Good, Fast or Cheap?
Time and time again, we come across Landlords who only compare letting agents by the amount they charge rather than looking at the level of service offered. Their first question is usually “What are your fees for finding a tenant and Full Management?”. If you ask this question to several letting agents, you will never be able to make a fair comparison. Let me explain.
There are no industry standards to compare services offered between letting agents. Some offer a ‘pick and mix’ service where the letting agent will give you the opportunity to leave out some items of work to reduce their fee in order to gain your instruction. Others will put together a comprehensive package for different services offered to ensure they have sufficiently covered the whole letting process ensuring compliance all round, and they charge accordingly.
One of the most popular remarks we hear from Landlords trying to negotiate fees is “We don’t care about referencing, we just want it let”. BIG MISTAKE. Firstly, if you or the letting agent has not covered the basic Identity, Anti Money Laundering and Right to Rent checks you could land yourself in big trouble. If an agent offering to omit this process prior to the tenancy and reduce their fees accordingly, alarm bells should start ringing. They clearly do not realise the potential consequences of doing such a thing… and they’re meant to be having your best interests in mind for the long term? This is a shining example of letting agents who are looking to earn a quick commission today. By the time you’re caught up in the mess of having illegal immigrants renting your property, said letting agent has packed up shop and nowhere to be found.
Do you take the time to read what services are offered for the corresponding fee? How else can you compare fees between agents if you don’t know how the service level varies?
Beware of confusing fee structures. Some agents have a Letting Fee and a Management Fee quoted separately. You may see a 5% Full Management fee but a 8% Letting Fee. In practice, what this means is that you will be charged 8% of the annual rent up front for advertising your property, finding the tenant, conducting viewings and securing the tenancy, and an ongoing 5% of the monthly rental for ‘Full Management’. This totals to 13% of the annual rent which is quite far from the advertised 5% Full Management which may have enticed you in the first place.
Also, be cautious that agents are now obliged to include VAT in their advertised prices. So that 5% Full Management should really be reading 6% including VAT.
By all means, look around, get to know the letting agents and test their knowledge on the legal side of things. You have to feel comfortable with the agent and build a rapport with them, after all they are going to be the ones you turn to if things don’t go to plan and you need to work through it together.
Most importantly, the cheapest letting agent means exactly that – inferior or substandard quality. Being a Landlord is a business in itself and every sensible businessperson realises that you get what you pay for. Pay a reasonable fee and you will get a quality service.
As we always say …plan your move.
*By the way…Utopia is a place that doesn’t exist!