nickthestudent Posted June 26, 2013 Report Share Posted June 26, 2013 Hi, I am an MBA student at Imperial College Business School in London and am doing an in depth study of the current lettings market in England. Having been a tenant for a number of years throughout England my current hypothesis is simply that the current lettings agent model is out of date and no longer meets the needs of renters or landlords. This is especially true given the recent advances in technology, which are not being utilised to ensure a smoother experience for all. I would be interested in the views of this forum on this topic. Thank you. Nick Link to comment Share on other sites More sharing options...
Mortitia Posted June 27, 2013 Report Share Posted June 27, 2013 Most people are in business to make money. A section of the population need to rent homes from landlords - not all using letting agents. Apart from a phone, pc of some sort and a printer what else could we need? I want to know what type of modern technology will get bad tenants to pay rent, remove them from the property when they don't then repair the trashed property ready for a new let? Have I missed the point? Link to comment Share on other sites More sharing options...
Chestnut Posted June 27, 2013 Report Share Posted June 27, 2013 "....my current hypothesis is simply that the current lettings agent model is out of date and no longer meets the needs of renters or landlords." If you could expand how and why you come to this negative looking hypothesis you might get some useful feedback from this forum. Meantime I concur with Mortitia. Link to comment Share on other sites More sharing options...
Melboy Posted June 27, 2013 Report Share Posted June 27, 2013 "....my current hypothesis is simply that the current lettings agent model is out of date and no longer meets the needs of renters or landlords." I agree with previous replies. You need to come up with some answers to that hypothesis you are stating., Link to comment Share on other sites More sharing options...
Richlist Posted June 27, 2013 Report Share Posted June 27, 2013 Well I certainly think the OP is on the right track. I think every tenant should have.....(but often has absolutely no idea ) :- * a thorough understanding of what getting a CCJ really means. * what legal committment they make when they sign tenancy documents. * a good understanding of the term ' clean & tidy' and I think agents need to : * understand that they work for the landlord.....not the tenant, their contractor or any other party involved in the tenancy. Link to comment Share on other sites More sharing options...
suziesuze Posted June 29, 2013 Report Share Posted June 29, 2013 Here here to above !! also im considering court action to some ex "NON PAYERS|" what are the implications of ccjs ? that If they apply for jobs it will tarnish their names and applications for credit in the future or future rentals ? I seriously want to do this as all the money they owe I feel some justice would be served if I at least put this blight In their lives for what they have done to us financially and emotionally ! Link to comment Share on other sites More sharing options...
nickthestudent Posted July 5, 2013 Author Report Share Posted July 5, 2013 Hi all, thanks for your responses. I started looking at this topic due to the poor service that I as a tenant had received from an agent but this also feeds through to the entire relationships that the agent has and its relevance in the modern age. I am in no way saying that the basic concept of renting a house is wrong, in fact it is an essential service and will become even more important given 'generation rent'. However, a huge variety of consumer polls cite that the agent - tenant relationship is poor and I do not think there is any inherent reason why it should be. I feel that if there is a way to improve these relationships that Landlords will have a happier tenant and that a happier tenant will be a better tenant and look after the house / flat in a more considerate manner. It occurs to me that the key is to ensure that you do not get bad tenants in the first place. Speaking to a number of landlords there seems to be a myth that local agents have a pool of good tenants available, whereas in reality it tends to be the first people that ring up that gets the house. Furthermore most referencing is done after a deposit has been taken and after some time has passed from the initial marketing so that there has been an escalation of commitment, which means that all parties involved may finds themselves simply satisfying rather than maximizing their demands for a quality tenant for fear of running out of time and having a void tenancy. The basic point is that at each stage of the process I believe that there a number of things that could be finessed especially given the power of the internet. For example the management process could be made much more transparent by basing it on a web based portal so that Landlords could oversee the interaction between tenants and agent either in a passive or active way. Some tenants have reported that they stop reporting problems because agents are unresponsive, this is bad for landlords as small problems have a tendency of leading to much larger and costly issues. Therefore from my slightly biased tenant view I feel that if you can improve the relationship between agent and tenant without necessarily affecting the cost that a landlord is charged that you can actually improve the whole relationship. Nick Link to comment Share on other sites More sharing options...
Grampa Posted July 5, 2013 Report Share Posted July 5, 2013 If letting agents were regulated that would get rid a lot of the crappy agent in one swoop. Though I am not saying all un-regulaed agent are bad because they are not and there are bad agents that are regulated in the same manner that there are good and bad solicitors. Tenant and agent relationships would impove hugely if the tenants read their tenancy agreements instead of getting the hump when told they shouldnt have painted that room pillar box red and wiil charged for putting right. Link to comment Share on other sites More sharing options...
Melboy Posted July 5, 2013 Report Share Posted July 5, 2013 It occurs to me that the key is to ensure that you do not get bad tenants in the first place. Speaking to a number of landlords there seems to be a myth that local agents have a pool of good tenants available, whereas in reality it tends to be the first people that ring up that gets the house. I would certainly agree with that statement. Not forgetting that most LA's are on commission especially in the large national agencies and even more so those LA's working self employed within a franchise agency. This should not make any difference to the procedure of securing a tenant for any landlord but it does. I have not used an LA for years now prefering to undertake my own sourcing of tenants and doing the paperwork myself etc. etc. this arrangement works for me OK and at least I don't have to hear those immortal words when contacting an LA to sort out an issue. "They are at a meeting I will get him/her to call you back". They never do of course. Grrrr! I have lost count how many times that has happened in the past. Link to comment Share on other sites More sharing options...
Richlist Posted July 5, 2013 Report Share Posted July 5, 2013 I started looking at this topic due to the poor service that I as a tenant had received from an agent but this also feeds through to the entire relationships that the agent has and its relevance in the modern age. Tenants don't have any relationship with the agent. The agent is employed by the landlord and the agent works for the landlord NOT the tenant. Furthermore most referencing is done after a deposit has been taken ..... Most ? Who says ? On what basis have you arrived at that conclusion ? Therefore from my slightly biased tenant view I feel that if you can improve the relationship between agent and tenant without necessarily affecting the cost that a landlord is charged that you can actually improve the whole relationship. How many tenants actually check out their future landlord and his agent......not very many I suspect. If tenants can't be bothered to find out how their landlord & his agent operate and wether it is going to meet their requirements they may well be dissappointed.....like you. Link to comment Share on other sites More sharing options...
nickthestudent Posted July 8, 2013 Author Report Share Posted July 8, 2013 Hi all, Thanks again for your comments. Just in response to the last post, I have made a few comments. I started looking at this topic due to the poor service that I as a tenant had received from an agent but this also feeds through to the entire relationships that the agent has and its relevance in the modern age. Tenants don't have any relationship with the agent. The agent is employed by the landlord and the agent works for the landlord NOT the tenant. * Obviously tenants do have a relationship with the agent, that is the point of them. Who they are paid by is a different matter but there is a question whether landlords would benefit from a better relationship between the agent and tenant, which is notoriously bad. Furthermore the common practice in London especially, is to charge the tenant certain admin fees. These are generally around £250 and for the big letting agents this adds up to big money. This obviously creates a conflict of interest and is a debated but common practice. There is currently a government select committee that is looking into this among other things and whether or not to ban it. Furthermore most referencing is done after a deposit has been taken ..... Most ? Who says ? On what basis have you arrived at that conclusion ? * My discussions with agents and tenant. Although I should perhaps be clearer and specify I meant the holding deposit that an agent will take following rent negotiations but prior to the contract signing. However, my point here is that referencing is usually done at a point down the line where if a problem is found then the chance of void rental periods has significantly increased. Therefore from my slightly biased tenant view I feel that if you can improve the relationship between agent and tenant without necessarily affecting the cost that a landlord is charged that you can actually improve the whole relationship. How many tenants actually check out their future landlord and his agent......not very many I suspect. If tenants can't be bothered to find out how their landlord & his agent operate and wether it is going to meet their requirements they may well be dissappointed.....like you. * This is a fair point to a certain degree. However, I would argue that it is relatively hard to find out this information especially for a high demand / low supply area like London where the number of agents is vast. It would also be interesting to discover whether many landlords take the time to ascertain what an agent's general relationship is with its tenants and again whether landlords in general value the service that a tenant receives. For many income focused landlords I worry that there is little thought given to this so that poor agents can continue to survive, despite there being certain, if unquantifiable, positives of this being a good relationship. I am currently carrying out interviews of landlords, if any landlords would be willing to discuss their processes then I would be keen to hear from you. Please contact me on nickt_1987@hotmail.com Link to comment Share on other sites More sharing options...
Grampa Posted July 8, 2013 Report Share Posted July 8, 2013 * . Furthermore the common practice in London especially, is to charge the tenant certain admin fees. These are generally around £250 and for the big letting agents this adds up to big money. This obviously creates a conflict of interest and is a debated but common practice. There is currently a government select committee that is looking into this among other things and whether or not to ban it. I am not sure I agree it is a conflict of interest but I agree the amount charged by some of the bigger agents is outrageous. But the admin/ref fees charged are part of the business model/fee structure for most agents and without them a lot of agents wouldn’t survive or the commission % charged to the landlord would increase greatly and or the service would drop. Below is some rough calculations I did for a small agency charging 7.5% with no extra ref/admin fees based on 100 properties at an average rent of 750 pcm which would generate £67500pa. You would need 2 full time staff at least to manage that amount of properties. It is also likely to be a lot less income than worked on as there will be many 300, 400 & 500 pcm properties in real life. Outgoings pa 40k wages (1 X 25k pa + 1x15k pa) 10k rent 1k PI & contents insurances 2k Utilities (water,electric, rates) 1k phones(2 lines)/broadband/fax/mobile 6k zoopla/righmove 1k legal courses/training (including traveling costs) 1k Stationary 1k Leaflet delivery & printing 1k PC Maintenance back-up etc (including anti virus membership) 1k Newspaper ads etc 1k Accountancy fee 1k Letting software 67K TOTAL so far and there is loads more to add such as corporation tax, company paye. office cleaning, window cleaning, petrol, car insurance, bank charges, fire extinguishers service, data protection membership, ombudsman membership, office maintenance. tea & coffee, printer ink, any lease equipment, any membership to arla/Nals/TDS. Xmas party, Postage. Start-up loan repayments, webhosting, annual domain name fee, credit check costs, any commercial rubbish disposal costs, parking, to let boards erection(£5 per movement), land registry checks, petty cash and any freeholder maintenance and insurance bills you are liable for as there is a good chance you will have a full repairing lease. Increase the commission and you break the vat threashold and your accountancy fees increase and you then have to get your stationary reprinted Link to comment Share on other sites More sharing options...
nickthestudent Posted July 8, 2013 Author Report Share Posted July 8, 2013 Thanks for that and it is certainly an interesting point and one I was considering myself. There are a number of government agencies looking at these fees currently and Shelter are running a campaign to get them banned, which has been successful in Scotland. Therefore there is potential that these fees could become illegal in the future. If, as you say, these fees are important in propping up a bloated and inefficient service then this change in regulation is likely to be the point of a correction in the market. The solution could be a more efficient web-based service, which reduces some of the fixed costs that you noted above, most notably the 10k rent as well as a broad consolidation of the market. The question I am looking at is trying to discover what landlords really value and so what service they actually want, which may actually differ from that currently provided. It is also important to look how this aligns with the needs of tenants and therefore in what form the agent should be so as to act as the middle man...this may all come to nothing but it is certainly an interesting area of research. On a side note, my view is that if the agent is meant to be the landlord's agent then receiving money from the other party clouds this relationship. For example many agents charge a fee for references from tenants but the question is now that the tenant has paid for this will it be properly unbiased and give the agent / landlord the best advice. One could consider that a member of the Competition Commission is the agent of the British people but if they then charged companies to carry out e.g. competition checks for big mergers then this would look slightly suspicious. Link to comment Share on other sites More sharing options...
Richlist Posted July 8, 2013 Report Share Posted July 8, 2013 There are 3 main points from your post that I would comment on: 1.Agent admin fees paid by tenants......has been covered by Grampa who, as an agent knows more than I about this so I'd tend to agree with his comments. 2. Tenant / agent relationship. I think you need to differentiate between the different types of services that agents offer landlords. Whilst agent do offer a 'full' package that includes everything including day to day management, they also offer a tenant find service only. I don't think its unreasonable to expect a tenant to enquire about the agent or anyone else they are going to work with if the tenancy goes ahead. Tenants need to take some responsibility and be pro-active instead of just complaining that the agent is not much help. 3. Referencing problems.....good agents will explain to applicants that CCJ's & debt etc will affect their reference outcome BUT, again is it so unreasonable to expect an applicant to ask the person checking their references what sort of things will negatively affect the outcome ? I don't think so. In over 10 years and hundreds of tenants I've NEVER had a single applicant check me, the landlord, out. That kinda says it all doesn't it. Applicants can't be bothered to ask a few simple questions or make a few checks or enquiries......but are always happy to complain after the event. I think a bit more self help wouldn't be a bad idea. Link to comment Share on other sites More sharing options...
Grampa Posted July 10, 2013 Report Share Posted July 10, 2013 I have posted the below on another topic as well but it is revelant to this this one also. Quote from a a debate in parliament this week with Baroness Hanham "We recognise that a minority of agents offer a poor service and engage in unacceptable practices, which is why we are already changing the law to require all letting and managing agents to belong to an approved redress scheme. This will give tenants an effective way to address complaints. However, we are unconvinced that regulating or banning specific fees is necessary because whilst landlords and letting agents are free to set their own charges they are prohibited from setting unfair terms or fees under existing consumer protection legislation. Where a consumer believes that agents are in breach of this legislation, it is open to them to draw this to the attention of their local trading standards officer. Disproportionate regulation will just drive up rents and reduce the choice of accommodation on offer to tenants" Link to comment Share on other sites More sharing options...
Richlist Posted July 10, 2013 Report Share Posted July 10, 2013 Disproportionate regulation will just drive up rents and reduce the choice of accommodation on offer to tenants" Don't see why this should be a problem for me........as a landlord I'm all for driving up rents & reducing choice.......thats gonna make my business more profitable. Link to comment Share on other sites More sharing options...
nickthestudent Posted July 12, 2013 Author Report Share Posted July 12, 2013 Thanks for all your replies and especially to those of you who offered to be interviewed. This initial interview process has helped inform and develop the below survey, which I would really appreciate if any landlords had 2 minutes just to quickly fill out. Thank you very much. https://www.surveymonkey.com/s/T8RZKJN Link to comment Share on other sites More sharing options...
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