Letting Agent's Costs

[vinvin]

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.

[vinvin]

You are using a corporate company so in most cases they will not be flexible on pricing.

An initial set up fee is now usual, prices do vary from £0-250 usually. A renewal fee when the tenant is renewed. Can be a fee similar to the initial set up, but usually not. if the house is up together most tenants will stay 16 months on average.

Renewal fees at 6 months ABSOLUTE rip off, no need to renew a contract at all.

£20 for a Gas Safety check!!! you need to check that figure, it is more likely to be £60-90 in portable appliance test.

Rent review, absolute waste of money, dont mess around with the rent once the tenant is in there, since anything you gain could be lost in costs if they leave because of the increase. When a new tenant eventually goes in a good agent will obtain market rent level for you anyways

With the corporates all that glisens is not gold, the smaller independants are usually more competative on costs.

My best advice tho is dont instruct on price, instruct on who you feel comfortable with. Fundamentally all do the same job, but the independants dont have a higher management structure in which to sustain.

Here speaketh the words of a Managing Agent

[Preston]

Hi

My best advice is to use lettings agents for the tenant finding aspect of the service only and not for ongoing management, but I do understand that if you are new to the business this might be daunting. Negotiate on the letting fee if you can. Some agents will, others wont but it my experience there is no relationship between their quality and their willingness to offer discounts - in other words, the cheapest can sometimes be the best. I would always refuse to sign a letting contract which requires a further fee if the same tenant is offered a new tenancy - I've never had an agent argue with this.

I agree very much with Melboy on the issue of documentation. There are many websites with free tenancy agreements, guarantor letters, section 21 notices, etc. Having said that, I have found that some of the best documents are on the RLA website and cost £5. They are in plain English and come with fairly easy to follow notes on how to fill them in.

As for the fees charged, some of the other contributors have had more success than me in pushing the price down. I have found that for a tenant finding service the bottom price seems to be around £350 (incl VAT) in central Lancashire. If anyone has any advice on how to do better than this, I would be very pleased to hear from them!

Preston

[hein25]

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

I have for 11 years used a letting agent in central london to find a tenant for me as i dont live in london but have always managed the property myself. Almost always the property has been let to the first person who has viewed the property within a week. For this the agent has charged me over £1500 pounds and if the same tenant renews the tenancy the agent wants another fee similar to initial fee.

This I find is a lot and so this time I am finding my own tenant as I do elsewhere. I do not know if the agent charged the tenant anything , I will not be charging the tenant refrencing fee or admin as it is no big deal .

This is ofcourse London where workmen will not get out of bed for less than £50+ an hour .

Some of them are not worth £5 an hour! The gas safety check/boiler service is £80 and now the EPC which I will pay £65 this week , for one bed flat, for what it is worth nobody has asked for it as yet.

hein25

[CH1]

I've only used Letting Agents for tenant find only and price has varied between £150 to £250 + vat. I don't use them to manage the property. The first one I ever used for £150 was a small independant and he was the best and got me a tenant within a week.

Unfortunately he's changed his field to do only servced apartments now and doesn't do lettings, so I was forced into doing the tenant find thing myself, so far done 3, all seems well, nothing too drastic. The only downside is when prospective tenants do not turn up for a viewing and don't bother to contact you to tell you.

I still use a letting agent for tenant find if property is far away in another city and is too far but I'm not having much luck with those as I cannot be as hands on and as a result agent is taking a while to find me a tenant, but I have no choice.

[Preston]

Hi

So, I know this is probably a very basic question, but how do you go about finding a tenant for yourself?

Incidentally, I heard the other day that a while ago the Dutch equivalent of Rightmove has allowed individual landlords - as well as agents - to advertise properties on their site. Apparently their turnover has more than doubled!

I'm not sure whether the legal framework is the same in Holland (property misdescriptions etc) but I do wonder whether one of the big websites will go this way in the future, perhaps when the property market picks up again?

Bernie

[J4L]

Interesting thread.

Coming from an agent's point of view I would say that set up fees are a standard norm not for any other reason than somebody did it once, got away with it and others followed suit.

What you will find is most established and new agents tend to jump on the bandwagon and follow this trend.

I totally disagree and have set my own set of fees to match what I think is a fair price for the time and effort that goes into marketing a property, finding a tenant, installing them and then setting up an agreement.

I got accused this time last year on this very forum of offering a champagne service for the price of a pint but I knew what I was doing.

I'd hate to post what my pricing structure is because i'll be accused of advertising, but suffice to say, yes there is a set up fee for the Landlord, plus an admin fee for the tenant, these are a one off fee that will never be repeated on that property. Subsequent agreements do not incur a charge on either tenant or Landlord. Nor do they get charged for inventories, check ins/outs, inspections or anything that has been mentioned above.

Our management rates are 25% less than any local company, and although we started only 18 months ago are now probably one of the largest in the area.

Our prices do not include VAT at present but our now, very loyal Landlords have a written guarantee that if/when we do this we will take this on board by offering their management charge at 1.1% below what they currently receive so as not to pile it on them. OK so I know that we'll end up paying out a lot of money but I'm confident by that time we'll be so well established in this and surrounding areas that we'll be able to suffer this small cost in comparison.

It's about getting the market to change their way of thinking rather than you sit in the same room and become 'one of them'

I strongly believe that we can alter the way that others do stuff and thus WE will be setting the standards rather than copying others.

Before Simon pipes up 'pipe dreams' I'd like to say that already we have changed the way lots of things are done locally by doing it differently. Landlords are buying and bringing these new properties to us, they are telling all their landlord buddies about us and they are slowly coming on board. Tenants are staying and if they want to move they come to us to find them a new property.

Of course a lot of it is about price but you still have to get a good service. It's an unknown quantity if you haven't done it before so you need to speak to the other Landlords locally and see who and why they use whomever they do. Everyone has a nightmare story, Landlords and Tenants alike. Managing well is keeping those nightmare stories to a minimum and to do that you need to work hard at what you do.

Here endeth the sermon

Oh and PRESTON?

Look out for the new Just4Let Property portal in the coming months, it's being built as we speak and WILL allow Landlords and agents alike to advertise for as little as a £1/week.