Letting agents should produce up-front tariffs setting out all of their charges to halt the "drip pricing" of surprise fees to tenants and landlords, the trading watchdog has said.
The Office of Fair Trading (OFT) said that letting agents are "pivotal" to the market, but a clampdown is needed to help those using their services to shop around and become "more demanding customers".
It wants to see more consistency across the industry, with common principles and logos which would make it easier for consumers to recognise good quality services which have certain standards in place.
The OFT said that there should be a general redress mechanism to help landlords and tenants sort out problems and better compliance and more transparency over tenancy deposit protection schemes.
It said: "Ideally we would like fees to be set out in a clear tariff of charges at the start of the process and certainly before any contract is signed."
The OFT analysed 4,000 complaints made by tenants and landlords to Consumer Direct about the lettings market - and found that nearly one third (30%) were about fees and charges.
The OFT said that landlords and tenants are being drip-fed extra charges when they have already signed a contract, making it harder for them to switch to another agent without racking up extra costs.
The OFT's report said: "Drip pricing reduces the ability of landlords to search for and compare the costs of different letting agents before signing a contract with one. It also affects the ability of tenants to search for and compare the total costs of different properties. Therefore, fees that are not clear up-front may not be exposed to effective competitive pressure."
The watchdog will host a series of events to discuss its recommendations and it wants the Government and industry bodies to work together to agree a strategy to raise standards in the sector.
Cavendish Elithorn, senior director of goods and consumer at the OFT, said: "Tenants and landlords are often dissatisfied with their agents but we also know that most agents want to do the right thing. It's important that tenants ask for key information, but we also believe that Government, industry and enforcers working together can have a real impact and improve overall standards in the lettings market."