Are students getting fleeced by letting agency fees?
Are ‘agency fees’ just a tactic for Letting Agencies to make a profit from penniless students?
Nearly all students at some point in their degree (usually 2nd year onwards) will find themselves in the often pressurised position of having to rent a house, and many will experience handing over sizeable sums of money for their first month’s rent and an ‘agency’ or ‘administration’ fee.
Many student housing agencies charge this fee, which supposedly covers the costs of preparing the tenancy agreement and inventory, and the external credit and reference checks. A good agency should provide simple, clear-cut information about their charges before tenants agree to sign a contract. The Citizen’s Advice Bureau states that these charges should also be reasonable. The problem is that even though these charges should be reasonable, a letting agency can legally charge an unlimited fee once tenants have signed an agreement.
Over the past few weeks, the Soton Tab has been running a survey on Southampton University students’ opinions of their agencies and landlords. Of students that were asked “if you paid an agency fee, do you think it was worth it?”, 80% believed their money was going to waste, whilst the remaining 20% believed the cost was justified.
I spent 5 minutes researching the costs to a letting agency in preparing a tenancy agreement. The price of an ASTA contract (most students sign these) was around £5. The most expensive, ‘platinum’ credit check on offer was £30, and I downloaded a comprehensive, 7 page inventory for the princely sum of nothing earlier on today. With this in mind, it suggests that letting agencies are perhaps making a steep profit from students by charging this administrative fee, that can often be up to £100 per tenant.
The consensus of some insiders of the letting agency business on internet forums such as Landlordzone.co.uk is that these fees are probably ’90% pure profit’, but are based on what prospective tenants are willing to pay and what the market will stand.
A good letting agency will often be a member of a self-regulating trade body, resulting in formalised channels for complaint. Although these channels are in place should tenants wish to challenge unreasonably high fees, this procedure may often come with its own costs that make disputes unrealistic on a student budget. The official advice is to shop around before signing a contract, as not all agencies charge these fees.
Couldn’t letting agencies could do cash-strapped students a favour and focus instead on making their profit from other avenues, than from out-and-out daylight robbery?