Shelter has come under attack from the letting industry over its call to ban letting agency fees for tenants, with the Estate Agency Foundation withdrawing financial support for the charity and letting agents considering a £50,000 “fighting fund” to legally challenge Shelter.

Last week, Shelter called for an end to letting agency fees to renters in England, after a mystery shopping exercise conducted by the charity with 58 letting agencies across the country found that all charged renters fees to set up a tenancy, on top of deposits and rent in advance, with the average fees charged almost £350.

In some of the letting agencies investigated by Shelter, hundreds of pounds of fees paid by renters were not refundable even if the deal fell through for no fault of their own.

Separate research commissioned by the charity looked at the impact of letting agency fees on renters’ finances. It found that one in four people who have dealt with a letting agency in the last three years said they borrowed money to pay for fees, while one in six reported cutting down on food or heating to meet the cost of fees. One in four say that letting fees have stopped them from getting a new home.

Commenting on the findings, Campbell Robb, chief executive of Shelter, called on government to stop renters being charged for the costs of setting up a tenancy.

Letting industry 'can get the most aggressive lawyers'

In response, Ian Wilson, managing director of one of the country’s largest letting agencies, Martin & Co, has called for the industry to set up a fighting fund to give legal challenge to Shelter.

Writing in a blog on the Letting Agent Today website, Wilson promises to put £1,000 into the fund if 50 other businesses follow. “As an industry we have the cash to pay for the best and most aggressive commercial lawyers to take Shelter on,” he says. “But we have to act collectively. Tenant fees are probably worth £200m to us all, maybe much more, so it’s a fight worth having.”

He adds that Shelter should be reported to the Charity Commission: “It is a charity and it benefits from tax advantages because of its charitable status,” he says. “It has to expend its efforts on its charitable aims and if it strays into other political activities such as helping teachers, doctors and journalists reduce their household bills by avoiding paying letting agents’ fees, then it should be reported to the Charity Commission and tied up in legal action through the courts.”

The Estate Agency Foundation, a charity funded by the estate agent industry to help the homeless, has withdrawn support for the Shelter over its position on letting agents charging fees to tenants. A statement on its website says: “Currently Estate Agency Foundation will make no further donations to Shelter but we will work together to try and find a resolution.”

Last year, the Estate Agency Foundation donated £20,000 to Shelter.  

Letting agents have also set up a petition in protest against Shelter.