Tenant Fees Ban: What Landlords Need to Know

A Bill with plans to make big changes to how landlords can let properties in England has passed its Second Reading. At the centre of the plans is a ban on tenant fees, including admin and agency fees.

If the bill gets enacted, this means that it would become illegal to charge tenants for referencing, inventories, and any other cost you can think of.

Here’s everything a landlord needs to know about the Tenant Fees Ban Bill.

Summary of Tenant Fee Ban

  • Limit tenancy deposits to six weeks’ rent
  • Limit holding deposits to one week’s rent
  • No cap to amount that can be deducted for referencing
  • Ban any other fees (except contractual default penalties)
  • Fines of £5,000 for first offence (civil)
  • Fines of £30,000 for second offence (criminal)

What’s in the Bill?

Here are the key new rules contained in the Bill.

1. A Ban on All Fees

Landlords – or their agents – will no longer be allowed to charge tenants for anything except: the rent, the tenancy deposit and a holding deposit (more on these below).

This means you will no longer be allowed to ask tenants to cover the cost of their own referencing. This is going to have some big consequences that we’ll be writing about very soon! You also won’t be able to charge check-in, inventory or admin fees.

2. Some ‘Defaults’ Are Exempt

You will still be able to charge ‘defaults’ once the tenancy is set up. These are things like fees to replace lost keys and fines for late rent-payment.

They will need to be included in the tenancy agreement for you to be able to charge them, and previous rules about fair clauses will still apply.

3. Limits on Tenancy Deposits

Tenancy deposits, also called security deposits, are to be limited to six weeks’ rent.

In practice, deposits have always been kept below two month’s rent due to the fear of the tenancy becoming a premium tenancy. This new rule will mean you can’t ask the tenant for a deposit larger than six times the weekly rent of the property.

4. Limits on Holding Deposits

Likewise, holding deposits will be limited to one week’s rent.

This is a big change, since most holding deposits are currently much more than a week’s rent. An OpenRent poll recently found that 47% of tenants have paid a holding deposit of over £750 – much more than the average weekly rent for a UK property.

5. New Rules on Holding Deposits

The Bill includes new rules about how holding deposits must be treated.

The holding deposit must be returned to the tenant: either in payment back to the tenant, or being put towards the first rental payment, or the security deposit.

There are some exceptions. In these cases the landlord can keep the holding deposits:

  • The tenant withdraws
  • The tenant doesn’t take all reasonable steps to enter the tenancy
  • The tenant fails a right to rent check
  • The tenant provides misleading information which materially affects their suitability to rent the property

If that last clause sounds a little vague to you, then you’re not alone. We’re hoping that this will be tightened up in the final version of the bill.

What Are the Penalties to Landlords Who Charge Tenant Fees?

Landlord (or agents) who charge illegal fees will face paying huge fines.

The first offence would be a civil offence, with a fine of £5,000.

If the offence is repeated within five years, there would be either a criminal offence or a fine of £30,000.

There are also plans to help tenants recoup any illegal fees they paid from the landlord (or agent). Local Trading Standards organisations will enforce the ban.

Remember: It’s a Bill, not an Act

Although the Government seem set on banning fees and restricting the size of deposits, the Bill has not been enacted yet, so not yet law.

Amendments can be tabled. The details could still change.

There will now be a period of scrutiny and feedback and the bill will be revised. When that happens, we’ll be back to keep you up to date with all developments.

Update: Housing Committee & Government Response

The Housing, Communities & Local Government Committee finished its period of pre-legislative scrutiny on 29th March, 2018.

The Committee made the following recommendations to amend the Draft Bill:

  • Cap tenancy deposits at 5 weeks rent
  • Failing referencing should not be grounds to keep the entire holding deposit
  • Default fees need to be tightened up

They also recommended that more funding was given to enforce the new rules. You can find their summary here.

The Government’s Reply

The Government replied to the Committee recommendations in early May 2018.

  • Tenancy deposit cap will remain at 6 weeks’ rent
  • There will be no cap on the amount a landlord can take from a holding deposit for referencing
  • Landlords who charge illegal tenant fees will not be able to issue Section 21 eviction notices until they have repaid them

Second Reading of the Bill

On Monday 21st May 2018, the Tenant Fee Ban Bill passed its second reading with a unanimous vote from MPs. You can watch the whole debate here.

Debate the tenant fee ban here!

73 Replies to “Tenant Fees Ban: What Landlords Need to Know”

  1. Its about time the fees charged are a scandal .many seeking accomodation have enough trouble getting the deposit as it is

  2. Its about time i just lost £650 for referencing and agents fees for a property wanted to rent but my landlord regused to give reference on me just because he was on abroad since when did Northern Ireland became out of this world.
    I have no rental arrears and am still the one that lost.
    Landlords should be referenced too just as tenants are.

    1. As a landlord. It can take me months to get you out of my property when you decide to not pay rent. Keep making idiotic demands. Start looking for a tent

      1. You are the type that has would have his property trashed and poo smeared over the walls because of your attitude.. start renting out tents!

    2. As a private landlord, it never ceases to amaze me, the level of fees that prospective tenants are expected to pay. If a landlord employs an agent to source tenants and manage a property, then this is a contractual agreement between the landlord and the agent. It is not fair to expect the tenant to bear additional cost if the landlord chooses to contract out property advertising, vetting of tenants, rent collection and maintenance etc. I do think, however, that a credit reference check is necessary in order to establish tenants ability to pay and it would not seem unreasonable for a landlord to facilitate this, charging for the service at cost.

      1. Tenants should not pay. Full stop.
        Landlords however have to understand that they have been the beneficiary and their fees have dropped dramatically over the last 20 years. There is a complete lack of understanding of the work that an Agent does, not only to secure a Tenant, but also to ensure compliance, due diligence & legal security.
        Landlords must accept they will have to pay Agents (reputable & licenced) more for this level of knowledge and competence.
        It is my view that private Landlord’s must fulfill the same compliance and insurance obligations, as Agents should.
        Government’s failure to understand this will set the Private Rented Sector back decades in terms of financial compliance and Tenant safety.
        The Tenant Fees Ban is so short sighted it’s untrue. A rethink and some long term solutions need to be applied.

        1. Hi James, thanks for your comment!

          We think it’s very easy for landlords to find a tenant and be compliant.

          Compliance just means hitting the simple points on this short list. And as for finding a tenant, 50% of landlords don’t even use a letting agent.

          When it comes to tenant safety, it’s hard to envisage it getting any worse, with a third of properties already failing health and safety standards.

      2. being both a landlord and a tenant, the cost of the referencing is always high and agencies make huge cost on this. The ability to pay the rent depends on income into their banks, the banks charge a very small fee (usually around 25 pounds) to furnish this information, however agencies charge up to 250 pounds, exhorbitant amounts of money for a simple letter. The fees are always extremely higher and unnecessary. The paperwork is simple and it is always worth the landlord getting insurance, that way you are covered. You dont need agencies at all.

      3. You are spot on tenants should pay for the credit check which is about £20 max and its refreshing to hear a landlord sticking up for tenants. The only way these estate agents have survived is by ripping the rental market since the recession.

        1. Why should the Tenants pay for the Credit checks? Credit checks are required by the Landlords so let the Landlords pay for it… What else? A fee for drafting the Tenancy agreements?

          1. Why should we ??? Why should we let someone we dont know say yeah I can afford and yeah of course I’ll pass knowing full well they probably wont ??? Us landlords pay the cost, referencing fails then off they trot at no extra cost to them leaving the landlord to foot the bill !!

          2. Because many tenants are financial basket cases, and others treat their agreements with contempt.

            Why should I pay the fee to discover the tenant has a bad credit rating? Or failed to pay their rent which is wy they are having to move!

            I certainly am not trusting a tenant with tens of thousands of my ( expensively) furnished property without knowing whether they can be trusted. And I am not paying to find out they are liars.

            It cost me thousands when they let me down.

            I am not justifying some historic silly agency fees, but tenants MUST pay for reasonable referencing.

            Also… when they lose a key, I have to change locks. That does not come cheap.

      4. Yes I agree. Agents are milking the tenants and come to think of it the Landlords as well. Doing a credit reference doesn’t cost a lot which the agent could easily lose in the maintenance charges which can be from 10 to 15% of the rent.

      5. Really. You need to be in the real world. Charging for a credit check at cost. That would be similar to going to your Lawyer, Doctor or other professional service providers and asking them to provide you with a legal document “at cost” It’s not going to happen as they need to charge. I am against huge fees but good letting agents still need to survive by charging their worth. How do I know this? I’ve owned a property management business and they don’t run on fresh air. I worked 7 days a week and even was out in the middle of the night tending to problems from time to time. The Government needs to put time in regulating the business. Get rid of the businesses like the one which manages two properties in our street. 1) has taken 4 weeks for a boundary to be decided belonged to next door which included 1 visit to the agent and 10-15 emails detailing the problem and repeating ourselves.. 2) property over the road is very overgrown. I’ve asked to tidy this up the grass/weeds are a mess property is empty about 12 months now. I’m not supprised as this is how this agent carried on

    3. That is very unfair and I would think challengable. I would argue it with the agent and take the matter to the ombudsman if necessary.

    4. This is awful and as a landlord I totally agree with this. I do think tenants should pay for their own references but they should do this once in a set period.
      Landlords should be registered and vetted. They should also be crossed checked against inland revenue to make sure they pay tax on the income. The gov know there are many that don’t and do nothing about it.

      1. Tenants should not pay for the referencing!!! If the landlord wants referencing done then the landlord should pay! Tenants are generally not well off and need ahome to live in, and most do pay very well.

        1. Most well off !!!! Thats a joke and completely stupid to assume that !!! I make a small amount from my 2 properties a month and for fear of having unpaid rent or property trash I pay alot out in rent protection and insurances. My tenants have both been in the properties for 4 years and as they do struggle at times (as I do !!) I have never put the rent up as I’d much rather keep good tenants who pay on time and look after my property (and I know as I do my checks 6 monthly) Its not a big ask at all for tenants to pay the referencing fees. They should now if they will pass it but as a landlord we have no idea so its just not fair and its not a case of “if the landlord wants referencing” its a case of having to do this surely. Would you expect a bank to give you a large loan or mortgage without looking at your background ? Smell the coffee !!

          1. Hi Kate, I agree with you (and so must my Landlord). I’ve been a private tenant since July 2016. Coincidentally, I have to renew my agreement today. I’ve never missed a rent payment. My Landlord agrees that i’m a good tenant, as the 6-monthly checks have shown that not only am I looking after the property, I’ve improved it. My Landlord ISN’T putting the rent up. When I sign the agreement I have to pay the estate agent £120 – this is my share of the agents costs. I’d much rather pay £120 every 12 months, than suffer a rent increase every year.

  3. I hope this ban actually does go through. I paid £425 +£425 +£215 rent for 1month +a month & half deposit + £250 which included references and drawing up contracts and after 6months they wanted £150 to extend my tenancy for another 6 months. This has got to stop. It the only way many can get a home .

    1. I agree with what you say, however it is unlawful (high court ruling against Fox’s in London) to charge you extra to extend the tenancy as it simply rolls on. If they have charged you then you have the right to take it to court and expect interest.

      1. Do you mean FOXTONS V CAMDEN COUNCIL, appeal 2017?If so, that was not the reason.It was because they quoted a general fee of £420 and not explaining fully the purpose of the charge other than to say for admin fees which is not allowed.

      2. I am a landlord who uses a letting agent. I have been charged £125 every year to relent to the same tenant. Would it be possible to get this money back when the new letting laws come into force.

  4. I really hope this Bill passes!
    It’s about time something is done about these horrendous fees landlords and agents are charging for references they don’t really check.

  5. I hope n.reland gets this as it’s an outrage you have to find over a thousand pounds before you get the house which people can’t afford ridiculous what they look for off people

  6. It should endorse straight away. Tenants are not just paying for referencing and admin fee but they are also paying mortgage for someone else and making them richest from rich.

    1. This is such nonsense. A comment riddled with jealous undertones. Many landlords have inherited property on which there are no debts but the inheritor requires interest on the capital involved greater than would accumulate if the same capital sum was invested in a bank. Most landlords are decent people, some tenants are not, some tenants turn good property into squalid slums.

  7. It’s about time. But this must be fast forwarded into it being LAW A.S.A.P. They also must must stop agencies from being allowed to not provide the landlords phone number for in cases of emergency. I had a flood from a burst pipe 00:20 . Yet the estate agents,’Property Solutions seem to think that an ex employee from six months back still being used in their emergency email address is adequate. And any email address is still not acceptable. I had water gushing and my landlord is now saying he’ll only pay half because I didn’t email the old email address. And now they’re also saying that when I turned the stop cock off after finally managed to figur out where the stop cock was and turned it off, that it was no longer an emergency! I was still paddling in water . I am disabled living alone. My only contact was the estate agents email address with an old member of staff who’d left months and months ago. This is not good enough. I’m currently in dispute about it as it happened last weekend on the 28th November 2017.

  8. It’s ridiculous the amount esate agents charge tenants. £240 to set an agreement up seriously one click of a printer does not cost that. £120 to renew a tenancy. How can open rent dona credit check for £20 pp and estate agents charge £100 upwards pp tenants need this new bill as there sick of getting ripped off.

  9. I don’t see why charging for an inventory is a scandal. We charge our Landlords for the check in and the tenant for the check out (both at cost might I add). What’s not fair about that given it s in both parties interest to have one. We charge referencing at cost and dont see why that would be unfair to pass on. I think the problems stem from the large high street agents that rip people off. Being a home based agency we can keep our costs right down and pass on what we deem to be fair costs…(we currently only charge for referencing and check out report for the past 5 years).

  10. Personally I don’t feel it is fair to ban fees outright, rather that they should be limited to a reasonable amount, such as £50. Otherwise I think there is a very high risk that many tenants will simply apply for multiple properties, messing landlords and agents about. Those costs will ultimately come back on all tenants as increased rent.

    1. Large amounts of money too landlords why would not be serious landlord and agencies take lot of money to secure property; find out have not passed credit checks , big scam

  11. About time my sister applied for a private rent and didn’t get it lost over £200 then needed to find the same amount again for next property its a rip off. Ive been lucky with mine he wavered the fees as I was in a right dump moved twice since with same landlord he’s the best

  12. I’m a landlord and don’t charge any fees except £30 to do a reference check. I’ve lost money on tenants who have not taken up a tenancy and cost 3-4 weeks of lost rent in the process. Plus tenants who have not treated my rentals well even though they are well maintained throughout.

    At the very least now I will be asking potential tenants to submit all income information before I payout for a reference check. ps. I don’t employ agents to manage my properties so perhaps I’m one of the few…

  13. i have just paid £480 holding fee. The agents are charging me £300 of that for getting references. All they did was ring my employer for that 300. In total with first months rent and deposit I will have had to pay out just under £2000.00 to move in to a property. Its no wonder people are homeless.

  14. I’m a private landlady and my tenants just paid £20 ref fee each via Open Rent. Deposit is protected in DPS scheme, it’s their money not mine. I got new tenants in the day after my old ones moved out. I really hope these laws come in, from my point of view if I have to pay to reference them that’s a small price to stop these rip off agents. Lets hope it puts the parasites out of business.

  15. About time, wer’re just looking to move due to work and the agents fees are just 7nder £2,000 by the time you take fees, reference checking etc, last property we rented they charged £400 for inventory which we had no choice over and we never even got a copy. They also demanded 3 months rent as we had a pet. It’s extortionist and lacks control and competition. I hope this goes through quickly. I understand agents need to cover their costs but they do charge a lot in commission on rentals so it should make it a more competitive market.

  16. Im about to sign with a private landlady and she wants to charge me £150 admin fee. Has this draft bill been passed? she says its for referencing, paperwork and certificates and inventory.

    1. No – unfortunately the Bill is still in the draft phase, so we’re a long way from a vote on a final bill, and even further away from a ban being enforced in England & Wales.

  17. And DO check that the fees charged by agents ARE displayed on their website. They have to show each fee, including VAT and what it is for. My UNI student daughter received an e-mail requesting £250 for “fees” – no breakdown at all. On checking their website (Clifftons in Bournemouth) I find the Student Referencing fee shows as only £180 (incl VAT) …….apparantly the website hadn’t been updated (hmmmmm…) so they would “hold” to the website price and I only need to pay £180 – which is still iniquitous considering you can do your own check Free of charge!
    How many students have overpaid these fees, I wonder?
    This bill can’t come in quick enough!!

  18. I hope this passes. Trying to find a place to live is hard these days. As a private tenant i think that the fees are unfair and unjust. They vary from one place to another and even if you use the same agent/landlord you get charged (most of the time) again. Considering you can get a statutory credit report for about £2 and usually have payslips to prove income which are these not accepted by most agents (I have tried) why do they charge £100’s. Now I agree that checks should be done which costs time and money and should be reimbursed but as a previous post says it’s edit a saved document and print, post or email and check responses. i would agree to a fee of £50 per applicant per agent covering a period of 6 months would be fair as the data can be reused or let the tenant provide the data (as long as it is from a reliable source)

  19. If more landlords took the time to actually get to know prospective tenants instead of getting a profit-first ask-questions later agency to do their legwork they would have fewer problems with nuisance tenants, non-payments etc. The ban on agency fees is long overdue and it would never have happened if the combination of laziness and greed by letting agents and landlords hadn’t been allowed to run rampant. You had your chance to be reasonable – despite a significant minority who are decent landlords – you blew it.

  20. I am company Secretary to a small privately owned organisation which purchases good houses to rent to people who cannot afford to buy in the area they would like to live. We have excellent tenants. Our gripe is with one of the letting agents we use. We are charged (as is also the tenant) a huge check-out fee on the day a new tenant moves into one of our houses. This has been queried umpteen times but no satisfactory answer received.
    Mistakes have been made on Inventories; our objections have not resulted in amendment of the Inventory. If letting agents’ charges were not so high, it could bring about lower rents being paid. It is intended that future purchases for renting will not use an agent for renting the property except for the initial contact with a prospective tenant.

    1. Hi Phyllis,

      Bin the letting / estate agent and do it yourself. Years ago I operated my own lettings management company and with great success. Put simply we visited any perspective tenant in their current home to see how they lived before offering any tennacy, we charged very small admin fees and no renewal fees for tenants.

      The only reason that I no longer do such is that I have gone into project management within the construction industry.

  21. as an agent we charge £70 for referencing and inventory and all charges all the way up to moving in.if for some reason the credit check fails we keep £20 from the £70 and refund the £50.

  22. I work for a letting agents and I agree that the fees need to look at however, abolishing fee’s altogether is not going to have the desired effect that everyone is hoping for. Landlords should pay for tenants to be referenced, this has always seemed backwards to me the way it is currently. Inventories, check ins and check outs should be paid for by landlords and this is how we do it at our agency. When a new contract is drawn up we charge our tenants and the landlord half the fee each. I think a lot of people from outside the industry don’t understand the work that goes into a lot of what a letting agent does, although I fully agree a lot of agents do abuse the current system. If fee’s are abolished completely I can guarantee you will see an increase in rent and unless the Government is going to put a cap on rent (which isn’t going to happen) then this won’t work. There needs to be limitation on fees not simply abolish them.

    1. Hey Paul – thanks for your comment! I hear this point of view quite often. The discussion usually focuses on ‘who should pay the costs’. But actually, the costs of creating a tenancy can be reduced to amounts so small that they make the ‘who should pay for it’ question quite insignificant.

      OpenRent can create a tenancy (including tenant find) for just £49 for landlords, and £20 for tenants if referencing is required. In the context of these services being available, the idea that a landlord would have to raise rents to absorb tenant fees becomes quite a stretch!

    2. Hi Paul,

      Having read your comment I have to agree with Open rent. Tenant referencing is avaliable online for a mere £9.99 and open rent does it themselves for just £20. The average cost of a Tenant Reference in Hastings is in excess of £200 which is a total rip off.

      On top of referencing are excessive charges for a Tenancy Agreement which is a free document that may take just 10 minutes to complete, add to the equation inventory fees and check in fees it can easily total a months rent in fees plus a months rent in advance plus a months rent as a deposit. I should point out that Hastings is by no means wealthy and many tenants have not got that amount of moeny to spend.

      Estate agents typically bump up rents in the hope that a tenant will apply and pay the monthly asking price, the market should dictate the rental value and not the letting / estate agent.

      Whilst I am sure their are some good honest agents perhaps as you are the majority are just interested in how much money they can sython from both the tenant and landlord.

  23. I am renting a property from an agency and they charged us for inventory fee , guarantee fee, check- in fee and many more . I didn’t have any other option as all other properties were even more expensive in terms of rent or application cost . This law should have been been brought to UK ages ago , income doesn’t increase but the cost of living does . Agencies are upset about the new changes that might happen soon and threaten with increased rent. The government should introduce a limit to rent increase however I doubt that .

  24. I abhor letting agency fees…it is a scandal.
    I once rented from Hyman hill agents for a couple of years but wanted something bigger. I viewed a different flat with the same agency and said I would like to move in. The agency told me that I’d have to pay full referencing fees to move in!! Even though they had done all my references for the current property I was living in and the only update they needed was from themselves as my current landlord.
    What also upset me was when they had arranged for their 6 monthly check on my flat, the agent didn’t even knock when he arrived, he just opened the door with his own key!! I was just standing there I disbelief when he showed himself in!!!
    Needless to say I won’t go near an agency now and have had brilliant (human) decent and reasonable landlords since then who have benefited from me being an excellent tenant (despite having bad credit believe it or not!!!)
    It would make looking for a new home so much easier with this ban.

  25. Hi, Great Posts everyone – has any one got any idea when this is likely to come into effect ? I would like add that for us as Landlords we have a cost for doing legally essential checks such as a tenants “right to rent” (ie border control enforcement) “how to rent” booklets etc and many other checks to assist the government, the previous Landlord and the tenant – however some credit checks and referencing is for our benefit also. It seems that this new legislation is a sledgehammer to crack a nut -the main issue is London agents were the demand is high charging extortionate high fees due to high demand. For most a charge of around £50 to cover the essential costs is sufficient and would stop landlords to charging higher rents to cover their costs which will surely be the consequence should this bill be enforced.

  26. It is about time Estate and Letting Agents stopped raking in money from Tennants. Having just read this article I have done a little bit of research and often have found that a tenant could lay out as much as £500 and fail a credit check to lose all that they have given a greedy agent.

    Referencing fees for Tenants are readily avaliable on line for under £10, quite often an Agency will charge £200+ and if the draft bill become legislation then I am sure such agencies would close their doors.

    The landlord in fairness also needs to be protected as they have an investment in the property and should accordingly recieve their rent, perhaps we should look at the Scottish laws on tenancy as they acted some time ago to protect the tenant and the landlord which stopped agencies ripping off both parties.

    I do hope a tighter bill is enacted and with luck it will protect both the Tenant and Landlord, call me a cynic but I daresay a watered down bill will be enacted.

  27. Some great and thought-provoking posts here.

    I’m an accidental London landlord. Not in it for profit but expect to at least break even and enable short and long-term maintenance to a good standard. I charge market rates and only just manage it. I consider myself a decent human being, always putting the tenants’ wellbeing first. But I have been – rarely – mucked about (sub-letting, filling house beyond capacity, tenants disturbing neighbours, late payments). I’ve had fraudulent applications which passed agents’ referencing. Both tenants and landlords need basic protections. It seems that the real winners at present at others’ expense are agents, particularly the big ones.

    I am pretty dismayed by the charges made by agents (in this case Dexters but I’ve also had a similar experience with Countrywide) against both tenants and landlords. Without property management, they already charge between 9 and 13% throughout the tenancy (say an average of 18 months?). What are they doing for that significant income, given that increasingly they also charge (either landlord or tenant) for a separate “admin fee,” referencing, EPC (a simple tick-box exercise once “qualified”), inventory, mid-tenancy inspections and check in/out? And they don’t take any responsibility for non-payment of the rent they are paid to manage. Even when done diligently, and I’ve experienced both, this feels like a lot of money for maybe 4 or 5 viewings, 1 set of paperwork (2 if one falls through) and holding/arrangement of holding a deposit? And when agents fail to perform, there is very little come back for either landlord or tenant.

    Thanks to companies like Openrent, we are now becoming aware of some of the true costs of the services agents provide. There are certainly good agents out there, and decent people working in them, but surely a rounded rental housing market requires some regulation of what agents can charge and must provide in return too?

  28. As a landlord, I wish to know that a prospective tenant can pay their bills, peacefully enjoy the property and keep it in good order, reporting any defects in a timely manner.

    References from banks, previous landlord etc seem fair to achieve this.

    What is wrong with asking for a fee to cover the time involved in following these up?

    1. Hi Dave, great point! You’re certainly not alone on this. Just to play devil’s advocate, tenants might reply that what’s wrong is that all those things benefit the landlord, not the tenant, so it’s wrong to ask the tenant to pay for them.

    2. Letting agents subcontract referencing to a referencing agency – it costs about £25 (send a couple of standardised emails, do a credit check – ten mins later bobs your uncle). They then charge tenants £150 for the pleasure. It’s a scam.

  29. Great posts on the topic!

    Like most things in the UK the Government needs to step in because a few agents are completely taking the piss on fees. I am a small independent and I believe there should be a small fee but capping it at £100 will allow time and process to be covered.

    1. Hi Alex, Yes certainly some agents are simply ripping tenants off. But It is definitely possible for agents to prosper without charging tenants anything. The fee ban will just incentivise agents to embrace more advanced and efficient ways of serving landlords and tenants, so they have much lower costs for ‘time and process’.

  30. Last time I rented my property I had two applicants fail their referencing – in each case they assured me there would be no problem. Due to the time taken my property ended up being empty for 4 weeks – a considerably greater loss than the cost to the tenant for referencing. Tenants should have to pay a deposit which is not refundable if they fail referencing, but which is taken off their rent if they take up the tenancy. This would stop those who know they aren’t going to pass referencing from applying. I think the first tenants I dealt with hoped that I would overlook referencing because they kept making excuses as to why they hadn’t finalized the forms. Presumably they thought if they held off long enough I would just let to them without the references. In future I will self-reference to a point where I am fairly sure they will pass before I use a rental reference service, but this is to avoid the wasted time rather than the cost.

    1. Hi MKmum, We suggested a similar system in our reply to the Draft Bill, but with a few differences. We think that it’s fair that a holding deposit is returned to the tenant even if they fail referencing. But if the tenant can be asked at least to cover the cost of referencing (around £20) then that’s enough to put off tenants who know they won’t pass without unduly penalising tenants who apply in good faith!

    1. Hi Trevor, deductible expenses are simply removed from your taxable income. This does not make them ‘free’, it just means you can subtract the value of the fee from your taxable profits.

  31. Prospective tenants should pay for the cost of referencing, why should a landlord have to foot the bill for a succession of applicants who fail referencing. Knowing that they may fail referencing checks is no deterrent if there is no cost to the applicant.

    Many agents have certainly been overcharging for this service for years, and that should be ended. As a landlord who does not use agents, I have the referencing agency directly charge applicants the £25 or so cost. I then subsequently refund this to successful applicants. I see no reason why I should refund anything to failed applicants who do not become my tenant, and probably knew they would fail before applying.

  32. How much do landlords think the average person earns when charging exhorbitant rents and not ACCEPTING DSS into the bargain. Also a reference can be done by telephone and a letter, the cost is extremely minimal so why do they charge exhorbitant fees for making a phone call and buying a stamp. they should hang their heads in shame and learn to be human and not be so greedy.

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