Renting roulette: the great lettings agent gamble

Our new study into the lettings market uncovers bad practice, unexpected and unfair fees and a lack of consumer protection that fails both tenants and landlords.

The private rental sector accounts for 4.7 million UK households with two thirds (66%) of all private tenancies involving an agent. However, with complaints to the Property Ombudsman increasing by a quarter this year and evidence of bad practice across the market, it is a gamble whether people get a good or bad agent.

Which? found widespread problems in the lettings market, including:

>               Tenants disempowered and dissatisfied: three quarters of tenants (73%) search for a property not the agent, yet lettings agents are ranked second from the bottom in our comparison of markets and one in five tenants told us they are dissatisfied with their agent.

>               Unexpected and unfair fees: we found less than a third of tenants said agents (29%) provided information about fees before they asked, 41% of tenants thought upfront fees were unfair and none of the 32 lettings agents we looked at had information on tenant fees on their website.

>               Widespread bad practice: we found evidence of agents using aggressive sales tactics, poor customer service, missing appointments and misleading tenants through out-of-date advertisements.

>               Tenants and landlords losing money: both tenants and landlords were found to have lost money through agents not passing on rent, unfairly handling holding deposits or failing to put deposits into protection schemes, as they are required by law.

Despite this bad practice, our research reveals both tenants and landlords are not conducting checks on lettings agents. Two thirds (62%) of tenants and nearly half (45%) of landlords told us they did not know whether their agent was a member of a professional body.

Which? is calling for increased consumer protection in the lettings market by extending the legal protection for people buying and selling property to those renting. This would mean lettings agents would be covered by the same legislation as estate agents, which would also require them to sign up to an ombudsman scheme.  By changing the legislation, the Office of Fair Trading would also have the power to ban lettings agents that break the rules.

We also want to see increased transparency with lettings agents including fees in the headline price and made clear at the point of sale, in adverts and on websites. Agents should also provide full details of the terms and conditions of the agreement before any upfront fees are paid.

Which? executive director Richard Lloyd said:

“People searching for a rented home through a lettings agent are too often hit by unexpected and unfair fees or unacceptably bad service.  With the private rented sector now the only option for millions of people, it is vital that more is done to protect both tenants and landlords from rogue lettings agents.”

Notes to editors:

1. Average tenant fees and charges based on one person on a tenancy agreement (Which? mystery shopping investigation, October 2012):

Holding deposit One week’s rent – £400
Administration fee £120 – £420
Deposit administration fee £0 – £29
Deposit 1 month’s rent – 6 weeks’ rent
Rent in advance 1 month’s rent
Credit reference check £43 – £90
Check in fee £0 – £60

Some tenants are also being charged up to £90 to renew a tenancy and up to £120 to ‘check out’ of a property.

2. Range of fees and percentage of tenants that reported having to pay the following fees in their current property:

Fee % reporting
Deposit 76
Administration fee 64
Holding deposit 47
Credit reference 34
Tenancy renewal 19
Cleaning cost 16
Check-in 14
Check-out 11
Fee to administer the deposit in the protection scheme 10
Guarantor 8
Other 2
Paid no fees 3

3. Methodology: Which? conducted an in depth study of the market between May and October 2012.

  • Tenants survey

Populus, on behalf of Which?, conducted an online survey of 1006 tenants who had rented through an agent in the last 2 years, between 4th and 10thSeptember 2012.

  • Landlord survey

Populus, on behalf of Which?, conducted an online survey of 506 landlords who had let their property through an agent in the last 2 years, between 4th and 6thSeptember 2012.

  • Qualitative diaries with tenants and landlords

Which? recruited 15 tenants and 6 landlords who were in the process of looking for a property to rent or agent to manage the let.  Each participant was asked to complete an online diary for a month and to record their experiences. Participants were drawn from three areas – London, Nottingham and Mansfield.

  • Qualitative focus groups

Which? conducted a series of four focus groups among landlords and tenants in order to further identify the experiences and opinions of these two groups. The groups were held in London on 11th July 2012 and Nottingham on 17th July 2012.

  • Secondary analysis of Citizens Advice complaints data

In May 2011/ May 12 CABs in England and Wales advised on 5,181 enquiries relating to letting agents.  CABs staff also recorded 181 qualitative case studies about cases which they considered highlight an underlying social policy problem. Which? conducted detailed analysis of these 181 cases.

  • Which? mystery shopping investigation

Which? carried out a mystery shopping investigation of 32 agents in Nottingham, London, Birmingham and Leeds in October 2012 and found fees vary greatly across agencies.

4. 66% of all private rented tenancies involve an agent. Source: analysis of DCLG’s ‘Private landlords Survey.’

5. The private rental sector provides a home to 4.7 million UK households. Source: DCLG live table 101: By tenure, England (historical series).

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