What fees would reasonable letting agent charge to T?

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  • What fees would reasonable letting agent charge to T?

    How much is a reasonable amount for a letting agent to charge as a fee to the tenants who want to rent a flat from them?

    I need an agent for four flats that are sitting empty as I am too busy to get them rented and no one wanted to buy them. I can pay 9% plus vat for a fairly small agent who I have used before and he did an alright job.

    Thing is he charges £150 fee to the tenant. Seems steep to me. Do other letting agents charge this much and do they find they have longer void periods because of it. I also have to pay £60 for marketing as a one off (I assume per flat) and I have to pay about £60ish for an inventory clerk (the tenant pays the same for that.) and I pay the clerk again at end.

    The tenant is therefore paying about £200 up front before they have even stumped up the deposit and first months rent. Also I put the deposit in the tds myself so I assume that is because he doesn't want any liability if he forgets to put it in by the deadline. This is a bit of a concern because he has to give it to me in time for me to get it in the tds by the deadline and if I miss it because of his slowness I can't use an s21.

    I would be grateful for any thoughts from other letting agents, particularly on if you think his fees to the tenants are too high.
    I'm trying to raise awareness of Myotonic Dystrophy, Pre-implantation Genetic Diagnosis (PGD) and In vitro fertilisation (IVF). Follow my PGD blog and please pass it on to any one you know who has an interest in PGD or IVF.

  • #2
    Agent is L's agent (not T's) so charges L (not T).
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

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    • #3
      Originally posted by jeffrey View Post
      Agent is L's agent (not T's) so charges L (not T).
      I don't get what you mean as they do charge the tenants an aplication fee? Are you meaning that they charge the tenant the fee on behalf of L and then charge me the same amount for the service? So effectively the £150 is my revenue but then also my cost so it cancels itself out. It doesn't appear like that on a letting agent statement, I wouldn't have even been aware of it if I hadn't asked.
      I'm trying to raise awareness of Myotonic Dystrophy, Pre-implantation Genetic Diagnosis (PGD) and In vitro fertilisation (IVF). Follow my PGD blog and please pass it on to any one you know who has an interest in PGD or IVF.

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      • #4
        Arusha

        Im a letting agent and we charge our tenants an admin fee which covers the referencing and tenants contribution towards inventory and paperwork, check in/out etc. We also charge the landlord a set-up fee and deal with the deposit (either DPS or TDS) your LA should have no prob getting deposit to you in time as he should be takeing cleared funds on day of signing up anyway?

        with regards to fee being charged to T this is normal for most agents and what I would say it most genuine tenants are happy to pay this fee. In my town I would say our fees are average but some are a lot higher and tenants still seem ok to pay these.

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        • #5
          I had a disagreement with my agent the last time they found me a tenant. Basically, they insisted on using their own AST where I normally use my own. Many agents normally assume that landlords don't know what they are doing and insist on doing everything themselves. I do and just wanted them to find me a tenant. Anyway I finally accepted them using their own AST as there was nothing wrong with it. In the end I discovered that they had charged my new tenant £150 for issuing same. Now if they had only been up front and said that the reason for using their own AST was to save me £150 on their fee for finding a tenant, I would have been perfectly happy! Why are we so embarassed about talking about fees and comission in this country? Everybody has to earn a living - is it just a "dirty" word?

          P.P.
          Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

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          • #6
            They are your agents. Consequently, they must not charge T for work unless you agree- it is a breach of their duty to you, and a conflict of interest, for them to undertake work for T or at T's expense. Making a secret profit, in any case, means that agents have to hand-over the money to you (as principal).
            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
            4. *- Contact info: click on my name (blue-highlight link).

            Comment


            • #7
              I have found myself a good agency (hopefully) they charge the tenant a reasonable amount and don't charge me fro changeover except for an advert in the paper. (I had to negotiate this or they would have charged me even for putting a board up).

              I managed to negotiate 9% as well which I think seems good as it is a decent sized agent. Thanks for the replies everyone.

              Jeffrey it is very interesting what you say about there being a conflict of interest as I am sure most of the agents I spoke to would not have told me about their fees to the tenant, it is only because I specifically asked that I found out.

              I didn't mind the agents charging a small fee at change over to cover some/all of the costs and to stop time wasters but if they are making a profit on it then there is no motivation to provide a good service to the tenant and therefore keep them for longer. Why would you employ anyone who was motivated to get a lot of changeovers (and therefore create more void periods for me)? It doesn't make sense and so the charges to me and the tenant on change over were a big part of my decision in which agent I chose.

              I worked out why the other small agent didn't do the tenancy deposit scheme for the landlord as well. It is because the agents have to join and pay a fee. I didn't know that previously, but the one I finally went with has joined and that saves me an extra bit of hassle. If I am forking out for an agent I want to do as little admin/work as possible myself.
              I'm trying to raise awareness of Myotonic Dystrophy, Pre-implantation Genetic Diagnosis (PGD) and In vitro fertilisation (IVF). Follow my PGD blog and please pass it on to any one you know who has an interest in PGD or IVF.

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              • #8
                Originally posted by jeffrey View Post
                They are your agents. Consequently, they must not charge T for work unless you agree- it is a breach of their duty to you, and a conflict of interest, for them to undertake work for T or at T's expense. Making a secret profit, in any case, means that agents have to hand-over the money to you (as principal).
                What you may not realise is that (and it has been tested in court as legitimate) an agent can charge a finder's fee to a tenant yet collects nothing from the landlord providing the tenant takes up a tenancy. It is slightly different to what you're discussing here but relevant possibly.
                The advice I give should not be construed as a definitive answer, and is without prejudice or liability. You are advised to consult a specialist solicitor or other person of equal legal standing.

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                • #9
                  Dear Poppy 35,

                  Some letting agents are charging tenants £400 in letting fees regardless of the property type. I would suggest that tenants are NOT HAPPY paying this kind of fee in addition to the 6 week bond and month in advance.

                  Comment


                  • #10
                    Originally posted by mgordhan View Post
                    Dear Poppy 35,

                    Some letting agents are charging tenants £400 in letting fees regardless of the property type. I would suggest that tenants are NOT HAPPY paying this kind of fee in addition to the 6 week bond and month in advance.

                    Welcome mgordhan....where did you dig out this thread from?!?!

                    I agree £400 is unreasonable - you must just vote with your feet, but very frustrating if it is a perfectly suitable property.
                    I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

                    That also means I cannot share in any profits from any decisions made!

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                    • #11
                      Or move to Scotland where such fees are illegal (bit radical I agree...)
                      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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                      • #12
                        Originally posted by theartfullodger View Post
                        Or move to Scotland where such fees are illegal (bit radical I agree...)
                        Yeah, yeah, yeah... First you are 'lured' to Scotland then next thing you know there's a wind farm popping up behind your golf course

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                        • #13
                          Originally posted by Phlash View Post
                          Welcome mgordhan....where did you dig out this thread from?!?!

                          I agree £400 is unreasonable - you must just vote with your feet, but very frustrating if it is a perfectly suitable property.
                          I suppose it is all relative to the total cost of renting that property : rent, energy bills, Council, Tax, etc. If the rent is lower than equivalent sized properties in the same area a prospective T may judge that the £400 is affordable.

                          I agree that in principle it is a greedy amount for an agent to charge, though!
                          'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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                          • #14
                            Originally posted by mind the gap View Post
                            I suppose it is all relative to the total cost of renting that property : rent, energy bills, Council, Tax, etc. If the rent is lower than equivalent sized properties in the same area a prospective T may judge that the £400 is affordable.

                            I agree that in principle it is a greedy amount for an agent to charge, though!
                            You sound more like an agent taking a capitalist view as to what someone will pay! I would have expected a 'value of the work' type calculation from you...(!) I'm almost disappointed MTG! Hehe.

                            £400 may be affordable, but agree with you MTG, it is too much.
                            I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

                            That also means I cannot share in any profits from any decisions made!

                            Comment


                            • #15
                              Originally posted by Phlash View Post
                              You sound more like an agent taking a capitalist view as to what someone will pay! I would have expected a 'value of the work' type calculation from you...(!) I'm almost disappointed MTG! Hehe.
                              God forbid! I was actually trying to see it from a tenant's point of view! The one who misses out (in a scenario where A charges £400 but T takes a 'global' view of the cost of renting) is the poor little landlord.

                              Value for work? Time taken to conduct a viewing and set up a tenancy : maximum 3 hours. So £400 is indeed extortionate, on that basis. However, that conversation is still going on eleswhere... and I must say I am disappointed you haven't yet replied to my incisive point about economies of scale.

                              Any thoughts?! See #45http://www.landlordzone.co.uk/forums...ent-fees/page5
                              'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

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