The British Landlords Association (BLA) is warning landlords to check their letting agent agreements carefully following concerns about agents introducing additional fees, charges and paid-for services.

We have become aware of landlords questioning new charges being introduced by letting and managing agents, including charges for services that landlords may previously have regarded as part of the normal management service.

The issue has also attracted media interest, with landlords discussing whether increased costs and regulatory pressures in the private rented sector are encouraging some letting agents to look for additional sources of revenue from their landlord clients.

The BLA is now asking landlords to report their experiences to us.

What New Letting Agent Charges Are Landlords Seeing?

The types of additional charges being discussed by landlords include:

• Automatic or proposed enrolment into rent guarantee schemes

• Charges for quarterly or three-monthly statements

• Fees for producing end-of-year or annual statements

• Additional administration fees

• New compliance-related charges

• Charges for services that may previously have formed part of the agent’s management service

• New paid-for landlord protection or insurance products

• Additional fees introduced during an existing management agreement

• Charges associated with new regulatory or tenancy requirements

This does not mean that every additional fee charged by a letting agent is improper or unenforceable.

Letting agents are commercial businesses and are entitled to charge landlords for services where the contractual arrangements allow them to do so.

However, the important question for landlords is:

Does your letting agent actually have the contractual right to impose the new charge?

A Letting Agent Cannot Simply Ignore the Management Agreement

The starting point should always be the landlord’s existing terms of business or management agreement.

A landlord who receives an email stating that a new £50, £100 or £200 fee will apply should not automatically assume that the charge is contractually payable simply because the agent has announced it.

The agent’s right to charge will depend on the terms agreed between the landlord and the agent.

The management agreement may contain provisions dealing with:

• The agent’s management fee

• Additional services

• Optional services

• Administration charges

• Compliance work

• Insurance products

• Renewal or tenancy-related services

• Authority to incur expenditure

• Variation of the agreement

• The procedure for changing fees

Landlords should therefore examine the actual wording of their agreement.

Can a Letting Agent Introduce New Fees?

Potentially, yes – but not necessarily simply by announcing them.

Whether an agent can introduce or increase a fee will depend on the contractual relationship between the parties.

For example, an agreement may contain a properly drafted provision allowing the agent to change certain charges by giving the landlord notice.

Alternatively, a new service may genuinely be optional, in which case the landlord can decide whether they wish to purchase it.

The position may be very different where an agent attempts to impose a completely new charge during an existing contract without a clear contractual mechanism allowing the change.

Landlords should therefore distinguish between:

a fee permitted by the existing agreement;

a separately agreed optional service; and

a new charge that the agent is attempting to impose unilaterally.

They are not necessarily the same thing.

Be Particularly Careful With Automatic Enrolment

One area landlords should examine carefully is automatic enrolment into additional paid-for services.

For example, a landlord might be informed that they are being enrolled into a rent guarantee, insurance, compliance or protection product unless they specifically opt out.

Where money is going to be deducted from rental income or charged to the landlord’s account, landlords should establish precisely what they have agreed to.

Ask:

What is the service?

How much does it cost?

Is it compulsory?

When did I agree to purchase it?

What provision in my management agreement permits the agent to enrol me?

Can I opt out without affecting the underlying management service?

Landlords should not be embarrassed about asking these questions.

It is their money.

Statement and Administration Fees

Landlords should also scrutinise charges for routine administrative functions.

If an agent introduces a fee for producing a quarterly statement, annual statement or other routine account information, check what the existing management agreement says the agent is already required to provide.

If the provision of statements formed part of the agreed management service, a landlord may reasonably question why a separate additional fee is now being charged.

Again, the contractual wording will be important.

A new charge is not automatically invalid, but neither should landlords assume that every fee appearing on an agent’s statement is automatically authorised.

The Renters’ Rights Act and Increased Costs

The private rented sector in England has undergone substantial regulatory change, including implementation of the Renters’ Rights Act.

Those changes affect landlords, but they also affect letting and managing agents.

Agents may face additional administrative work, staff training, software changes, compliance procedures and other costs as the regulatory framework develops.

It would therefore be unsurprising for some businesses to review their pricing structures.

However, increased operating costs do not, by themselves, rewrite an existing contract.

Where an agent wishes to change the commercial relationship with a landlord, it must consider the terms governing that relationship.

The BLA is concerned that landlords should not simply accept additional charges because they are described as being necessary because of new legislation.

Landlords should ask what the fee is actually for and where the contractual authority for charging it comes from.

What Should You Do If Your Letting Agent Introduces a New Fee?

If your letting agent announces a new fee or deducts an unfamiliar charge from rental income, we recommend taking the following steps.

1. Check Your Management Agreement

Find the agreement or terms of business you originally accepted.

Do not rely solely on the agent’s current website terms, particularly if your relationship with the agent began several years ago.

Establish which contractual terms actually apply to you.

2. Ask the Agent to Identify the Contractual Basis

You can ask a straightforward question:

“Please identify the clause in our management agreement that authorises this charge.”

A reputable agent should be able to explain what the charge relates to and the contractual basis upon which it is being made.

3. Ask Whether the Service Is Optional

Do not assume that an additional service is compulsory.

If it is a rent guarantee, insurance, compliance package or other product, ask whether you can decline it.

4. Check What Your Existing Management Fee Covers

If you already pay a percentage of the monthly rent for full management, check the list of services included within that fee.

If the new charge relates to something apparently already covered by the agreement, ask the agent for an explanation.

5. Check the Variation Clause

Some management agreements allow fees or terms to be varied after notice has been given.

Read the clause carefully.

The existence of a variation clause does not necessarily mean an agent has an unrestricted ability to impose any charge it chooses.

6. Keep Everything in Writing

If you dispute a fee, communicate by email or letter wherever possible.

Keep copies of:

• The original management agreement

• Revised terms and conditions

• Emails announcing new charges

• Rental statements showing deductions

• Invoices

• Information about additional products

• Your correspondence challenging the charge

These documents could become important if a dispute develops.

Don’t Ignore Small Charges

A £10 or £20 administrative charge may not initially seem worth challenging.

However, landlords should consider how frequently the charge will be imposed and how it operates across a portfolio.

A £25 quarterly charge is £100 per property each year.

For a landlord with ten properties, that becomes £1,000 annually.

Combine several apparently modest add-on charges and the additional annual cost can become significant.

Landlords should therefore look at their total effective management cost, rather than simply the headline percentage charged by their agent.

An agent advertising an 8% management fee may not ultimately be cheaper than an agent charging 10% if numerous additional charges are added throughout the year.

Landlords Should Review Their Agent Agreements Now

The BLA recommends that landlords using managing agents take this opportunity to review their agreements.

Create a simple list showing:

Management percentage: What percentage of the rent is charged?

VAT: Is VAT additional?

Tenant-find charges: Are there separate letting fees?

Renewal or tenancy charges: Are additional fees payable?

Inspection fees: Are routine inspections included?

Statements: Are monthly, quarterly and annual statements included?

Compliance: What compliance work is included?

Maintenance: Is there a surcharge or commission on contractor invoices?

Insurance: Are any insurance or guarantee products automatically included?

Exit fees: What does it cost to terminate the management agreement?

Other charges: What additional administration fees can the agent impose?

This exercise may reveal that the true annual cost of management is considerably different from the headline management percentage.

BLA Wants to Hear From Landlords

The British Landlords Association is currently gathering information from landlords who have experienced new or unusual letting agent charges.

We are particularly interested in hearing from landlords who have:

• Been automatically enrolled into a rent guarantee or other paid-for scheme

• Been charged for quarterly or annual statements

• Had new administration charges introduced

• Had new compliance fees introduced

• Been charged separately for something they believed was included in their management fee

• Had money deducted from rent without expecting the charge

• Been told that a new fee is necessary because of the Renters’ Rights Act

• Challenged an agent about the contractual basis for a new charge

We would also like to hear whether the agent withdrew the charge after being challenged.

Media Investigation Into Letting Agent Add-On Fees

The issue is now attracting national media attention.

The British Landlords Association has been approached by The Telegraph, which is investigating letting agent add-on charges and is interested in speaking to landlords who have experienced them.

The newspaper is particularly interested in landlords who may be prepared to be named and photographed as part of its reporting.

If you have experienced this type of practice and are willing to share your experience, please contact the British Landlords Association.

Where appropriate, we may be able to put landlords directly in contact with the journalist investigating the issue.

BLA: Landlords Should Question Unexplained Charges

The British Landlords Association believes landlords should expect transparency from the agents managing their properties.

Agents perform an important role in the private rented sector and legitimate additional work can reasonably attract additional charges where those charges have been properly agreed.

The concern arises where landlords discover unexpected charges, are enrolled into paid services they did not realise they had accepted, or are told that additional fees are compulsory without a clear explanation of the contractual basis.

Our message to landlords is therefore straightforward:

Check your management agreement. Check your statements. Question unfamiliar deductions. And do not assume that a newly announced fee automatically becomes part of your existing contract.

With the regulatory environment becoming more complex, landlords need good letting agents more than ever.

But the relationship must work both ways.

Landlords should receive clear information about what they are paying, what services are included and exactly what they will receive in return.

Important Notice

This article provides general information and does not constitute legal advice. Whether a particular letting agent fee or contractual variation is valid or enforceable will depend upon the wording of the relevant management agreement and the individual circumstances. Members requiring advice about a specific agreement or charge should seek appropriate advice before taking action.

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