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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Letting Agent Fees – What’s a Fair Fee to Find a Tenant by Letting Focus

Since my last two blog posts, many people have asked me what is a fair fee to pay a letting agent for finding a tenant.
My answer is
1) It depends where in the country you are (London agents always charge higher fees as a % of the rent)
2) How good a negotiator you are.
3) How easy the agent thinks it will be to let your property
Read the Contract
Do you like reading contracts?
No?
Well, sorry, but it’s time to get “down and dirty” with a letting agent’s contract.
Write this in bold letters, WHEN I USE A LETTING AGENCY I WILL READ THEIR CONTRACT VERY CAREFULLY.
Why?
Well, you have to in read it order to understand the limits of what they will do and won’t do for you.
Most will not evict a tenant who does not pay the rent, for example - at least not in their standard fee.
So why do contracts matter so much?
Well, if I had a fiver for every time a newbie landlord said to me “Wait a minute, the agent has just sent me another bill for a thousand pounds for a tenant who moved in 6 months ago” I would have about £500. The reason is, “renewal fees or repeat letting fees.”
As we have seen from the recent OFT case involving Foxtons, letting agents - especially those in London – just love renewal fees because if the tenant agrees to stay on after the end of 6 months; the agent gets to bag another fee for doing not very much.
If you have signed a contract agreeing to this, you are a bit stuck unless the existence of the renewal fee was hidden in the small print.
And if that was the case, then see my last post for more on what to do.

What’s Included and What isn’t Within the Letting Fee
Also, check out what’s included in the letting agent’s fees – for example, some agencies offer a free inventory as part of their service whilst most others charge extra for this.
If inventory is included, then great, but always request a copy of an old inventory to check quality and detail which varies greatly.
Also, ask if they make extra charges for checking references, doing check-ins on move-in day, signing tenancy agreements or notifying utility providers and the council tax people.
Ask if the agent uses an up to date credit referencing system to check out tenant’s ability to pay the rent and does it check for County Court Judgments too. What does it say about the referencing system they use on the internet?
Assess if the agent understands the importance of having proper references and an inventory done.
The former will reduce the chances of ending up with a tenant from hell – one who won’t pay rent and who could take months to evict - and the latter will ensure that if the property is returned in a mess or with things damaged beyond normal wear and tear, you’ll be entitled to keep some or all the deposit to pay for it.
If the agent does not understand this, go elsewhere, because this is basic stuff.

Letting Fees - What I Pay
For Tenant Find Only services - where the agent find and “reference checks” a tenant, sends the reference report to me for my OK, collects a holding deposit, does the move in, collects the balance of the tenancy deposit and first months rent and signs the tenancy agreements - I have never paid more than 4 weeks rent, even in London.
And no, I won’t pay the agent any other extension or renewal fees (as all my tenants will move onto a periodic tenancy at the end of the initial term.)
I have a phone and I know good plumbers, heating engineers and plumbers so I can easily manage all my properties myself too - so no need to pay a letting agent a management fee. I just pay them to find a tenant and that’s it.
Some landlords who used letting agents before may wonder about doing it themselves. We can help you with this. Just ask about my one to one property advice service and my property seminars or join my newsletter by emailing me at [email protected]
Plus at our Property Affiliate page we have set up links to lots of good long established merchants who can find tenants for you by putting your property online, checking tenant references, arranging the best buy to let mortgage, finding good landlords insurance and a lot of other landlord services too. Click on our Landlords Resources page for more information and great deals from our merchant partners.
We are having a couple of well earned weeks off. We will post again on 12th August!
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord experts. I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investment Book.
What’s unique about LettingFocus is that I offer independent unbiased advice on buying property as an investment because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas) and what type of property to buy and I can answer all your questions on letting property too because I have been a landlord and property investor for over 25 years.
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Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week.
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Letting Agency Renewal Fees - The Lettingfocus.com view

I recently did some consulting with a chap who was not happy that his letting agent was going to charge him to renew his tenant’s contract – the original tenancy had been arranged through the agency.
My view is that all landlords must read the contract with the letting agent BEFORE they sign it. If they have signed to say they agree to being charged a renewal fee then that’s tough, I’m afraid.
I’m not an agent but on the matter of agency fees, my view is that agency letting fees are not high as long as you avoid renewal fees.
Simply extend the tenancy - doing this should not involve you or yuor agent in any work, except simply asking the tenant if that's OK with them.
In fact, a friend of mine has just asked me if I would find a tenant for him whilst he is overseas. My answer was No.

What A Letting Agent Does to Find a Tenant
Putting in adverts, doing viewings on wet evenings and weekends, checking references, doing check ins and dealing with the general public and the like is all a lot of work – and not something I would personally do for the going rate agency finding fee of around 8 to 10% plus VAT.
Sorry, but I have better things to do than that – which is why I like to keep my tenants by keeping my rent increases reasonable and my rents below the market average.
The reality is that there is not much cash in lettings – agents often use it as a loss leader to get more lucrative work selling properties.
This is why they often try to make some extra money by charging renewal fees – even though they often don’t do much at time of renewal – and why they always try to load up fees for other services like printing off copies of tenancy agreements and making charges to tenants for doing references etc.

New Tenancy Agreement
In this particular case the agent wanted to issue a new tenancy agreement.
I said that, seeing as the landlord indicated he did not want to necessarily issue a new longer term tenancy, why not just extend the existing one to make it a periodic tenancy.
One benefit to doing this would be that the landlord would not need to join a Tenancy Deposit Scheme because the original tenancy started before April 2007 – i.e. before TDS became compulsory. So, he would save on the hassle and / or cost of having to register for TDS because TDS is not compulsory for Tenancy Agreements starting before 6 April 07.
If you need more advice on where to letting agency fees ask me. I’m David Lawrenson from property investment experts http://www.lettingfocus.com/
I’m the author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” the UK’s top selling property title.
I’m an expert on UK property investment and a well known property freelance writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a property investment advice service.
I also work as a consultant helping banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my landlord blog and details of my networking, advice, property seminar programme at my website http://www.lettingfocus.com/
Click here for details of my next London landlords networking meeting.
What’s unique about lettingfocus.com is that we offer independent property investment mentoring because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2008. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.

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Letting Agents - Should I Use a Letting Agent to Let my Property? Should I Pay Renewal Fees Every Time The Tenancy Is Renewed?

If you use a letting agent, their fees are not set in stone so look carefully at the rates they quote in their contract.
Be prepared to negotiate (or remove altogether) any clauses in their contract covering payments of fees that you feel are unjustified or excessive.
For example, if a fixed term assured tenancy becomes a rolling or “monthly periodic tenancy” after 6 months then the workload for the agent should be minimal.
In these circumstances, all that might happen is an exchange of emails between your tenant and your agent to say they wish to stay on - the tenancy becoming a monthly rolling or periodic one. This type of situation does not justify a hefty renewal fee.
So make sure you don’t sign a contract which gives the agent the right to charge a fee on renewal of each tenancy. If you do, you’ll be paying a fee for as long as the tenants stay.
Neither is a big fee justified for producing a tenancy agreement. These are available from the internet or from landlords associations or in my book “Successful Property Letting – How to Make Money in Buy to Let” at little or no cost.

Don't Be Mean
But don’t be mean.
Good letting agents are worth their fees and work hard and do unsocial hours on your behalf - so be prepared to pay for the work that the agency does when they do it. In many cases this will mean 7 to 10% for finding a tenant and at between 3 and 5% for managing them.
But just make sure you don’t sign up to pay renewal fees where little or no work is done by the agent.

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ABOUT US

LettingFocus.com are the experts on landlord issues and I’m David Lawrenson, the author of “Successful Property Letting” – which has been the UK’s top selling property and buy to let book for the last 3 years.

We help landlords and property investors make money in property by coaching them in ways that work, that are ethical and which involve minimal risk.
I have been a landlord and property investor myself for over 25 years.

At LettingFocus we offer independent unbiased buy to let advice for property buyers and landlords both on a one to one mentoring and coaching basis as well as through occasional group seminars.

Property syndicates and property advice in the UK is still largely unregulated and what counts as “advice” is too often more about making the promoter money than giving useful information to the investor.

With no link to property firms, developers or bridging loan providers, at LettingFocus, we aim to give unbiased independent advice on where and what type of property to buy for investment, when to buy and how to buy property at a low price.

We also show you how to manage tenants properly and in ways that take up as little of your time as possible.

See this related article from our Articles pages: http://www.lettingfocus.com/pages/myarticles_ChoosingaLettingAgency.html

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Letting Agency Fees - Negotiate on Them

If you use a letting agent, their fees are not set in stone so look carefully at their rates.
My advice is to look at the contract they present and be prepared to negotiate (or remove altogether) any clauses fees that you might feel are unjustified or excessive.
For example, if a fixed term assured tenancy becomes a periodic tenancy after 6 months then the workload for the agent should be minimal at the 6 month point.
In these circumstances, all that might happen is an exchange of emails between your tenant and your agent to say they wish to stay on. This type of situation would hardly justify a hefty renewal fee.
Neither is a big fee justified for producing a tenancy agreement. These are available from the internet or from landlords associations at little or no cost.
But don’t be mean.
Good letting agents are well worth their fees and will work hard and do unsocial hours on your behalf so be prepared to pay for the work that the agency does when they do it.
In many cases this will mean at least 10% for finding a tenant and at between 3 and 5% for managing them.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of landlord information.

I’m David Lawrenson, a landlord and property investor myself for over 25 years and author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years.

Services to Businesses and the Public Sector

Primarily I am a consultant to banks, local authorities, social housing providers and other organisations – helping them with their landlord facing or buy to let product strategies and services.

For example, I help banks improve their buy to let mortgage lending practices and I help housing association / local authorities find private landlords (private rented access schemes, local letting agency models etc.)
I also write for property websites and am regularly quoted by the broadcast media.

Services for Private Landlords

We also find some spare time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on either a one-to-one mentoring / coaching basis or through our occasional group seminars. With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it. We also show you how to manage tenants properly.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog

THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page


For general info on our CONSULTING click here: Consultancy and Seminars


ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring


NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event

We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords

TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

To JOIN our Free QUARTERLY NEWSLETTER
simply send an email to [email protected] - Please note we WILL NOT send spam or sell our mailing list to advertisers!

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Copyright of Blog:
David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.

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