rent? Or would you rather they remained, giving you more ability to keep the fees low by shopping around and negotiation.