Some letting agents have been found to be charging non-refundable admin fees in excess of £500, according to recent research.
The LGA is calling for increased regulation of the private rental and will be looking to raise the issue, along with concerns about rogue landlords, at a select committee inquiry on private rented sector housing today.
Councillor Tony Newman, member of the LGA’s Environment and Housing Board, said: “With the housing market stagnant and a shortage of mortgages available to help first-time buyers, people are increasingly turning to the private rented sector to find a home.
“Pricing people out of private rented housing in this way is adding to the pressure on already over-subscribed waiting lists for council and social housing.
“The vast majority of private sector landlords provide good housing and a fair deal for their tenants but there are some bad landlords out there which give the rest of the sector a bad name by renting out shabby, substandard homes.”
Ian Potter, managing director of the Association of Residential Lettings Agents, said: “As the LGA’s research shows, many consumers today are falling prey to bad practice in the private rental sector.
“For this reason, we have been calling for regulation of the sector; currently anyone can set up shop, regardless of their training or experience and without any need to adhere to a code of practice or standards.
“The challenge is, with the current undersupply of homes, tenants may feel pressure to pay high fees, or live in substandard properties.
“In the absence of statutory regulation, tenants should do as much research as possible, and consult organisations like Citizens Advice, ARLA, or the Property Ombudsman.”
Official statistics show that the number of families in England waiting for social housing rose to 1.85m last year.