An investigation by housing charity Shelter approached 58 letting agencies and found that all demanded agency fees — many of which are not-refundable and charged under the guise of administration, holding, credit check, check-in or check-out fees — to set up a tenancy.
The national average for the fee, charged on top of deposit and rent, was just over £350, but almost a third charged more than £400 with seven agencies charging more than £700.
According to the report, Letting Agencies: The Price You Pay, Londoners are affected by the issue more than anywhere else in the country.
Almost a third — 31 per cent — of Londoners questioned who have used a letting agency in the past three years were forced to borrow money to pay for fees, compared with a national average of 27 per cent.
The charges to tenants are additional to the fees that letting agencies usually charge landlords in order to set up a tenancy on their behalf.
One in four people in England says letting fees have stopped them from getting a new home.
In the past six months, the Office of Fair Trading, Advertising Standards Authority and Which? have raised concerns about standards and fees.
The Property Ombudsman reported a 12 per cent rise in complaints from landlords and tenants.
A recent report by property and construction body Royal Institute of Chartered Surveyors, which represents some letting agencies, compared the letting industry to the “Wild West”.
Campbell Robb, chief executive of Shelter, said:
“This shocking research reveals that letting agency fees have now become truly out of control. When renters have to find hundreds of pounds in fees each time they move, on top of deposits and rent in advance, it’s not surprising that fees are causing real financial hardship and in some cases preventing people from moving.
“Anyone who’s tried to find a rented home in the past few years knows that affordable, decent places to live are in short supply. The high demand for rented homes means that renters can’t shop around, but instead have to deal with the letting agency their landlord has chosen: they have no choice but to swallow their anger and stump up their cash.”
Shelter said landlords should be forced to cover the costs of setting up a tenancy rather than tenants and called on the Government to put an end to letting fees for renters. It urged people to take action by joining its campaign and signing its online petition.
Labour shadow housing minister Jack Dromey said:
“This shocking research shows why Labour was right to call for action to tackle unscrupulous lettings agents who rip off tenants by charging them fees they didn’t know they would face, forcing many of them into debt.”