Lettings Fees: is this fair? Please help.

[Niksan]

Dear all,

New to this forum but really need your help...

My wife and I are moving overseas with my job and are looking to let out our two bed flat from early January. We have found an estate agent on our high street, who seems decent, but are a little concerned about the fees that he is proposing. We have decided to go with a managed let because we will be living be so far away.

The agent initially asked for 15% + VAT for a fully managed service but we have negotiated this down to 12% + VAT. However, for the second year with the same tenants, the agent is asking for 10% + VAT. This seems really steep to us as there clearly won't be a lot of work for him to do to keep the tenancy going. Is this fee reasonable? If not, what sort of rate should we be trying to negotiate down to?

We need to go back to the estate agent tomorrow as we have to get the property on the market asap.

Your advice would be very welcome.

Many thanks in advance.

Nik

[Grampa]

I have never heard of a letting agent reducing the fee for full management for later years with the same tenant I wouldnt do it.. The fees change from area to area so cant comment on the rate you need to speak to other agents in the area..

[Chestnut]

there clearly won't be a lot of work for him to do

How do you know?

You are very remote from the property. Anything can happen. For example, have you ever had a burst pipe whilst away?

Ask your agent what they offer for the 10% and look at a few other Agency sites to compare.

[Jas@FiveTrees]

'Clearly won't be a lot of work for him to do'

You never know what will come up..

I have just dealt with a panic call from a tenant (whose landlord is in South Africa) on a Saturday night as their electrics were cutting out.

I would definitely approach more than one agency and get the best deal / service possible. This will also give you a feeling for what is a 'normal' rate in your area.

[Niksan]

Sorry, perhaps I should have been clearer. The management fee is 5% of the 12% in the first year; the other 7% is for finding the tenant, credit checks, collecting rent etc. The 5% management fee won't change in the second year but the agent is proposing to reduce the additional 7% to 5%. I think this is a little harsh as the agent won't be looking for another tenant but please correct me if I'm being unfair.

[Melboy]

Just check that the LA is not charging you a renewal fee for setting up a new tenancy contract at each years end as well with the same tenant in place. It's illegal but still goes on with some LA's.

Regards to your original question you have to look at all the options and choose an LA where your getting service with what your paying out. Check for the hidden charges as well!

Personally I would go with an LA who is ARLA registered.

Mel.

[Richlist]

Just check that the LA is not charging you a renewal fee for setting up a new tenancy contract at each years end as well with the same tenant in place. It's illegal but still goes on with some LA's.

That of course doesn't apply IF the tenant & landlord actually agree to have a new contract when the old one ends.

In that case the letting agent is fully entitled to charge for the admin' work involved in processing a new AST.

[Melboy]

Just check that the LA is not charging you a renewal fee for setting up a new tenancy contract at each years end as well with the same tenant in place. It's illegal but still goes on with some LA's.

That of course doesn't apply IF the tenant & landlord actually agree to have a new contract when the old one ends.

In that case the letting agent is fully entitled to charge for the admin' work involved in processing a new AST.

True! But some LA's are getting around the new ruling by saying to the Landlord that a rent increase is required at the end of the AST period so therefore a new AST is required which it probably is at some high price for running off a photostat copy and posting it off to Landlord/Tenant.

Newbie BTL landlords need to be totally aware of what they are signing up to and to read the small print in detail.

Mel.

[Richlist]

.... some LA's are getting around the new ruling by saying to the Landlord that a rent increase is required at the end of the AST period so therefore a new AST is required

A rent increase may well be required. Market rents, in many areas, are rising at a fast pace. A landlord needs to be able to differentiate between an agents' suggestion, advice or instruction.

which it probably is at some high price for running off a photostat copy and posting it off to Landlord/Tenant.

The work involved in providing a new AST is a little less simplistic than you make out .....especially if you want it done correctly. The work may involve new RGI or a new guarantor or the addition of a break clause etc...... and a charge of £50 + vat would not be unreasonable.

Newbie BTL landlords need to be totally aware of what they are signing up to and to read the small print in detail.

Agreed, but, I'm of the opinion that new landlords need to educate themselves in ALL aspects of renting and letting. Its not beyond most people to spend a week or two reading a book on the subject....but of course many of them don't.

Incredibly, some even think that posting a couple of questions on an internet forum and recieving an anonymous reply is all they need to make their landlording successfull ! If only life were that simple.