Housing charity, Shelter, carried out mystery shopping with 58 letting agencies across the country and found that all of them charged renters fees to set up a tenancy. This is on top of deposits and the rent in advance.

The average fees charged were almost £350, with almost a third of agencies charging renters more than £400 to set up a tenancy, and a further seven charging more than £700, according to Shelter.

These charges are in spite of the fact that letting agencies typically receive separate fees from landlords to set up a new tenancy on their behalf.

Shelter found that in some instances, letting agencies failed to return the fees they charged potential renters, even when the deal did not go ahead due to no fault of the renter.

Separate research by the charity also found that 1 in 4 people who have dealt with a letting agency in the last three years said they had to borrow money to pay for fees and one in six reported they had to cut down on food and heating to meet the letting agency fees.

A quarter said that letting fees stopped them from moving to a new home entirely.

Campbell Robb, Shelter’s chief executive, said: “This shocking research reveals that letting agency fees are out of control. When renters have to find hundreds of pounds in fees each time they move – on top of deposits and rent in advance – it’s not surprising that fees are causing real financial hardship, and in some cases preventing people from moving at all.

“Anyone who’s tried to find a rented home in the past few years knows that affordable, decent places to live are in short supply, and often snapped up within hours. The high demand for rented homes means that renters can’t shop around, but instead have to deal with the letting agency their landlord has chosen: they have no choice but to swallow their anger and stump up their cash.

“People often forget that the landlord is the real customer of a letting agency, but the fact that renters also pay fees leaves both expecting the agency to act in their interests. This adds up to a confusing situation that leaves landlords in the dark and renters powerless.”

“The only way to fix our broken lettings market is for the Government to stop renters being charged for the costs of setting up a tenancy. This would put landlords in a stronger position to negotiate the best deals, restoring healthy competition to the market and releasing renters from the burden of paying out hundreds of pounds in sky-high fees.”

Shelter is petitioning politicians to end letting agency fees charged to renters to set up a tenancy, including ‘administration’ fees, ‘holding’ fees, credit check fees and ‘check-in’ fees.

Caroline Kenny, executive at the UK Association of Letting Agents (UKALA) said: “At UKALA, we are completely against overcharging. UKALA members operate under a strict code of conduct. Unfortunately however, there are unscrupulous agents operating within the industry who are overcharging tenants and damaging the industry with their dishonest practices.

“Matching prospective tenants with suitable properties is resource intensive and can be extremely costly. The bulk of any agency’s costs are covered by the fee paid by their landlord client. However, it is not always appropriate for the landlord to meet pre-tenancy costs, particularly when they are associated with proving the suitability of an applicant.

“It is therefore appropriate for a prospective tenant to contribute towards the administration and referencing process before a tenancy begins. This demonstrates commitment to the prospective tenancy, safeguards against an applicant securing multiple properties simultaneously, to then reject all but one at the last minute, and protects agents and landlords from applicants who provide false information.”