It is estimated that there are over 10,000 letting agents in the UK. Some are large ‘corporate’ companies who own thousands of agents between just a few brand names; some are independent with just one office while others are franchised, such as Belvoir where the individual owners are supported by a central office. But how do you find ‘the right one’, because surely they are all cowboys and out to fleece the unsuspecting landlord in some way?
By law, since October 2014, letting agents in England must belong to a redress scheme, while although agents in Scotland, Wales and Northern Ireland don’t need to belong by law, as yet, many have already joined. From much of the marketing you would see, it does appear that on the surface, most letting agents are the same. Most, for example, offer the same basic services: ‘let only’ whereby they just find you the tenant and you do the rest, and ‘full management’ where they look after your tenant and property for the duration of the tenancy. However, just because they all offer the same services, it doesn’t mean they deliver them in the same way or work to the same standard.
As a landlord, there are various services you may need which are above and beyond the ‘standard’ offered by most agents. For example, some offer a successful ‘buy to let service’. This is where the agent helps landlords find the right property to let, at a price you can afford, delivering levels of rent achievable in the local area. You could do this through property investment clubs but they tend to charge you thousands of pounds to ‘source’ a property and don’t always offer the discount claimed, nor is it always possible to achieve the rent they suggest. We at Belvoir Milton Keynes offer a buy-to-let service based on our extensive knowledge of the area, won’t charge anything for our advice and time (providing the investor also puts in some leg work) and our main aim is to secure your property management business over the next 15-20 years, so your success is very much tied into ours.
Secondly the way letting agents charge is very different. The better agents, including all Belvoir offices, provide both tenants and landlords with all the fees they are likely to charge. Since 27 May 2015 in England it is a requirement to display all fees upfront to landlords and tenants - but not all agents do. In Scotland, letting agents (and landlords) are banned from charging tenants fees, although again, some still do.
As letting agents charge for their services in different ways, it isn’t always easy to compare them. What’s important is to be clear on how they charge, not just at the start of the tenancy, but to manage and re-let the property too. Some agents charge landlords a fixed ‘admin’ set up fee, which may include just marketing the property and showing tenants around or include lettings basics such as a tenancy agreement, an inventory and protecting the tenant’s deposit. Other agents don’t charge a set-up fee, but charge a set commission based on the rent to find a tenant or for full management.
Agents charges become complex and potentially quite high where there are inflated prices for ‘additional charges’ and carrying out repairs. For example, I find many letting agents who charge low commission fees to ‘attract’ landlords, such as 5% of the rent, in my view, charge high costs for letting incidentals, and pass on some of those costs to tenants by forcing them to re-apply (and pay again) to renew their tenancy, ultimately causing a higher number of tenant moves or ‘churn’. For example they may charge a set-up fee, a low commission rate and then charge high prices for individual services needed such as a tenancy agreement, gas safety, EPCs, protecting the tenant’s deposit, inventories and more. For you to compare costs on a ‘like for like’ basis, it is important to compare letting fees over a 12 month period:-
What does the ‘set up’ fee include?
What percentage uplift does the agent charge for individual services?
How much will the agent charge for management, renewal and check in/check out fees?
What will it cost to organise repairs?
Do they organise some repairs for free?
Does the letting agent keep up with latest legal changes?
The final main difference between good agents and the not so good comes from keeping up with legal legislation for lettings. Successive governments have been increasing the amount of legislation which affects landlords, letting agents and rented properties. To keep up with these legal changes requires substantial investment from letting agents. This is why many letting agents don’t bother. Agents should ideally belong to an industry organisation such as the Association of Residential Letting Agents (ARLA); National Approved Lettings Scheme (NALS) or the Royal Institution of Chartered Surveyors (RICS). These organisations require the highest standards in lettings. For example, they need their agents to have ‘client money protection’ insurance which means if something goes wrong with the business, the rent collected by the agent is protected. It also means every time there are proposed changes to the law, the agent can respond; it is not just knowing the law that’s important – it’s being able to interpret it correctly on your behalf, and at Belvoir we pride ourselves on being at the very forefront of change.
So, although on the surface, agents do offer the same basic services, there are key differences when it comes to standards and pricing. At Belvoir, we were members of a property ombudsman scheme prior to it becoming a legal requirement and are members of both ARLA & NALS. Our fees are published on-line and in print for both tenants and landlords and we take our legal responsibilities seriously, so that you can be both protected from risk and advised of future compliance ahead of time.
If you would like to discuss our fees or would like anymore information, please call us at Belvoir! Milton Keynes on 01908 562582 or send us an email to firstname.lastname@example.org