An undercover investigation has revealed the shocking widespread practice of some letting agents in Scotland charging private tenants extortionate and unjustified upfront charges.
Shelter Scotland’s ‘secret shopper’ campaign investigated 29 letting agents, many of which have multiple offices across Scotland, and found that 90% demanded high upfront fees to tenants for services like credit checks and paperwork to process applications.
The housing and homelessness charity says such high fees can be illegal under section 82 of the Rent (Scotland) Act 1984 and are a giant obstacle for prospective tenants to overcome when they already face paying rent and a deposit before they even get the keys to their new home.
Shelter Scotland says that disproportionate fees by unscrupulous letting agents for credit checks, drawing up a lease and renewing a tenancy are making it even tougher for hard-pressed people to find affordable accommodation in the private rented sector (PRS). The charges are particularly unjustified considering that landlords are often also paying agents for the same services.
Graeme Brown, Director of Shelter Scotland, says:
“That some letting agents – established and new – are charging extortionate and unjustified upfront fees is shocking. They are not only ripping off desperate people who need a roof over their head and who, in many cases, have little or no choice but to pay up, but they are also undermining the work of good letting agents who offer a fair deal to tenants.
“New legislation clarifies tenant’s rights and the government must make it clear that all charges above rent and a reasonable deposit are unlawful. Only then will tenants, and indeed landlords, be assured that they are not being exploited.”
The charity says that current legislation leaves people who make up so-called ‘Generation Rent’ – who have little prospect of owning their own property – exposed to exploitation by letting agents. According to Shelter Scotland people who have little choice but to rent are often so desperate to secure a tenancy that they have little choice but to pay up to these agents.
Shelter Scotland says thousands of people are leaving themselves open to unfair treatment and financial exploitation simply because they are not aware these charges are illegal. The charity wants new laws to be implemented that make it clear that all charges to tenants are unlawful.
Graeme Brown added:
“Times are hard enough for many people right now and the last thing they need is to be fleeced by unscrupulous letting agencies in their search for a home.”
Notes to Editors:
1. The mystery shopping exercise was carried out by Shelter Scotland. 29 letting agents were contacted across a range of geographical locations including 11 across the urban areas of Edinburgh and Glasgow and rural areas such as the Highlands. All letting agents were chosen at random. For each enquiry a specific property was chosen, a 1 bedroom or 2 bedroom property charging a low to medium rent (from £360 a month to £600 a month). Each letting agent was telephoned and asked for further details on the specific property, particularly the costs involved. Each agent was asked to state:
- the rent per month for the property
- the amount payable for the deposit
- any other charges/fees to pay
2. Summary of Investigation Findings
• Full report available via http://scotland.shelter.org.uk/professional_resources/policy_library/policy_library_folder/premiums_in_the_private_rented_sector
• Upfront charges ranged from £16.80 up to £180. Most charges are as an ‘Administration fee’, with some as specifically noted as a reference fee or credit check. One letting agent specifically asks for a £36 administration fee ‘to draw up the lease’ (which Shelter Scotland understands to involve simply photocopying).
• The highest fee from the exercise was for a property in Glasgow (£180 administration fee).
• Eleven letting agencies charged £120 or more across, Edinburgh, Glasgow, South Lanarkshire, Falkirk, Bathgate, Stirling and Dundee.
• Two of the letting agencies asked for a £200 reservation fee to hold the property which is refundable once the lease is drawn up. Another agency asks for £150 to secure the property at which stage credit checks are carried out. If the potential tenant passes the checks the money is refunded and if the tenant fails, the agency keeps the £150.
• Two letting agencies specifically used ‘No Admin Fees’ when advertising properties to let on their website. This was used as a way of making a property more attractive
• There were instances of tenants being asked to pay a fee to renew their tenancy ranging between £25 and £50 every 6 months.
• Another client was being asked to pay a £60 every 6 months in order to pay for a ‘continuous affordability check’. There is also evidence of fees charged as an assignation fee once they vacate the property.
• At present 272,653 households in Scotland class the Private Rented Sector as home.
3. Current legislation explicitly prohibits charges for drawing up a tenancy agreement and furthermore it is an offence to require any premium as a condition of the grant or continuance of tenancy. This comes under section 82 of the Rent (Scotland) Act 1984. In accordance with section 90, a premium includes any fine or other sum and ‘any other pecuniary consideration’ in addition to rent.
4. New legislation: Part 4 of the Private Rented (Scotland) Act 2011, once implemented, will clarify the law on the charges that can be made by letting agents and landlords in connection with setting up a tenancy. Shelter Scotland believes ALL premiums and charges to the tenant should remain illegal. Tenants should not be asked to pay a second time for a service that is also charged to the landlord.
5. Shelter Scotland provides expert support services, online advice and a free national helpline for everyone facing housing and homelessness difficulties. For advice and support visit http://scotland.shelter.org.uk or call 0808 800 4444.
6. Spokespeople are available for interview – call the media office on 0844 515 2442. An ISDN line is available for broadcast interviews.
Shelter Scotland believes everyone should have a home. We help people find and keep a home. We campaign for decent housing for all.
Contact: Sabina Kadic-Mackenzie
Phone: 0844 515 2442