Letting Agent's Costs

[stecoo]

I've been quoted by Your Move an initial set up charge of £200 plus VAT making it £235, so if after 6 months you lose the tenant then £200 again, then a monthly service charge of 10% of gross rent received, plus a gas safety check for £20 plus VAT so £23.50, then if the tenant enters into a further term £95 plus VAT so £111.63, a rent review fee of £26 plus vat £29.38, I'm a newbie but this seems very expensive. I would appreciate any views.

[Trenners]

Hi qweetcher,

Some of the prices - quoted above - seem good value and some seem bad value - but the real question to consider, when choosing a letting agent, is how QUICKLY can they find a tenant, move them in, and start generating you rent.

If you have to wait a month for the letting agent to find you a tenant then you are going to lose 1 months rent and this is going to be much larger than any of the fees quoted above.

Don't fall into the trap of thinking that a "High Street" letting agent will find you a tenant quicker than a smaller agent. Most high street agents sit in their offices and wait for the tenant to visit them whereas a smaller agency will actively go out and look for a tenant on your behalf.

Regarding fees - £200 setup seems high although, if it includes the agent creating an inventory / schedule of condition (which I strongly advise you have created) then it is around the norm. (ie: £125 setup + £75 for an inventory).

10% of the monthly rent for a fully managed service is on the cheap side - the average tends to be about 12%.

The gas safety test (at £20) is a total bargain - the norm is about £50+VAT. £95 for tenancy renewals is quite high - the norm varies between £40 and £75 + VAT. I'm not sure why you are being charged a rent review fee - I haven't come across that fee before.

In summary - the charges might seem high (to you) but the cost of having the property empty, tenantless and generating NO RENT is much higher still !

Good luck,

Mark

[Andy Jones]

I've been quoted by Your Move an initial set up charge of £200 plus VAT making it £235, so if after 6 months you lose the tenant then £200 again, then a monthly service charge of 10% of gross rent received, plus a gas safety check for £20 plus VAT so £23.50, then if the tenant enters into a further term £95 plus VAT so £111.63, a rent review fee of £26 plus vat £29.38, I'm a newbie but this seems very expensive. I would appreciate any views.

Good Morning

Thank you for taking the time to accept a quote from Your Move.

We are not the cheapest agent that you can rent your property through and as Mark has wisely informed you, it is more about finding a tenant quickly to minimise any void period, which will hit your pocket harder!.

Your Move are one of the largest Independant Agents in the UK and we pride ourselves on our ability to run our business in a very professional manner and at the same time have the local business knowledge of smaller agents.

To Instruct Your Move, may involve more cost initially but in the log term we are confident that we will save you money. We have office set up's and IT systems that ensure your property is marketed with the latest technology, on the most visited websites in the UK today and we ensure that our sales teams maintain that personal touch, to get your property Let quickly and more importantly, give you lots of feedback if its not!

Your Tenant is likely to stay longer than 6 months and you can always ask for a 12 month contact, although this might limit your options. The average Let for Your Move is between 11-14 months.

We would always advise that you have a renewal contact drawn up after the initial term, as it gives you the peace of mind of a fixed term. However if you choose to let the initial lease lapse into a "Statutory Periodic Tenancy" (SPT), then there would be no charge as the contract just rolls on until notice is given, by either party.

Our office employees are trained to a high standard and qualified by ARLA (Association of Residential Letting Agents), so any further good advise required is always available.

Good luck with your hunt for an agent and hopefully Your Move are able to help you find a tenant.

Regards

Andy

[Melboy]

I always use 3 Agents......on a "No find.... No Fee" basis. I pay a one up-front fee of £411 inc. VAT.

Never had a problem with this arrangement at all and it works for me and I always seem to get fairly good Tenants as well.

The Tenancy may be for 6 Months or longer but that is gamble and I may have to go back again after 6 Months for a new Tenant and pay again but I do not and will not pay for for extensions to an original Tenancy contract.

That's it no hidden extra's or extra charges.

Average Tenant occupation is 12 Months but I have had Tenants go for 3 years,mainly due to the fact that the properties are in nice locations and to a high standard (Rule No 1).

Oh Yes..... My Son owns and runs his own Plumbing and Heating Company and his charges for Landlords Certs. is £35 inc. vat. for an average size property.

Naturally I pay nothing!!

[Matthew]

In my experience it is not at all hard to find a tenant in the current environment, so I don't think any money should be paid for finding a tenant. All the extras they charge not only to the landlord, but the tenant also are all also just money for old rope. I think that property maintenance and dealing with Tenants problems once they are in are more time consuming and difficult.

[Melboy]

In my experience it is not at all hard to find a tenant in the current environment, so I don't think any money should be paid for finding a tenant. All the extras they charge not only to the landlord, but the tenant also are all also just money for old rope. I think that property maintenance and dealing with Tenants problems once they are in are more time consuming and difficult.

Quite possibly Matthew....and I have been down both roads on this Tenant finding business but I have to say that the prospective Tenant who takes the time to go into a proper Letting Agent's office in my experience turns out to be the better Tenant in the long run but of course there is no guarantee on whatever option you may choose.

[Trenners]

I agree with Melboy .... the best quality tenants will usually search for property and rent a property via letting agents.

The poorer quality tenants will try and find a landlord directly .... this is because the letting agents won't deal with them (often because they would fail the traditional credit checking / scoring systems that letting agents use).

Good luck,

Mark

[Matthew]

Mmmm not sure on that one, I think many people avoid letting agents as it is cutting out the fat in the system. Some letting agents try and charge £100 every 6 months to tenants on renewing their tenancy agreement, plus are not very pragmatic at dealing with Tenants problems and are very unflexible with loads of hidden extras.

Another common view is properties with Letting agents are less well maintained, if the Landlord can't be bothered to market the property himself, then can he be bothered with the maintenance etc? often not. The lack of personal touch with the tenant/landlord makes it easier to ignore problems. This is my experience as a tenant myself.

I have never used letting agents so I can't really comment on that standard of tenant. But the way it could be viewed is the way I view jobseekers. Would you prefer employees who just go to a recruitment agency to find them a job, or one that seeks a job themselves? I see people that use these agencies as being too lazy to seek the jobs themselves.

Also it is very easy (lazy) to just pop into a letting agent and pass over your details than actively search for a flat and speak to landlords themselves.

[Trenners]

An interesting perspective from Matthew .....

Is it laziness that prompts professional employees to use letting agents ... or is that they are very busy people (working to earn an honest crust) who don't have the time to go around all the landlords negotiating their own deals ....

In my experience ... tenants that actively seek the landlord and avoid the letting agent are, indeed, trying to save money by avoiding the letting agents fees BECAUSE ....... they don't have a lot of money / any money in the first place and every penny saved helps.

How many landlords out there have been inundated with calls from "Do you take DSS tenants" when advertising the properties themselves? Loads I bet - because the DSS tenants can't afford to pay the letting agent fees ........

Those tenants with their own money don't "bat an eyelid" at a letting agent fee as long as the property on offer is the one that they want.

Thoughts ?

Mark

[Melboy]

I use to specialise in Company lets so money/letting agents fee's was of a secondary consideration as far as they were concerned. What they were after primarily was quality accommodation at a reasonable rate.

Unfortunately this business has almost dried up in the 21st Century as companies cut-back thanks to Smiler Brown and the Treasury pinching all the money from Companies in taxation.

Mel.

[SPEEDTWIN]

Just because someone has gone to a letting agent to find somewhwere to live what makes you think they dont look privatly as well, in my experiance people dont pick one or the other they look at all options

[Matthew]

Re Trenners point that most don't bat an eyelid at a letting agent fee, I'm not convinced of that. I know I certainly do and people I talk to think it to be outrageous.

I don't know many people that would be happy to part with £100 every 6 months for an "admin fee" just to rent. People renting also, by nature, do tend to be people who are less well off since most would buy if they could. Also alot of people are trying to save whilst renting so every little helps.

Rent is still very much seen as dead money in most peoples eyes in the UK, so I think people do object and should object to paying an admin fee. Do you pay a £100 admin fee when buying a car your paying up front for?

It should all be included in the monthly rent which would make it a lot clearer. In London, I have heard of finders fees (essentially admin fee)of over £1,000, which is just rediculous for a rented property.

You are right though people pay it as often they feel they have no other choice, and what you're saying is that if people are stupid enough to pay it then fair doos.

I am concerned where we are going as a nation though, in the future I can see people aged 70 still in rented accomodation as they can't afford to buy, with little council stock left, will be forced to houseshare, or worse sleep rough. This does sound a bit out there, but alot of people are very short-sighted these days and they may regret just going along paying fees and high rents willy-nilly, when they could have saved and invested in their future.

[Trenners]

Hi Matthew,

The thing is re: letting agent fees that the landlord expects the letting agent to fully reference and credit check the tenant. This costs the letting agent time, effort and money ... and someone has got to pay for this time because, like all other businesses, letting agents can't be expected to work for nothing (although I know loads of landlords who would like their agents to be registered charities).

The letting agent could ask the landlord to pay for the time and costs associated with creating tenancy agreements and referencing and checking tenants into properties etc but all landlords I've ever met are even more careful with their money than "people from planet careful" and refuse to pay ... which means the bill gets passed onto the tenant.......

I agree with you sentiments ... it is outrageous that tenants have to pay letting agent fees ... but this is only because penny pinching landlords (who could easily afford to pay the fees) are always trying to cut costs and pay less.

Controversial ..... probably ..... Honest ... absolutely.

Mark

[Matthew]

Ah, the credit checks I am not too worried the tenant being charged £20 for a rent check. But I am always charged £50 for this by letting agents and then another admin fee.

When I let my properties out I pay for the rent checks as I see it as my cost of giving me some peace of mind that the tenant should be reliable and to weed out potential problem tenants. I would feel a fraud for charging them.

I charge them no admin fee and no fee for a tenancy agreement which can be downloaded from the internet. All these things take such little time, the letting agent should just work out their costs and required profit margin and include it in the one-off fee or monthly percentage of rent. Why do they not do this, because, if most landlords knew what it would cost, they would do it all themselves.

The main problem is........ Letting agents and Estate agents should be on minimum wage (if you look at what skills are required for the job and the general standard of the bozos in those fields) and the reality is they are on £35K.

Controversial ..... probably ..... Honest ... absolutely.

:-)

Mat.

[Melboy]

One of my main complaints with LA's and it will always be so.......Contract charges!

Not sure what Trenners charges so I don't want to upset him!

A few years back (1996) I was charged £75 for Letting Contracts. I was absolutely furious but there was nothing I could about it at the time. Six pages of a photostat contract to be signed by me and the Tenant.

Never again. I have heard that some Agencies charge £125 now for the same 6 pages of contract to Landlords.

Don't have a problem with credit reference checks or paying for them to find me a Tenant but Contracts Grrrrrr!

Mel.

PS.... I use a down loadable contract which is free and comprehensive and is approved by the Law Society.

Cost Nothing!

[GPEL]

CAVEAT EMPTOR

Great discussion here about charges and many sour grapes. If someone does a job for you, expect to pay them for it. If you haven't checked the costs, or could have done it yourself beforehand, then who's the fool, the "bozo" or the client?

[Matthew]

Ah, but should people who can't afford to buy a place be forced to pay large fees to letting agents simply to line the letting agents pocket?

They are cracking down on bank overdraft charges, exit fees etc, I think it's time these unfair admin charges are stamped out and any charge backed up with evidence of real cost.

In GPELs comment it may be the clients fault, but the letting agent often doesn't explain it properly, skeems over it and uses forked tongue. I think landlords are often mis-sold purposely by these devious letting agents.

[GPEL]

Sweeping statements Matthew, which admin fees are unfair? Have you seen the list of fees your mortgage provider could charge for various services lately. Some types of admin related charges may indeed be unfair but I doubt all of them are. If you don't like it go elsewhere or is it a push for a free lunch. Who are these devious agents? Where's your evidence that letting agents don't do this or try to do that. Is it based on the odd experience, national survey or jaundiced anecdotal opinion? As mentioned before, if you can't take the time to read the contract then no good expecting something for nothing later. Hardline response but broad brush opinion undervalues the good value-for-money work that is often done by properly run agencies.

Many LAs/Prop Managers are small business people trying to earn a crust. Undermine their legitimate income streams to get your free service and you're likely your loose the lot, leaving the industry to the mercy of the corporates.

[Trenners]

Hear Hear GPEL ... I know that you and I often share differing opinions (which is the whole point of a forum) - but I think your points are very well made.

The fact is - and all landlords should take note - that if it was so easy to find, administer and run tenancies then there would not be a massive market place for letting agents.

Landlords, on the whole, appreciate the services of the letting agent .... they just don't want to PAY for those services.

Perhaps we have identified a market niche ....... the relocation of letting agencies into Charity shops !

Mark

[GPEL]

With you on this Mark. Choose to let a property and it becomes an income generating business. Use an agent and it becomes a business to business transaction and all that involves, including your own due diligence. Mostly, I'd say that admin fees are legitimate. Agents aren't responsible for the state of tenants or landlords bank accounts nor are they responsible for the high cost of housing; that cost lies with homeowners wanting as much from the sale as possible and others willing to pay it.

Elements of the odd agent or two's fees may be questionable. However, there seems to be a hidden agenda by some landlords. Complaining about income streams to get all admin fees banned is more likely to be from a landlord wanting to increase his own profit. This is self-defeating in the long run. Ultimately, the overheads associated offering a decent level of service would make the business untenable.

If you want a good quality of service from an agent then bite the bullet or go DIY and stop complaining. Take responsibility for your own actions and stop trying to pass the buck. Support your local businesses or lose them.

[Matthew]

I must admit that not all Agents are rip-offs and some do provide a good service without loads of extras, just saying that some I have dealt with in the past are very devious and money grabbing.

The fact remains I would not be able to look the potential tenant in the eye and say: "Firstly you need to pay me a £100 admin fee. Then you need to pay me £100 for the tenancy agreement. Then every 6 months you need to pay me another £100 admin fee to extend the tenancy."

Not only because I would feel I would be fleecing money off them, but also for the fear they would ask me to show evidence of these costs and substantiate the charge.

Don't get me wrong, I appreciate the service, and it is needed, but I often feel that as having somewhere to live is a main basic requirement, lettings agents can, and some do, take the mick.

Also,

I am not saying it to increase landlords profits, quite the opposite.

Letting agents simply need to work out what their total figures are and wrap it all up in the charge to the landlord. At least then there will be more clarity.

However, I can see what you're saying, landlords would more likely choose a cheaper service which charges the tenants extras, hence this is how the agents operate.

[Melboy]

I don't think the argument is about LA's charges it is about LA'S charging a fair rate for a service and what I am saying is that some LA's charge far too much for simple services both to Tenants and Landlords.

I too am a limited company so my crust of bread is no different to the Guy/Gal sitting behind the desk trying to take a crust off of me.

Incidently, the latest nonsense to happen to me last year was in the Letting of my property and the LA Manager wanted a photocopy of my passport for money laundering purposes!!

The Manager even knew me and had known me for 5 years at least. So, I requested a photocopy of his Passport as his Company was registered the same as mine and I too wanted to make sure that he was conforming to Money Laundering rules.

What an absolute bloody nonsense! It is things like this that put you off from even going into an LA's office these days.

[GPEL]

Mel, people in business do something to either produce a profit or because it's imposed on them. The need to provide proof of ID is not your agent's fault and is probably related to a requirement from an insurer or the Financial Services Authority. Take it up with the Government, you'll becoming across this type of thing more & more.

[kevfallon]

I pay £100 to get the tennant, and 10% rent after that, It is only a small company but as people have already said if someone is looking they look everywhere. I like the personal touch, they do what the have to do, sort out all the saftey certs, repairs if reqiured, keep the tennants happy. I am in this for a pension, I have long way to go, but my take on it, good quality, clean and safe accomadation at a reasonable price.

hope this helps,

Kev

[odecar]

I pay 10% per month and agent is a good one. Live 200 miles away and I either trust them or I don't.

I was buying an additional property they were advertising and after a while they suggested walking away as by their visits to the property it was quite clear a business with frequent cash buyers for small packets of product was being conducted next door. Yes they lost a sale but their view is they didn't want to manage a problem like this, even to the extent the removed it from their agency as other investors who they manage for may have bought it.

They did come up with an alternative that a buyer had dropped out at last minute and I complete on that next week.

I hired a decorator to paint the inside and he did a poor job so they warned me and then refused to pay him until he put it right, being very clear that if he didn't then any chance of gaining any work or being added to their contractors list wouldn't happen.

You get what you pay for and yes I have had disagreements but now won't use anybody else in that area and further purchases will always be managed by them.

You get what you pay for and could I save money ? The answer is yes but if it means I then have the hassle of managing contractors etc its just not worth it.