Posts with tag: letting agents fees

Ban on agent fees will impact negatively on 20% of landlords

Published On: January 23, 2017 at 11:55 am

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The Housing Minister Gavin Barwell has moved to state the proposed ban on letting agents levying fees on tenants will only negatively impact 20% of tenants.

An ARLA report from the meeting of the All Party Parliamentary Group for the Private Rented Sector earlier this month says that Barwell disputed the notion that the ban would be universally costly for landlords and tenants alike.

Financially Impacted

Mr Barwell told MP’s that while the implications of scrapping fees does need to be assessed, early HMRC forecasts suggest that just a fifth of investors will be hurt financially.

In addition, the report states: ‘Barwell also said that since the change will be phased in it will not have as large an effect. In response to concerns that landlords will have to up their rent to cover the costs of the fees, Barwell said that it is of course up to the discretion of the landlord to decide their fees. He said the government see the measure part of as creating a fair tax regime. He said the forthcoming consultation will not look at the value of the measure but will look at how it is implemented.’[1]

What’s more, Mr Barwell is reported to have stated that Build To Rent would feature in the Government’s White Paper on Housing. Barwell sees Build To Rent as good value for money and believes that the scheme offers longer tenancies-one of his key objectives.

Ban on agent fees will impact negatively on 20% of landlords

Ban on agent fees will impact negatively on 20% of landlords

Changes

After the meeting, managing director of ARLA David Cox, observed it was clear that the Government is trying to implement large scale changes to the private rental sector in England.

Cox noted: ‘Since the 1980s, England has been building up to 40 per cent fewer homes than the 240,000 needed annually. The resulting shortage of about two million homes has left the country with soaring prices and a growing gulf between the property haves and have-nots.’[1]

‘Unfortunately, the government doesn’t seem to realise that punishing hard-working letting agents who deliver a hugely valuable service will not in the long run improve the affordability of the sector and the service that tenants receive.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/1/letting-fees-ban-will-only-hit-20-negatively-claims-minister

 

Are letting agents worth their fee?

Published On: March 25, 2013 at 11:37 am

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Categories: Landlord News

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Traditionally, investors in the buy-to-let market have had only two choices when searching for tenants and maintaining properties. The choices facing landlords are to pay letting agents a large fee to do the work-or set about the task themselves.

Agent fees

Services provided by agents can prove invaluable and in some cases, essential for landlords who own a large portfolio of property. The type of service typically offered by landlords will be a let-only contract. Under this type of service, landlords usually; –

  • Locate, interview and vet potential tenants
  • Take care of relevant paperwork
  • Secure deposits
  • Collect and secure first months rent

This service can normally be secured for around 10% of overall tenant rent. Alternatively, agents can offer a full-management service, where they continue to be responsible for collecting rent and assist with day-to-day requirements. This is normally in return for 15% of rent.

Are letting agents worth their fee?

Are letting agents worth their fee?

 

For landlords wishing to be more hands-on, or to simply save costs, other alternatives are available.

Alternative Choices 

Online letting agencies like Upad allow landlords to promote their properties on websites such as Rightmove and Zoopla for as little as £99. Upad director James Davis, said that their services were a viable alternative to landlords concerned about paying over the odds for a letting agent. Davis said, ‘Landlords who use high street agents usually spend half of their profits on the agents’ costs. We put landlords in contact with tenants and they conduct their own viewings, which enables you to meet the people who will be living in your investment.’[1]

Another consideration for landlords is to use an online estate agent. Agencies such as eMoov offer a service like that of a high street agent-arranging viewings and such like, for a fee of £395. eMoov’s director Russell Quirk said that, ‘We typically save property owners 66 per cent on traditional agents’ fees. With void periods, non-payment of rent and lack of capital appreciation, saving on fees must be a big consideration.’[1]

People power

As in many walks of life, people power is a strong form of negotiation. This method has been enforced by the Happy Tenant Company. The company has around £500 million worth of property in areas close to the M25 motorway, and uses this figure and group letting power to enter into negotiation with agents. On a property rented for around £300 per week, the landlord can expect to save around £2,400 on fees.

Founder of the Happy Tenant Company Jonathan Monjack, set up the company as he was, ‘fed up with paying high renewal fees for no extra work.’[1] He said that it was never his intention to go into the property business, but can now, ‘bring a lot of business to lettings agents and recommended contractors, so they offer discounted rates, which we pass on to landlords.’[1]

The right agent

Despite a feeling amongst landlords that they pay money to agents for very little return, being a member of a reputable letting agency such as the UK Association of Letting Agents has genuine benefits. Members should be comfortable understanding the 70 plus pages of legislation that a landlord should comply with.

Ian Potter, managing director of the Association of Residential Lettings Agents (ARLA), urges landlords to ask advice from affiliated sources. Potter says that due to there being, ‘no restrictions on who becomes a lettings agent, so seeking advice from an agent affiliated to a professional organisation is highly recommended. They are trained, offer client money protection and there is a redress scheme in place if things go wrong.’[1]

Competition

A rise in competition between landlords has seen fees fall as a result. Typically, let-only agent fees are now 6% of total rent, with full-management dropping to around 10% are now common. Sarah Rushbrook, founder and director of property management company Rushbrook and Rathbone, said that landlords should go alone, or at least go against fully managed agent services. Rushbrook said, ‘here are alternatives to a fully managed service which protect the landlord from legal and financial blunders but allow him or her to organise their own day to day maintenance.

“For most landlords who chose to go it alone, this would prove to be a safer option while still giving them control over maintenance expenses.’ [1]

[1] http://www.landlordexpert.co.uk/2013/03/25/are-letting-agents-worth-the-money/