Letting agents in the firing line
Letting agents are not the ‘favourite kids’ on the property block. Landlords tend to view them as overpriced middlemen and most tenants eye them with mistrust. So do letting agents deserve their reputation? Well, sometimes, yes.
Landlords need to be on their guard when employing a letting agent. Some letting agents take a big cut for arranging maintenance work on rental properties, despite getting charging a hefty full management fee to a lanldord, of as much as 20% of the gross rent. It’s common practice for letting agents to take a cut from the cost of the work to add to their profits. Many landlords are totally unaware of these little ‘side deals’ taking place under their noses.
Nobody loves letting agents
The politicians can ‘smell the votes’ and letting agents are an opportune target.
‘Generation rent’ are an increasing portion of voters. With less than a year to go before the next general election, the parties are bending over backwards to appear tough on both landlords and letting agents, and it looks like both major political parties have it in for the ‘poor old’ letting agent.
The Coalition act against letting agents
The Coalition have just announced a clamp down on letting agents who don’t list all their charges to landlords. This seems to me to be sensible and good practice. Currently letting agents were only required by the Advertising Standards Council to list the fees they charged to tenants. Unfair? I think so. The new rules will require letting agents to also make transparent the charges to landlords. Those letting agents that fail to do this will risk tough new fines.
Labour’s attack on letting agents
Labour’s attack on letting agents has a stronger tenant focus, that follows more closely a campaigning subtext of ‘desperately seeking tenant voters’ and attacking landlords.
The Labour member for Walthamstow, Stella Creasy, tabled the opposition motion calling for letting agents to be prevented from charging twice for the same service to both a landlord and a tenant. She called it “a fundamentally anti-competitive corporate practice”.
Property Hawk’s view
Landlord and tenants need to recognise that letting agents do not adhere to any set fees and charges. You need to make sure you check their letting agency agreement thoroughly when picking a letting agent to see exactly what you are paying, or not paying for. It’s down to you to pick your way through the charges to have a clear idea of what service you will be getting.
This flexibility in fees and charges can be seen as a good thing, however. It provides greater consumer choice. A landlord can decide upon exactly what level of service they are looking for, and pay for exactly what they want. Landlords and tenants are best served by a vibrant letting agent industry. The lack of barriers to the industry brings many suppliers all competing on price and service. Non of us will be served by the banning of charges on one thing or another if that revenue then is just clawed back by adding it onto another service. Let’s keep it flexible.
Stamping on the letting agents might be good press for politicians, but letting out property does cost, and somewhere along the line the letting agent has to cover these and make a profit.
Arguably landlords are better off without employing a letting agent at all. Have a look at our piece discussing using a letting agent against the relative merits of a landlord taking charge of managing their rental properties.