Letting fees in Northern Ireland

We recently carried out an undercover survey of 40 NI based lettings agencies to find out more about the fees and charges that prospective tenants are forced to hand over before they can find rented accommodation.

Types of fees

Tenants are being asked to pay up to £100 on top of the usual security deposit and rent in advance.  Agents are asking for money for a variety of routine business practices including:

• credit checks
• guarantor checks
• inventory services
• tenancy renewal fees
• general administration work, such as providing copies of tenancy agreements.

On average, the agents we contacted charged an additional £48 in upfront fees per applicant.  This can be a huge barrier for people in financial distress, who may have to borrow money to cover their first month’s rent and security deposit.  The survey found that it can cost as much as £1,430 for a tenant to move into rented accommodation.

Charges not disclosed

Worryingly, some of the agents contacted were either unwilling or unable to give clear guidance on their fee structure when asked.  Only 10% of the agencies surveyed displayed information about their fees on their website. We feel that this failure to disclose fees could constitute a breach of consumer law.  According to the Advertising Standards Agency (ASA), letting agents must clearly display tenancy fees when marketing rental properties.

Letting fees can act as a disincentive to rent privately.  Most tenants will only get their first housing benefit payment in time to cover their second rent payment and there’s no social assistance available to help people with deposit costs. For those who have managed to scrape together the money for rent in advance and a deposit, finding an additional £50-£100 may be an impossible task.

The way forward

Landlords pay agents to find tenants for a property.  We believe that the evidence from this survey supports the call for regulation of the letting agent industry and that tenants shouldn’t be paying for business operations which are part of the routine letting and landlord management process.

After a review, the Scottish Parliament last year decided to introduce legislation to ensure that agents could not pass on premiums to tenants, meaning the only payments they can receive from applicants are for rent or deposits.  We’d like to see the NI Assembly consider:

• launching a joint investigation by the Department for Social Development and the Department of Enterprise, Trade & Investment into this issue

• introducing compulsory regulation of letting agents to ensure that tenants are confident that the agent they’re dealing with is reputable and professional
• introducing a requirement that all agents clearly advertise their fees on websites, promotional materials and on all property advertisements and particulars
• providing greater clarity on the legality of these fees and a ruling on whether or not the practice of charging  upfront fees to tenants is legal.

Examples of unfair letting charges

Excessive, unrepresentative administrative charges

We were told of 2 separate incidents of tenants being charged £150 a time to change the names on a tenancy agreement.  The agent would not provide an explanation of how they calculated this charge or why the tenant, rather than the landlord was footing the bill.

Direct discrimination

An agent in Belfast was reported to be charging foreign nationals who have resided in the UK for less than 6 months a non-refundable credit reference fee of £95 while all other applicants paid £40.  This has been referred to the NI Equality Commission.

Keen to know more?

If you’re interested in finding out more about this survey you can read the full report.  The NI Private Tenants Forum helped us carry out this exercise.  Contact Peter O’Neill at Housing Rights Service if you’d like to find out more about the Private Tenants Forum.