Fees for references

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    Fees for references

    Hi. I've just put down a deposit to lease a house and the agency has asked for references, as would be expected. However, they have told me that as they outsource their referencing they have to charge £55 per reference. Between myself and my partner they have requested at least 6 references (may rise to 8!) which, along with the agency fees of £180 would bring up the entire fee to between £510-£620. They have also asked for these referencing fees in cash only. Given that the referencing process is fully automated, I am not sure how they can justify these fees. I'm not from the UK and this is my first time renting here so was wondering if anyone could let me know if this is normal? Any advice would be appreciated!

    #2
    I have never heard of tenant referencing being "outsourced" in more than 20 years experience and all the ones I know of are UK companies.

    There is not a separate fee per reference.

    Normally, you provide details of yourselves and your referees and the reference agency make their checks, along with any other information it may have or find about you. Some reference agencies can check on people who come from other countries.

    Normally, only your current employer and your past landlord (if you have one) will be checked, which makes only 2 per person.

    The reference agency will make a report and give it to the agency who gives it to the landlord.
    The cost to the agency for this service is about 5-10 pounds per person.
    Everything is usually done online.

    A more usual cost for referencing is about 50-60 pounds per person, so you can see that letting agencies still make a big profit even at this amount.

    I would be curious to know which are the other references that come to 8 between you that this agency has said it needs.

    I would not use this agency as the "reference costs" you've have mentioned sound like false costs and the agency is more than likely trying to rob you.

    The "agency fee" is a completely made up fee for absolutely nothing so don't pay it, wherever you go.

    There are a lot of properties available these days and there are some good agencies so my advice is to keep looking.

    I would recommend that you ask other agencies what their fees are before deciding to look at any properties from any agency.
    A high level of "fees" (which are about 90% pure profit) is usually indicative of an agency that is ready to do other bad things to you.

    Although it doesn't guarantee that an agency is a good one, if they have memberships to professional bodies, like ARLA and NAEA, they are more likely to be decent than not.

    I would also not pay anything in cash. Check or credit card only.

    Comment


      #3
      While I would agree with DrunkenJedi that these fees seem extortionate, there is nothing to prevent the agency charging them - it is whatever the market will stand / the landlord requests.

      Ultimately, you have the choice - pay the fees or find a different property. Sometimes you want to do the second but it isn't practical, so you end up paying.

      The issue of paying in cash is slightly alarming - though despite DJs advice you do not have a 'right' to pay by anything other than cash. If you do pay - don't leave the office without a receipt!

      DJ sems to have been letting properties for some time, but I don't think his assessment of agency fees is really valid. I don't use them because I did have a bad one and they don't do anything I can't do myself, but to suggest that 90% of the fee is profit is... suprising.

      Comment


        #4
        Originally posted by Snorkerz View Post
        but to suggest that 90% of the fee is profit is... suprising.
        Its not a suggestion, its a fact.

        Why don't you call some of the reference agencies and pretend you are a letting agent.
        Ask them what their price is for their tenant referencing or assessment service for letting agents.
        (They will have a different price for landlords too).

        Office staff who process the reference details are already being paid a salary for their job so any work they do has been accounted for by the agency. Since potential tenants cannot choose not to have a reference check carried out, this work is not extra work that the agency has to do and is not expecting to do.

        Therefore, there is no real cost to the agency other than what they are charged by the reference agency, which is around what I quoted.

        Tenants should realise that they are being ripped off with these so called "admin fees" and when more and more refuse to pay such large fees, the less these fees will appear.

        All tenants should runaway from agents who charge such extortionate fees since there is no justification for them.
        An agency that charges the tenant 30 pounds for the reference check process gets the same service and data as the agency that charges the tenant 300 pounds.

        Comment


          #5
          Agree with DrunkenJedi

          These "checks" start @ £8 (Bronze..) & this one's "Platinum" reference is only £28,,,,

          http://www.credit-check-services.co.uk/services.asp

          (Not bad prices if they deliver what they promise..???)
          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...

          Comment


            #6
            Most Ts I know (depressed area of UK) are willing to pay £200 admin fee to apply for a tenancy of a house they have found. This includes ref & credit checks.
            The agency usually takes a finders fee off the LL as well if not appointed management agents.
            Without checks, and most LLs don't know where to start, expect to see requirement for 3 or 6 month rent payable in advance, and higher rents to cover increased risk, to deter the people less able to find a wad of cash. Thats not to say the better off won't default or abuse the system, so even if Lord so & so wanted to rent my pad in Pimlico and offered me 6 month rent up front, I like to think I would run the same checks on him as the benefit claimant.
            As for admin fees and rents, it is what people are prepared / able to pay.

            Comment


              #7
              DJ, we are going to have to agree to differ.

              I fully accept that there may be an absolutely huge mark-up on references, and as I said in #2, I agree that such charges are extortionate. However, 'mark-up' and 'profit' are not the same thing and without knowing the ins and outs of any agencies accounts you can not hope to assess their profit.

              I believe agencies charge too much for the service they offer, but their prices are based on what the market will stand. A business is there to make a profit - letting agencies are not charities - and if the business is a Limited company it's directors have an obligation to maximise shareholder value.

              Comment


                #8
                Originally posted by Snorkerz View Post
                I fully accept that there may be an absolutely huge mark-up on references, and as I said in #2, I agree that such charges are extortionate. However, 'mark-up' and 'profit' are not the same thing and without knowing the ins and outs of any agencies accounts you can not hope to assess their profit.
                I have been in & close to the letting business for a number of years and can say, with a high degree of certainty, that letting agencies are all based on a very similar operating structure.

                Staff in letting agencies are not professional people, do not require degrees or other professional qualifications to work in or operate an agency and they are all, essentially, sales & admin staff.

                There is no "mark-up" on references as the agency does not sell references.
                Letting agency admin fees are almost pure profit as it costs them nothing to do carry out references, so my statement was & remains correct.

                The agency sets their completely made up admin fees (and in the OPs case, is in addition to the massively overinflated reference fee per reference) based on whether the agency has any scruples and honor or not and if not, what they think they can get away with.

                Originally posted by Snorkerz View Post
                I believe agencies charge too much for the service they offer, but their prices are based on what the market will stand. A business is there to make a profit - letting agencies are not charities - and if the business is a Limited company it's directors have an obligation to maximise shareholder value.
                The letting agency business is a tad above a cottage industry with few companies having a national or stock market presence. In addition this industry is in effect, a loose cartel in any given area and if they all charge very similar fees (which is the norm) landlords and tenants in that area have little choice.

                Its another one of the businesses, most of which are dishonorable, who try to make money from both sides of a transaction.
                Only, in the case of what is demanded of tenants, there is no justification whatsoever for these fees.
                The requirement for references are made by the landlord, not the tenant, so why should tenants be charged anything?

                This is one reason why so many tenants have turned away from letting agents.

                Comment


                  #9
                  Letting agencies most definately make a profit on getting references done on prospective tenants. I work along side a referencing agency - [we provide the rental warranty contracts which are based on a succesful reference]. The Letting agency charge at least double what they are charged for the reference. It is a nice little earner for them. They charge [per tenant] and then search for CCJ's, speak to previous landlords and current employers or accountants.

                  Comment


                    #10
                    And does the Agency disclose its secret profit (as any agent has to do)? No? Imagine my surprise.
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                    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
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                    Comment


                      #11
                      I'm not surprised.

                      I've just let my property through an agency who wanted to charge me £430 for proffesional cleaning and £480 for the check in and inventory! It's a tiny 2-bed flat!! I shudder to think how much money they make from people who simply accept the charges.

                      I ended up paying the agency to organise the EPC, PAT, referencing and deposit hold for a combined total of £400. I downloaded an inventory form which cost £10 and did it myself, and paid a pro cleaning service £170. Sometimes you have to draw a line in the sand...

                      Comment

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