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Call to end rip-offs by unregulated letting agents

Thursday, 8 December 2011 9:18 AM

Tenants are being ripped off by letting agents with upfront costs of over £1,000, variable fees and a lack of transparency about charges, according to a report out today from the Resolution Foundation.

The think-tank conducted a mystery shopping exercise with letting agents in three cities and found tenants being charged administration fees ranging from £95 to £375 in addition to a deposit and rent in advance.

Total upfront costs for a one-bed property were £2,166 in London, which is double the level in Manchester (£1,028) and Gloucester (£1,094).

Only two of the agents displayed the costs of renting on their websites and many renters only discovered the charges they had to pay after deciding to rent a property. Letting agents are currently unregulated.

Average deposits for a one-bed home ranged from £487 in Manchester to £1,099. But many tenants reported problems getting their deposit back when they moved, despite the protection of the tenancy deposit scheme.

The Resolution Foundation is calling for letting agents to be regulated to at least the same level as estate agents, so that unscrupulous firms can be banned.

And it says all agents should be signed up to an ombudsman service offering redress for tenants and codes of practice with easily comparable charges.

Vidhya Alakeson, director of research, said: "The lack of regulation in the exploding private rented market is of growing concern. We need more transparency so tenants at least know what fees they're facing and to help create a more competitive market."

Christopher Hamer, the property ombudsman, said: "The government does not see regulation of the sector as a priority and I, therefore, welcome the recommendation of this report that all letting agents should be required to be registered with an ombudsman scheme so that, at least, landlords or tenants can gain redress where they have been disadvantaged by an agent."

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