Shelter and the letting agent fee campaign

[Grampa]

http://www.lettingagentsupportklub.co.uk/letting-agents-blog/entry/shelter-letting-agent-fee-campaign.html

[Carryon Regardless]

I've not read it all but believe I got the jist.

Shelter wish to protect the poor T again. No consideration that where there is fair competition T's can shop for a cheaper option, after all cartel legislation encourages fair competition.

"Shelter a worthwhile charity" my ass.

[Richlist]

Whats your 'ass' got to do with anything ?

[HomeXperts London]

it looks like a fair blog expanding the views of agents and some landlords.

however the law looks like all us agents will have to do is simply show exactly what the cost will be. therefore the legal system has a better grasp of competition than shelter and less for us to worry about unless your agency fees are ridiculous.

overall I think it is biased however when is any blog or written work not biased? the potential is expanded to scaremonger levels though and I do not believe landlords would simply ignore good agencies. you will however always find someone who thinks they can go it alone as a new landlord and I wish them luck.

for everyone else there's a much less stressful way and a better way

[Grampa]

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"

[Richlist]

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.

[Grampa]

Ah yes but if a agent lost the ability to charge say £250 in ref checks and check in/out fees based on 2 tenants and a guarantor they have to claw it back somewhere or take the hit themselves. Remember there is a cost of part of these checks which the agent has to pay for such as the ccj, bankruptcy and land registry checks so it isn’t all profit.

So if we take a property which is £650 pcm earning a agent £1170 over 18 months (as an average tenancy length) at a commission rate of 10% fully managed, the rate would have to increase by an approx extra 2% to the landlord for the agent to get same in fees.

So the landlord would then have to increase the rent to about £663 to achieve about the same income and no benefit to him so far. So any extra increase the landlord wants is going to be harder to justify.

These figures are only approx and they can change greatly with different rents and tenancy lengths. You could say if a agent manages to get a landlord to agree (which will be tough) to a 2% increase he is quid’s in on bigger and longer tenancies but a lot of landlords can’t afford to landlords at the present rates and moan when repairs are needed so they will just move their properties to smaller agents with less fees for less service which then gives the letting industry a worst reputation that it already has.

The only way to do it is to regulate the industry at the same time which will improve the standard of service and get rid of most of the Mickey Mouse agents.

[Richlist]

OK that all makes sense.

But if there are landlords who's finances are so close to the edge that they cannot absorb a 2% increase then perhaps they are in the wrong business and ANY blip will tip them over the edge into financial ruin.

You wait until the interest rates start to creep up by a few points......as they undoubtedly will eventually........there are lots of people, including landlords that are going to fall into a very large hole.

[Grampa]

Ah well that doesnt bother me because 9 times out of 10 I get to sell the property so a win win for me.

[Richlist]

yes......and I might get to buy at a price that makes it worthwhile.

[Carryon Regardless]

The causing of LL's to fall is a bit worse than you think.

I agree that as interest rates rise there will be the inevitable increase in the number of LL's loosing their rental properties (or just giving up due to no profit no equity).

You then have much greater social instability which is what, I believe Brown could foresee. Don't forget it isn't just the rental properties that see the increase so many home owners will suffer too, the failing LL's being a part of that group.

All these homes coming onto the market will prevent value rises or reduce the values further. Many (pre 2008) have designed their portfolios as a retirement plan on the principle that at some future point they sell some to own the rest outright due to increased property values

We have, in my experience and against most of what I read, reducing rents- certainly reducing profits, and certainly ever increasing responsibilities.

If the 'light at the end of the tunnel' potential for increased equity is put further out of sight many will seriously question the point of running what is turning into a business that is no more than a Govt agency, housing as they require and to their dictated requirements.

Methinks they interfere tooooo much and should let supply and demand and fair competition find it's own balance. But I think you all knew that already.

[Richlist]

We have, in my experience and against most of what I read, reducing rents- certainly reducing profits, and certainly ever increasing responsibilities.

Thats not my experience at all. In 10 years I've only ever experienced rising rents, increasing profits and a never ending stream of income opportunities. Increased responsibility ?.......yes, but my agent handles all that for me so it doesn't make an impact on me.

If the 'light at the end of the tunnel' potential for increased equity is put further out of sight many will seriously question the point of running what is turning into a business that is no more than a Govt agency, housing as they require and to their dictated requirements.

Its been some years since I used increasing equity as a measure of the benefit of my property portfolio. Its been replaced by rising rents and the resulting increased profit from that income instead.

[Carryon Regardless]

In the areas where HB is prevalent the benefit changes, such as only shared room allowance for under 35 years old, has an impact on the whole rental market there.

Only this week I had a 31 year old who can only get £220 pm and there are many of these. Assuming other LL's, like me, reject these applicants that becomes a fair amount of T's not filling our properties. We then have a lesser pool of potential T's so demand is lower, with the resultant lower rents.

In this area I could previously charge up to £385pcm for a 2 bed terraced (peanuts to the South I know), for some months I have been advertising at £355. Soon I shall reduce that to £325. This becomes further necessary due to the council tax changes that soon I shall be paying 150% of the full rate.

Then to reduce the no profit situation further this area has selective licencing, mine is one of thousands selected. £750 for 5 years, no refund if you sell earlier and any next LL pays again. On top of that there are inspections to accommodate and pay for.

A value of approx £80k in 2008 I honestly couldn't get £30k now. I'm glad I sold 2 of 3 back in 2008 but this one remaining means I am a social LL. Those with portfolios in the area won't have a desire to be doing this for much longer I'm sure.

I am involved in other areas that aren't as bad but the potential for a slide toward that is something I recognise. This year most of my rents weren't increased and advertising for new T's I found the need to reduce.

RL I'm pleased to hear that you are riding high on a wave but I believe your situation to be unusual. The more the Gov't put pressure on the LL loading the responsibility and effectively taxing any present day profit the closer they are to a social disorder they can't afford.

Can you imagine the mortgage providers developing mechanisms to handle the number of adverse tenancies they would have if many LL's throw in the towel ?

[Richlist]

Thats an interesting story and its not a situation anyone would like to find themselves in. It goes to show how different geographical locations, property types, target tenants etc etc can impact a landlords lot.