There’s No Point Using Letting Agents
Written by The Landlord on 13 Sep 2007
When the rental market is booming, why use a letting agent? It makes no sense. They charge extortionate rates for doing very little work. So why not CUT OUT THE MIDDLE MAN?
Currently, there’s been a lot of articles in the news about the serious drought of properties to rent. Supply simply isn’t meeting demand at the moment. When the rental market is in that kind of state it’s good news for landlords because they know they can quickly fill properties with tenants! If you’re a landlord and you’re struggling to find tenants in the middle of a rental frenzy, you either give really bad first impressions, or you’re trying to rent out a piece of shit.
Currently, a lot of people want to rent. Why?
Why renting has become popular
- properties are too expensive to buy
- a lot of people are getting their homes repossessed (i.e interest hikes are causing strains)
- a lot of people are selling their homes as they anticipate a property crash.
Yesterday I encountered my first actual real-life sign of there being literally a shortage of properties to rent. I recieved this letter from a letting agency:
“We are finding that the renting market is currently very buoyant and we would envisage having no problem at all in finding you a suitable tenant”
That’s nice to know, aye?
When I was looking for a tenant, I went to a few agencies; this particular agency happened to be one of them. Unfortunately, I never ended up using them as I got better rates elsewhere.
I guess this agency is sending out letters to every client in their books that aren’t currently housing one of their tenants. There really must be a shortage.
I’m thinking, if demand is that high, why would landlords need to go through agencies? What exactly do letting agencies do?
What letting agents do…
- They do credit checks (apparently)
- Arrange the tenancy agreement
- Depending on the package, they can collect rent for you
- They do routine checks on your property (apparently)
- They market your property to find tenants
- Chase your tenants for late payments
For all that, they take a ridiculous 8-14% cut of your rent.
Here’s a list of alternatives that even Average Joe can do for a fraction of the cost
- Go direct to a credit checking firm (£10 approx)
- Download a Assured Shorthold Tenancy Agreement
- Get Rent Guarantee And Legal Expenses Insurance
- Perform quarterly inspections yourself
- Advertise your Buy-To-Let on websites like Rightmove. That’s how Letting agents get most of their leads anyways.
All that will cost you a fraction of what agents charge, and the work they do really isn’t THAT taxing. I say cut out the middle man, and take advantage of the demand.
Like I said, when the rental market is booming – who needs a letting agent?
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Taking In Lodgers- ‘Rent-A-Room’ SchemeRelated Articles
15 Comments - join the conversation...
The Landlord2007-09-13 13:26:25
Hey Danny,
To be honest, I think the rate of return isn't as great as it once was. That's mainly due to high interest rates. But that unfortunate situation mainly applies to landlords that are just entering the industry at this moment of time.
In my case, I have a property on a decent fixed rate, repayment mortgage- the figures stack up, and I believe i'm getting a good rate of return. My rent covers my mortgage. However, if a landlord is on a 6% interest-only mortgage policy, which is just about covered by rent; the return may not be so great. I think the rate of return depends on the individual circumstance.
But there's definately room for a great return, especially with rental demand being so high.
In the longterm, it's very unlikely a landlord will get a bad return, unless they do something stupid :)
To be honest, I think the rate of return isn't as great as it once was. That's mainly due to high interest rates. But that unfortunate situation mainly applies to landlords that are just entering the industry at this moment of time.
In my case, I have a property on a decent fixed rate, repayment mortgage- the figures stack up, and I believe i'm getting a good rate of return. My rent covers my mortgage. However, if a landlord is on a 6% interest-only mortgage policy, which is just about covered by rent; the return may not be so great. I think the rate of return depends on the individual circumstance.
But there's definately room for a great return, especially with rental demand being so high.
In the longterm, it's very unlikely a landlord will get a bad return, unless they do something stupid :)
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Matt2008-10-04 12:36:39
Great Blog, I've just about finished reading all of it. I'm a smalltime landlord too, and your experiences mirror mine, almost exactly. I've purchaced in East Central London where I feel my flats will appreciate, and tennants would be easier to find. I'm just scared of investing in the 'country' when I don't know the market and i'd need more properties to achieve the same return. Seems to be coming off well, although I'm only achieving 5% yeild. Hopefully this will improve over time.
I use gumtree everytime now, agents can go swivel as far as I'm concerned, although I have one friendly agent that would give me great rates and manage too. (I'm considering emigrating)
I'm seeing some great buying opportunities at the moment, and debating whether to pick something up cheap. As yeilds increase though price falls, I'm guessing the market will bottom out when people can get 6% - 8% return. Thats going to be much better than holding cash once the gov drops rates to 4.75% or 4.5% shortly.
Matt
I use gumtree everytime now, agents can go swivel as far as I'm concerned, although I have one friendly agent that would give me great rates and manage too. (I'm considering emigrating)
I'm seeing some great buying opportunities at the moment, and debating whether to pick something up cheap. As yeilds increase though price falls, I'm guessing the market will bottom out when people can get 6% - 8% return. Thats going to be much better than holding cash once the gov drops rates to 4.75% or 4.5% shortly.
Matt
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The Landlord2008-10-05 10:17:41
Hey Matt,
I've had the same thoughts as you, in regards to investing in unknown areas (the country). I decided just to stick to areas I know because i'd feel more comfortable that way. I'm probably losing out on great opportunities, but I guess that's the decision I made.
There are so many great opportunities about at the moment, with the credit crunch and everything. I'm currently looking around, although I think i'm going to wait a few months because I think as it comes closer to Christmas, they'll be better bargains about. I also think better mortgage deals will eventually come onto the market as the banks start to sort themselves out. At the moment borrowing is expensive!!!
If you buy the right property, which is significantly under market value, there is no reason why you can't reach 8+% yield, which is great! It's a buy-to-let market as far as i'm concerned, especially with the growing demand for rental property!
I eventually want to travel for a year, so I'm going to need a letting agent. If you can get a good agent that doesn't charge an arm and a leg, then that's great!
I wish you the best of luck, and many thanks for sharing your situation!
Kind regards
I've had the same thoughts as you, in regards to investing in unknown areas (the country). I decided just to stick to areas I know because i'd feel more comfortable that way. I'm probably losing out on great opportunities, but I guess that's the decision I made.
There are so many great opportunities about at the moment, with the credit crunch and everything. I'm currently looking around, although I think i'm going to wait a few months because I think as it comes closer to Christmas, they'll be better bargains about. I also think better mortgage deals will eventually come onto the market as the banks start to sort themselves out. At the moment borrowing is expensive!!!
If you buy the right property, which is significantly under market value, there is no reason why you can't reach 8+% yield, which is great! It's a buy-to-let market as far as i'm concerned, especially with the growing demand for rental property!
I eventually want to travel for a year, so I'm going to need a letting agent. If you can get a good agent that doesn't charge an arm and a leg, then that's great!
I wish you the best of luck, and many thanks for sharing your situation!
Kind regards
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T2009-06-12 10:31:23
Really enjoyed reading your blogs about letting on your own. I just got rid of the worst tenant ever (holes in walls, have painted rooms, naked children running round, neighbour arguments etc etc. You get the idea) which was handpicked, for a price, by my local letting agent and "good references" given. So I am just setting out on my lonesome and have put my property on Gumtree so glad that I have picked well :). 10 enquiries already and 4 viewings.
I was wondering however if you had any recommendation of a few credit check agencies that you used? Don't want to get shafted at the last hurdle.
Cheers and many thanks
T
I was wondering however if you had any recommendation of a few credit check agencies that you used? Don't want to get shafted at the last hurdle.
Cheers and many thanks
T
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paul hill2009-08-12 00:56:38
“Apart from ripping off perspective tenets’ I see it they were also ripping of the land lord”
A word on some sharp practices by letting agents, I have just viewed a 2 bed detached let today, surprised to find I was not the only hopefully who had asked to turn up at this time, in fact within the half hour I was their 4 families and two other couples were all viewing the property. , ,
The letting agents A Manchester based and well known Chartered Valuation and Estate letting agents seemed more interested in gaining non refundable application fees then individual customer service going off the box full of forms he had at his feet! ( £150 Joint £100 single ) .
I asked the agent if they could justify this charge and what guarantee I had that any applications would be processed fairly, He went on to explain that the fee covered finders fees transfer of utilities and admin of credit search and all applications will be given every opportunity,
But I found You I said and I am quit capable of transferring my own utilities in fact I would not allow any body ells’ to handle this, I can read a meter So how do you handle the application fairly I asked, when do you stop taking applications I asked, if there is a large demand seems a bit of a cash cow!!
" Yer he laughed but what you going to do, if you credits good you have as much chance as everyone "
Apart from ripping off perspective tenets’ I see it they were also ripping of the land lord in this case the rentable value was at least £50 to £80 below what I would have expected this 2 bedroom detached to be in south Manchester £495 set to show up on a £400 to £500 pcm web search, at this level going off what I saw they would make a few grand on non refundable apps rather then get the best price for the property,
I would also be very surprised if they checked every app, at the commercial rate for standard credit check £19.50 for 5 applications this is properly as far as they go .
I left this property and voted with my feet I have no interest in joining a lottery and receiving such patronizing service, I am still looking but via the papers I have great references from my employer my bank and past land lords all off whom have been on first name bases, I don’t know why the rental sector is allowing the agents to worm themselves into a nice little earner and rip off everyone.
A word on some sharp practices by letting agents, I have just viewed a 2 bed detached let today, surprised to find I was not the only hopefully who had asked to turn up at this time, in fact within the half hour I was their 4 families and two other couples were all viewing the property. , ,
The letting agents A Manchester based and well known Chartered Valuation and Estate letting agents seemed more interested in gaining non refundable application fees then individual customer service going off the box full of forms he had at his feet! ( £150 Joint £100 single ) .
I asked the agent if they could justify this charge and what guarantee I had that any applications would be processed fairly, He went on to explain that the fee covered finders fees transfer of utilities and admin of credit search and all applications will be given every opportunity,
But I found You I said and I am quit capable of transferring my own utilities in fact I would not allow any body ells’ to handle this, I can read a meter So how do you handle the application fairly I asked, when do you stop taking applications I asked, if there is a large demand seems a bit of a cash cow!!
" Yer he laughed but what you going to do, if you credits good you have as much chance as everyone "
Apart from ripping off perspective tenets’ I see it they were also ripping of the land lord in this case the rentable value was at least £50 to £80 below what I would have expected this 2 bedroom detached to be in south Manchester £495 set to show up on a £400 to £500 pcm web search, at this level going off what I saw they would make a few grand on non refundable apps rather then get the best price for the property,
I would also be very surprised if they checked every app, at the commercial rate for standard credit check £19.50 for 5 applications this is properly as far as they go .
I left this property and voted with my feet I have no interest in joining a lottery and receiving such patronizing service, I am still looking but via the papers I have great references from my employer my bank and past land lords all off whom have been on first name bases, I don’t know why the rental sector is allowing the agents to worm themselves into a nice little earner and rip off everyone.
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Kate2010-04-16 11:21:32
Please can I have some advice? I currently let my property through an agent who do nothing but transfer monthly rent and take their cut. I sort out and manage the property- they haven't even inspected it as they agreed. My agreement says that I have to use them whilst the current tenants occupy the property, but since I have refused to sign another 12 month agreement the letting agency has threatened me with legal action. Should I just start my own legal proceedings?
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Jools2010-04-17 08:19:48
Kate,
who is the client here? Go get you biggest pair of bollocks on and go and tell them to f*** off! How can they threaten you with legal action for not signing a new agreement (unless of course you did not read the original one before signing which said they could!?).There is no basis or foundation for such action.
Go and tell them that YOU have been doing the management which you pay them for (unless of course that is what you have signed to do).
They may try to charge you an amount for renewing the AST but then refer them to the Foxtons case (you will have to google it but there is plenty of info about.
Kate - go and tell these pin headed idoits to start acting like professionals and do the job they are taking their management fee for. See what happens before deciding what to do further. If you want to take your business away - do so.
Let us know how you get on!
Jools
who is the client here? Go get you biggest pair of bollocks on and go and tell them to f*** off! How can they threaten you with legal action for not signing a new agreement (unless of course you did not read the original one before signing which said they could!?).There is no basis or foundation for such action.
Go and tell them that YOU have been doing the management which you pay them for (unless of course that is what you have signed to do).
They may try to charge you an amount for renewing the AST but then refer them to the Foxtons case (you will have to google it but there is plenty of info about.
Kate - go and tell these pin headed idoits to start acting like professionals and do the job they are taking their management fee for. See what happens before deciding what to do further. If you want to take your business away - do so.
Let us know how you get on!
Jools
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Kate2010-04-19 19:28:56
Thanks for your advice, I still haven't signed a further agreement despite receiving an email now saying that they will do anything KI want them to in terms of managing the property from now on. I have read the agreement (or covering letter) and it does say that the tenants are 'theirs' in terms of managing the property for the duration that they live there for. Howwever, it is my money at the end of the day and as theu don't do anything other than take the rent each month, I don't know how legally firm they stand. I have contacted a solicitor who wanted £150 to read the agreement and then/ if they felt there was a case to write them a letter. My one concern is that the letting agents have my tenant's deposit which they might not relinquish. I was going to put the property on the market this Spring and think in retrospect it would have been the right thing to do, but the tenants are really lovely, whilst the staff at the agency are curt and rude.......
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Darius2011-10-19 15:26:09
This is sickening, all you vultures thinking of new ways to squeeze money out of us young people just getting into the world. The letting agents screw us over for £120 admin fee just for allowing us to apply for the property. And because you lot are all fighting over property to buy so you can collect our rent, the prices are rediculasly high,I hope there is a housing crash so all you selfish greedy cunts fuck off and let us live..
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Twattybollocks2011-10-19 16:06:19
Dear, dear poor misguided Darius.
I do hope that you manage to find somewhere that will accept you and your attitude, but given the size of the chip on your shoulder you are going to need somewhere with a large extension just to get it in.
Where do you think you are going to live if all us "selfish greedy cunts fuck off"?
So come on bollock brains - you tell us how you would change the system?
Love
TB
PS - It's spelt 'ridiculously' not whatever you wrote - just getting facts straight and all that!
I do hope that you manage to find somewhere that will accept you and your attitude, but given the size of the chip on your shoulder you are going to need somewhere with a large extension just to get it in.
Where do you think you are going to live if all us "selfish greedy cunts fuck off"?
So come on bollock brains - you tell us how you would change the system?
Love
TB
PS - It's spelt 'ridiculously' not whatever you wrote - just getting facts straight and all that!
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Darius2011-10-19 18:00:20
Im sorry "Twattybollocks"?
I see now that you are really doing us a favour and I guess its not your fault this system encourages those with no conscience to jump on this goldmine bandwagon of exploitation, thank you for allowing us to pay your mortgage its really valiant of you.
I guess I just lashed out there when I was searching for landlords directly so I didnt have to get shafted by a letting agent and then I found this site with all you lot talking about how much profit you makin from the next generations trying to survive.
These are homes they are not money making tools. All this Buy to let shit is the reason its impossible for BUY TO LIVE because you greedy fucks are fighting over our rent revenue it drives the cost up. And drop all this "wow the rent market is booming" bullcrap, the whole economy is being screwed by design starting with the "Banker Bailout" of 2008, our government sold us out and the austerity is just us getting raped, we dont owe shit. So the people HAVE NO CHOICE but to rent but you lot see it as "WOW stocks are up on our investments, Yipee!"
I dont know how to change the system but there appears to be some Laws missing which prevent this scandal from occurring, and I sincerely hope you rot in hell
I see now that you are really doing us a favour and I guess its not your fault this system encourages those with no conscience to jump on this goldmine bandwagon of exploitation, thank you for allowing us to pay your mortgage its really valiant of you.
I guess I just lashed out there when I was searching for landlords directly so I didnt have to get shafted by a letting agent and then I found this site with all you lot talking about how much profit you makin from the next generations trying to survive.
These are homes they are not money making tools. All this Buy to let shit is the reason its impossible for BUY TO LIVE because you greedy fucks are fighting over our rent revenue it drives the cost up. And drop all this "wow the rent market is booming" bullcrap, the whole economy is being screwed by design starting with the "Banker Bailout" of 2008, our government sold us out and the austerity is just us getting raped, we dont owe shit. So the people HAVE NO CHOICE but to rent but you lot see it as "WOW stocks are up on our investments, Yipee!"
I dont know how to change the system but there appears to be some Laws missing which prevent this scandal from occurring, and I sincerely hope you rot in hell
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Mr X2011-10-19 19:10:41
I honestly don't know why people think landlords are selfish or greedy. A lot of them (myself including) still had to save a deposit to buy a house, just like any first time buyer.
When I bought my first buy to let property, I lived frugally for a few years to save up my mortgage deposit, and then put it on rent whilst living with my parents. It is now on rent, they pay me monthly and I make sure they are safely housed with no problems. Whats greedy about that? I am simply providing a service.
As twattybollocks mentioned "Where do you think you are going to live if all us "selfish greedy cunts fuck off"? " - Truth is, tenants need landlords just as much as landlords need tenants.
If you dont want to rent, then cut back, save, and come up with your own mortgage deposit to buy your own house.
When I bought my first buy to let property, I lived frugally for a few years to save up my mortgage deposit, and then put it on rent whilst living with my parents. It is now on rent, they pay me monthly and I make sure they are safely housed with no problems. Whats greedy about that? I am simply providing a service.
As twattybollocks mentioned "Where do you think you are going to live if all us "selfish greedy cunts fuck off"? " - Truth is, tenants need landlords just as much as landlords need tenants.
If you dont want to rent, then cut back, save, and come up with your own mortgage deposit to buy your own house.
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Mr X2011-10-19 19:17:30
lol at "rediculasly"
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Darius2011-10-19 19:32:45
ok ill try live frugally for a decade so I can one day pay extortionate mortgage interest on a shitty little flat, and maybe one day get to suck off someone for a living as my prize.
I say we re-claim the trillions stolen by the international banks and use it to FORCEFULLY buy you little empires off you so that they can be sold at a loss at a reasonable price and have laws to cap house prices attached to inflation of course.
But if we got a position to do that, our problems would have already have been sold.
Im sure there are prbably some really nice people here in person and its none of your fault criminals run things. But "twatty bollocks?" I cant think of a better name for you lowlife
I say we re-claim the trillions stolen by the international banks and use it to FORCEFULLY buy you little empires off you so that they can be sold at a loss at a reasonable price and have laws to cap house prices attached to inflation of course.
But if we got a position to do that, our problems would have already have been sold.
Im sure there are prbably some really nice people here in person and its none of your fault criminals run things. But "twatty bollocks?" I cant think of a better name for you lowlife
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