Using a letting agent
I’ve written before about landlords not needing to use a letting agent.
We all know that letting agents are often an expensive and ineffective distraction. They promise to deliver trouble free letting when in reality, a letting agent frequently fleeces the poor tenant with unnecessary charges, whilst costing the poor landlord a small fortune in lost rent. For example, tenants are often ‘encouraged’ to pay for the renewal of a 6 month AST when actually both landlord and tenant would be perfectly happy with it simply becoming a periodic Assured Shorthold Tenancy.
Costs of a full management service
A full management service from a letting agent normally starts at minimum 10% of gross rent and in London is more likely to be at around 12-15% or more if you use one of those posh corporates like Foxtons or Savills.
My experience of full management
I tried a period of a full management service but when I looked at the amount of rent I was loosing and how little the letting agent was doing for ‘their money’ I decided to take back control from the letting agent. One of the annoying aspects of using a fully managed service I find is that many letting agents often have ‘arrangements’ with contractors employed to do work on you buy-to-let. This means you can easily end up funding the letting agents ‘kick back’ rather than having the job done at the lowest price. This is not always the case, but be aware – it does happen!
The other aspect that I find frustrating is that you can get caught in a strange Triad where you have to work through your letting agent to talk to your tenant. Given the letting agent has ‘found them’ for you, this often means that you may never have met them. If there is a problem with the tenancy, then you belatedly find out that you are dealing with tenants you would have never let any where near your prized buy-to-let in the first place. Given you have been delivered a poor quality tenant you are powerless as the problems with the tenancy mount.
I was contacted recently by one Property Hawk user who’s experience with a letting agent highlights the fact that whilst you trust your letting agent to act on your behalf, the comprehensiveness of their actions and rigor cannot always be relied on. One of the main difficulties with employing a letting agent is that there are no standard terms of engagement. Each letting agent can & will operate in a different way so it is down to you as the landlord to ensure that they carry out all the duties that you expect and know what services are included in their fee. Make sure that you have a signed written copy that you can refer to should a dispute arise.
Are there any redeeming features to a letting agent?
You might think from this introduction that there are no redeeming features to the beast that is the ‘letting agent’. Wrong. I do have some positive news to report.
I frequently employ a letting agent on a ‘let only basis’. For this my letting agent charges me the princely sum of £300 to market, conduct the viewings, carry out the tenant reference and provide a signed tenancy agreement. This may sound a lot given the number of options now available to landlords to advertise their properties on Rightmove and even be able to market it for free using the likes of Gumtree.
However, after my recent bout of tenants moving out I was concerned about carrying these voids going into the winter. The useful thing about using a letting agent is that whilst I’ve been away for a week in Sicily my letting agent has been ‘beavering’ away on my behalf.
Last week whilst supping one of my many cappuccino in the Italian sunshine, I had a very welcome call. The letting agent phoned to let me know that had managed to let both my properties. A couple wanted to move into my 2 bedroom terrace straight after the current tenancy finished. The other property was wanted by a single professional man in his early twenties. He unfortunately was not able to move in for 3 weeks after the current tenancy was due to end. However, a little bit of pressurising from me and an insistence to my letting agent to continue marketing the property brought this rapidly down to 2 weeks.
The total cost of these lettings comes to £900. However, when you look at the costs of just one months void and the hassle of having to respond to tenant enquiries and carrying out viewings to me this money well spent. I’m happy with the letting agent I use and I would say they are rather good. I’d be interested to hear about where other landlords stand on the perennial issue of using a letting agent. Are they a landlord’s friend or foe? Please email us your views and comments.
On landlords friend or foe – I would be interested to know where you found the letting agent who only charges you £300.00 on a let only basis. The ones I find charge a months rent plus VAT. Am I doing something wrong?
Hi Louisa, I use a small independent with a low cost base. That might be why.
We found out that if the letting agency goes bust we are likely to be responisble for the deposit. You can be sued for 3 times what the tennat has paid after a simple hearing in a small claims court. It is much safer to insist on putting the deposit in the protection scheme yourself.
We found that the tennat paid on time but we had to wait months for the letting agency to pass the payments to us. Often having to call in or phone over and over to get paid.
We were told that they would inspect the property regularly. On our 2 properties no visits were made, ever, aside from the initial viewing. As a result one house was turned into a cannibis factory. They did nothing whatsoever to recitfy this. No compensation, no help not even compasion.
I would advide people to find tennants themselves. Spend £60 on a couple of adverts in local papers and place adverts in as many newsagents as you can. Then see as many people as possible and choose the best. It is also so much better if you get to know the people moving in. I find that letting agents add hassle not remove it.
I can certainly confirm your suspicions about some letting agents using repairs as ‘kick back’ income. We are both landlords and have a plumbing business. Several letting agents required that we pay them £5 per job or a %age which we were to build into the price so it was always the landlord who paid the premium. We refused but one firm (Select Property Management in Morecambe) still took £35 off our bill for the 7 jobs sent to us that month! We have never worked for them since and advocate to the landlords we do know to always bear this in mind and to ask for us by name. In this way we will tell them the price first before it gets to the letting agent so that no ‘finders fee’ can be added. We have set prices for work such as Landlord gas safety inspections, boiler services etc so there is no quibble about price. We even give a discount to landlords with several properties.
We find that letting agents are often the worst to deal with, it takes ages to get a response via them from the landlord who has to be contacted anyway so why not just talk to us directly? Then the letting agent doesn’t give you the correct information or pass the advice from the tradesman on correctly to the landlord because they are often young girls fresh from secretarial courses and not seasoned agents. The number of problems we have had trying to deal with the ‘triad’ you speak of is quite depressing. It costs the tradesman time and money as well as the landlord.
The one good feature about the better lettings agents is that they should sort out the legal stuff for you and do the legwork when re-letting. Other than that, if you can do all the landlords stuff yourself then you are way better off. Our tenants live next to our old house so for a time they lived next to us. If they were happy to live next to the landlord they are usually not too bad to deal with.
David A. Farrer Ltd
Thank you for writing the article on Letting agent friend or foe, it was an interesting read.
I feel the same about you really. I recently let my 3 bed semi in Wokingham in Berkshire using a letting agent. It cost me around £245 inc VAT for the admin fee plus a monthly fee for finding the tenant and rent collection. I got them down from 8% to 7% for the monthly fee. Also the agent reminds me when the PAT and Gas cert are due for renewal as well as monthly statement.
I guess I could have gone for basis tenant introduction service, but my thinking is that the letting agent charges the whole one month rent which is £895, what if the tenant leaves in 6 months? It means I would have lost 1 month rent and the process starts again. This way I’m spreading the cost over a year. I also live 35 miles away from my buy to let and works Monday to Friday so you can imagine the hassle I would have had if I didn’t use a letting agent to look for the tenants and the possible void period if I did it on my own. The agent found the tenant within 3 weeks too.
I agree with you. It is well worth finding a good letting agent to do the hard work of finding a tenant. I had a tenant leave last July when I was on holiday so I used my agent to do all the checking out stuff and I think I might well do that again. I tend to be a bit soft with tenants, the agent is not! In this case the tenant had allowed a stray kitten in, which the agent discovered when showing a prospective new tenant round. The agent immediately told the current tenant she would have to have the carpets cleaned. It then transpired the house was flea invested, which was discovered before the deposit was returned, so the tenant also had to pay for pest control. I might have missed all that until it was too late for the expense to come out of the deposit.
So in my view my excellent letting agent (Hamlets in Loughborough) is worth every penny.
Hi I have just read the article on letting agents.
I am a landlord my self of several properties I agree with a lot of the statements made on the article as I my self have had bad experience with some agents.
However to rectify all these issues I got together with 2 of my good friends
And opened a letting agent called Global Letting Property Management LTD about 2 years ago as we are all landlords we over come a lot of the fears that we as landlords face when using an agent. We work on the basis that it is your property hence you have the final say as we understand the common landlord as we are all landlords, we work on all properties as if they were our own we don’t just put tenants in just because we want our moneys ASAP but rather wait and get the right person by doing background checks, getting references & by having meetings with the potential Tennants before we even consider putting them in to any property which the landlord has entrusted us with the final decision is always the landlords as it their investment maybe that’s why we have a 100% success rate with all our let’s and have no defaults as of yet!!! Not bad in 2 years.
We are members of organisations where we as members get discounts on equipments materials etc that we put forward to our landlords we have other benefits too such as out of hours call outs to properties. To cut the Long story short we run our business by putting our experience as landlords first so we know what an individual landlord wants from the property and the agent which rectify a lot of problems one may face using an agent any comments pls email me on firstname.lastname@example.org thanks
After reading your comments on letting agents I have to balance the status quo. For years I put an advert in the local QUALITY paper when I had a property to let. Looking forward to the abundance of telephone calls whilst properly up a ladder, making appointments to view and trying to do them in blocks whilst not been embarrassed by 2 viewings showing at the same time. Waisting time waiting for people who never turn up. Then, having to vet them, do they look ok, will they trash my property, will they pay the rent, will I have to evict them. Yes we all know if you want to let properties you have to face this. I have had more than my fair share of bad tenants.
Then I found a local company specializing in letting only. I run my property services business and for £275 they look after all the viewing ( alone worth this in lost time), tenancy agreements, inventory deposits and most of all vet them well. The letting agent contacts me with who they think is a suitable tenant and I meet them and give the seal of approval. Then they take it from there. I meet them on moving in and since the letting agent has taken deposits first rent etc. I have nothing more to do but watch the direct debit hit the bank each month. The letting agent even call me to remind me of the gas safe certificate each year. All this for £275. Its a no brainier.
If you cannot be bothered to get fully involved in letting your property and just hand it over to a letting agent to deal with it all as they see fit while you collect your rent less thier expenses then you cannot moan at what they charge! The quality tenants want to have everything above board and whilst I consider myself a very good landlord, tenants still think of us in a salubrious light. Only the rogues and scammers don’t go through agents as they know they will be found out. But you do it your way? This way works perfectly for me.
I read through your article this morning and I was quite shocked at what I heard when you were discussing price of different letting agents.
I have just started a small family run letting agents that covers south Derbyshire and our ‘let only’ package starts from just £99.
Here’s our web address if you want to check us out: www.fletcherandsons.co.uk
£99? Good luck mate. I don’t think you’ll be around long charging that level of fees.
Hi Chris – Can I please address several points with Your article “Using a letting agent – friend or foe”
The article makes an excellent read. As you can see I am a letting agent in the Leighton Buzzard and Milton Keynes area and due to recent events we are finding it hard to capture landlords who are confident in what we do after they have lost money. I would recommend any landlord to use a scheme such as The Deposit Protection Scheme, who hold the money and will only release it on the agreement of all parties. Let’s face it, during the term of the AST it is the tenants money after all, which brings me onto another point.
The inventory is the life line of any property should damages or losses be claimed. I cannot emphasise enough the very real need for pictures as well as a comprehensive record of the property prior to taking up residence by the tenant. On top of that, the agent should also be doing regular inspections. You contributor above, Howard, has talked about a cannabis factory being set up in his property, which is coincidental really given I have just done a blog on my website about this very subject. http://www.pierceandco.co.uk/press-room/entry/6-months-up-front-yes-please
Your article in my view, is spot on when you talk about the arrangements letting agents have with contractors. Whilst we do have this option we do encourage landlords to use their own maintenance people but the option is there should they need it. To give back control over their expenditure, we agree a maximum monthly fee should the need arise but this does not carry over to the next month if it is not used – Think of it as a mobile phone contract that resets the counter each month J
We get very frustrated by letting agents who “cream off a quick profit” and whilst we do advertise a “renewal fee” for a tenants agreement renewal, we don’t push it. We would much prefer to keep the tenant in the property if they are a good tenant and in the current economic climate this could be a deal breaker for everyone!
So to cap it off we are working very hard to become the “landlords friend”, given most landlords simply do not have the time or possibly the right knowledge or experience, to let their properties out at a level that protects them in the event of problems further down the line.
Pierce & Co
Residential Lettings Agents