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It is a matter of their contract as to whether they insist on a referencing fee or not. It is equally something to negotiate. I can see no purpose of such a fee in your case for the reasons that you have explained. But they can refuse to rent you the property if you do not comply with their rules and regulations - so basically hold you to ransom. There is a bill going through Parliament at the moment with the intention to ban such reference fees but this is only a bill and not an Act yet so is not yet enforceable. As such they are allowed to make these charges, but they are incredibly unfair.