Dealing with letting agents is always a scary prospect, because the industry is notoriously swamped with spineless assholes, so unless you’ve done your research, the odds of being another victim aren’t all that scarce.
I’ve had experiences with dozens of letting agents, some have been pleasant, while others have been excruciatingly painful. Coupled with getting royally screwed multiple times and gaining a better understanding of how the industry works through experience, I quickly started recognising the differences between the one’s that are genuinely trying to provide a good service to landlords/tenants, and those that are trying to chew through as much of your cash as humanly possible. Alas, there’s a lot more of the latter, so it’s crucial to limit your odds of locking horns with the cowboy strand of agents.
Needless to say, the consequences of working with the wrong letting agent can be on the same par as a slow and painful death, if not magnificently worse.
From my experience, most agents prey on “ignorance” – they pull all kinds of shit (which they get away) because most of the tenants and landlords they deal with don’t know any better. And that’s the reason why I felt compelled to write this blog post- to help you know better; to help you pick a better letting agent to help you find tenants and/or manage your investment.
Hidden costs / Tenancy Renewal Fees
I’m going to start off attacking the issue which most landlords face when dealing with letting agents- and that’s there extortionate fees, many of which are hidden away in the small print. Most landlords only discover how expensive an agent is after they’ve received a bill for something they never expected, or realised was even “a thing”, let alone chargeable.
Be wary of hidden costs- letting agents seem to come riddled with them.
Honourable letting agents will be upfront and honest about their pricing structure by breaking down each cost, which should also be clearly written within the service contract. Ensure to read the contract thoroughly before signing.
One of the more notorious (and therefore noteworthy) fee that is often strategically hidden, or worded very discretely, is the ‘Tenancy Renewal Fee’. This is when agents charge the landlord a fee EVERY TIME the tenancy is continued after the initial fixed-term. For example, if you paid an agent £700 to find you a tenant for a 12 month fixed period, the agent would continue charging you a fee (not necessarily the entire £700 again, but a percentage of it) every time the tenant extended the tenancy beyond that 12 month period. Ouch! Exactly, why is this even a thing?
The Tenancy Renewal Fee has been the bane of many landlords existence. A good agent will NOT force this charge because it’s, to put simply, total bullshit. In any case, that’s just one example of how they inflate their prices and profit from doing very little. Avoid agents that push this fee and others like it.
Admin / Tenant Fees
While the landlord is the letting agents client, most letting agents also charge tenants an admin fee to process their applications, which usually includes a credit check. I don’t really agree with letting agents charging tenants, because they charge landlords enough- it’s unnecessary to charge both parties. But in any case, as said, most agents do it.
Given the unfortunate circumstance, it’s worth enquiring how much the letting agent charges tenants. It’s not uncommon for agents to charge tenants an obscene amount, and that could mean less prospective viewings, as their fees may scare the punters away. Moreover, it’s also worth taking into consideration the moral viewpoint of why the agent deems it appropriate to charge both landlord and tenant large sums of money.
As far as I’m concerned, Admin fees are a massive turn off.
Reservation Fee
Similar to the admin fee, a “reservation fee” is just a total scam. While the landlord won’t be directly affected by the fee, because it’s only subjected to the tenant, there’s still a question of morality, which shouldn’t be waived by any landlord.
The bullshit fee (yes, it is bullshit) is paid if the tenant wishes to “reserve” a property for a set period (typically 10-14 days). Once the fee is paid, the letting agent cannot reserve or offer the property to anyone else. However, in theory, if a prospective tenant likes a property THAT much, the only requirement to reserve the property should be to pay the standard security deposit, and the landlord/letting agency should be happy with that. But moreover, WHY does the letting agent actually charge that fee? The landlord doesn’t see any of the money, and the agent isn’t doing any extra work for it. It’s just daylight robbery- just another unscrupulous means of lining the agents pockets with more cash.
If an agent is charging a “reservation fee”, then they’re probably enforcing all kinds of other BS fees. And even if they’re not, this fee alone should be enough to leave a bad taste in your mouth. If you want to watch
Watchdog actually covered the issue, and did a segment on agents that were charging multiple tenants a reservation fee for the same property, and then refusing to reimburse the applicants that didn’t end up getting the property. Shameful. You can watch that clip over at the letting agents reservation fee blog post.
Only use letting agents that are regulated!
From 1 October 2014, all letting agents have been required to be a member of one of three government-approved letting agency redress schemes- so make sure yours is! If an agent ISN’T a member of at least one, they are NOT complying with the law and could face persecution.
The purpose of the schemes are to increase consumer protection by ensuring agents stick to a certain code of conduct! Failing to do so could also lead to prosecution.
The schemes are:
Most agents will clearly display which approved scheme they are members of, whether it be on their website and/or shop window.
More details: Use Letting Agents That Are Registered With An Approved Redress Scheme For Consumer Protection.
Year established
I would avoid using an agency that’s only recently opened their doors for business. Similarly to the pub trade, dozens of letting agents are closing down on a daily basis. It’s tough out there.
Look for well established agencies/branches that have a good reputation- they’re the one’s that will be less inconvenienced by the economic turmoil.
Reputation
An established agent WILL have a reputation, whether it be good or bad is another question. If possible, talk to other landlords that have used local agents to receive feedback. Moreover, I can almost guarantee that if an agent supplies a poor enough service, someone would have written about it on the internet somewhere. Ahhh, the power of the internet. Use Google to hunt down reviews of your local letting agents.
Average time to fill vacancies
A good agent will have a quick vacancy fill rate.
It’s probably worth calling around a few agents and investigating how long it’s currently taking them to fill vacancies. The agents may pull a figure out of their baggy arseholes (and most likely will), but it’s always good to get a benchmark figure. If an agent predicts 2 weeks, and it takes them substantially longer, it won’t reflect well on them, consequently it should be in their best interest to meet their targets and improve on their average.
Advertising presence – Rightmove & Zoopla
A good agent will have a powerful marketing presence both locally and on the internet. Find out which mediums’ the agents are utilising. Most of the best agents are spread across local newspapers and the internet.
Personally, I wouldn’t use an agent that doesn’t advertise on the UK’s biggest property portals, including Rightmove and Zoopla– those two are crucial!
Image is everything
I hate to be the kind of brother to stereotype, but I gots’ to be that kind of brother. Most agents are complete and utter greaseballs- they will stab their nans’ for a buck.
Go with your instincts and decide whether your agent presents well and seems standup. Be wary of agents that wear too much aftershave and gel. I don’t know why, but they’re usually dickheads.
Quick response rate
When I send an enquiry to an agent, I expect a sharpish response. Time is money. But beyond that, a speedy response is plainly and simply professional, and that’s the kind of service I always expect.
I recently read an article (I don’t remember where now), which discussed research which showed that people expect to hear from the agent almost immediately, often within an hour, but definitely within 24 hours. I don’t find that hard to believe for one second.
Late response rates are often a good basis for judgement. If an agent isn’t quick off the mark, you can probably assume that’s the kind of service they generally offer.
Agents should be immediately helpful from the moment you make contact. If they’re not, buyer beware.
Different levels of service
A good agent will offer different levels of service, from fully-managed to tenant-only. Each level will have it’s own price tag.
Just because one agent doesn’t offer a package that best suits your requirements, it doesn’t mean another won’t. The services available are very much based on an agent by agent basis. Use an agent which offers a service that best suits your needs.
Agent should be able to cover A-Z
Letting agents should have the contacts and resources to handle the entire A-Z for a landlord. That means handling the finer details from arranging all the necessary contracts to ensuring you’re meeting all your landlord legal obligations (bear in mind, it’s YOUR responsibility to ensure you comply, not the agents), including Energy Performance Certificate (EPC) and a Gas Safety Certificate. Not to mention, the extra “sensible” precautions, like complying a solid inventory.
Seems pointless using a letting agent if they require you to do some of the legwork.
Non-refundable tenant-find fee
If an agent wants to take a non-refundable fee as part of the tenant-find service, then I would shop somewhere else. Why should you pay a penny if the agent can’t find you a tenant?
It’s also worth noting, many landlords use multiple agents to find tenants. For example, I’ve simultaneously used an online letting agent and a high-street agent to try and find me tenants. May the best man win. In that scenario, I don’t want to be shackled with non-refundable fees.
Right to reject tenant
Sadly, agents aren’t always looking out for the landlords best interest, especially when the landlord is subscribing to their lower-earning package, the tenant-only service. This gives agents the motivation to quickly fill the vacancy so they can get paid and move on, despite how unsuitable the tenant maybe. Remember, it’s the landlord that will pay for a bad tenant, not the agent!
That said, it’s always sensible to reference and meet any prospective tenants for yourself, and not just rely on your agents recommendation. So it’s important to ensure that your agent will allow you to meet and greet prospective tenants, and in turn, accept and reject any applicant.
Type of tenant
Tenants come in all shapes and sizes. Some are good, some are terrible, and some are better matched to certain properties and landlords
A good agent will ask you exactly what type of tenant you will accept e.g. tenants with pets, tenants that smoke, single tenants, DSS, family etc.
If they don’t ask, make it clear what you’re after BEFORE agreeing to work with them, and way they can decide whether or not they’re up for the challenge. It’s also a good idea to get it in writing, that way you can easily refuse any tenant that doesn’t meet your requirements and they won’t have a leg to stand on.
Opening times
Does the letting agency open on weekends, particularly Saturday? And what are there closing times during the week? Remember, most people work during the day, so most enquiries are made during the week and after work hours.
The nature of ‘a tenant looking for a property’ is that they often move quickly- they don’t often wait around for long. So if your agent misses an enquiry from a prospective tenant, there’s a good chance the tenant would have found somewhere else by the time their call is returned.
If you’re planning to use an agent for a fully-managed service their opening times are just as important, as you will want your tenant to be able to report any problems as quickly as possible. Equally, you may need to contact the agent.
Pay attention to the opening times.
Flexible pricing structure
In this current climate, letting agents have to be flexible with their pricing structures because everyone is trying to keep costs low. An agent should be prepared to break down costs and give you the opportunity to craft your own package. For example, if finding a tenant costs £200 of the total package price, arranging a tenancy agreement costs £50, and managing the property for the year costs £600, the agent should be prepared to slash the £200 if you’re prepared to find the tenant yourself.
Here’s a guide on how much the average high-street letting agent charges.
How appealing are their adverts?
Look at other properties they’re currently trying to let for other landlords; look at their shop window and look on Rightmove & Zoopla. Are their adverts descriptive and well-presented? Would they entice you to make an enquire?
Pay special attention to the photos being used – they should be high quality (e.g. good composition of the key rooms/features, high resolution and well lit) – they make a HUGE difference.
I’m always left bewildered whenever I jump onto Rightmove/Zoopla (or any other property portal) and see vacant properties with hideous photography; blurry as hell, lop-sided, terrible compositions, and clouded by profoundly poor lighting. Poor presentation will drastically reduce enquiries! Here’s a more in-depth article on the importance of using professional photography and how they improve conversions!
If you’re using a high-street agent (as opposed to an online letting agent), it’s usually their responsibility to take with a good quality camera and wide lens, because that’s what you’re paying a premium for! So make sure you’re getting your moneys worth!
Personal website
A letting company who are serious and professional about property management should really have their own website. It would seem a bit weird if they didn’t.
Competitive rates
It goes without saying that the best agents will be competitive with their rates. Get quotes and find the best rates. Bear in mind, agents are prepared to haggle, so take advantage.
Promotional offers
A lot of agents offer promotional deals, so it might be worth enquiring because that could be the clincher.
I once used an agent that was offering free landlord Rent Guarantee Insurance. If my tenant defaulted on rent payment, the insurance policy would cover the cost of lost rent and legal costs. Amazingly enough, that particular tenant actually did fall into arrears, so it was a stroke of orgasmic luck.
Great article. On renewal fees, OFT has been looking into this practice and whether or not it is fair. See press release: http://www.oft.gov.uk/news/press/2009/83-09
My understanding is that agencies now have to make this fee abundantly clear if they do use it, otherwise they're breaking the law. Personally, I don't use a letting agent, but it's always good to be aware of their pricing practices.