Landlords & tenants stung by double dip chargingThursday, August 21, 2014Published by WARREN ...
Landlords & tenants stung by double dip chargingThursday, August 21, 2014Published by WARREN LEWIS
New research published by Direct Line for Business has identified unscrupulous letting agents that are ‘double dipping,’ charging tenants and landlords for the same service.
Whilst most letting agents play by the rules, the research found evidence of both landlords and tenants being charged for services such as checking references or alterations to contract extension agreements, even when revisions to the contract amounted to just a change of a date.
The research revealed how a South London letting agent charged a landlord £670 for a simple contract extension, which only necessitated a change of date, while the tenant was charged £90 for the same action.
The research also highlighted the variance in fees landlords pay when they rent out their property through an agent. While on average landlords are charged 11 per cent of the revenue they receive on a monthly basis if they rent out their property through a letting agent, the research found a range from as low as five per cent to a high of 17 per cent.
When calculating the yield they hope to generate, landlords should consider the range of additional charges involved in renting out a property. The research revealed the cost of a letting agent completing an inventory on a property ranged from £65 to £300; property visits from £20 to £100; and the charges for managing a checkout from £30 to £125. Other charges landlords often encounter include paying for the cost of running credit checks on prospective tenants, reviewing references and checking tenants into a property.
Jasvinder Gakhal at Direct Line for Business said:
“Whilst most letting agents are transparent and fair, a minority are doing an injustice to the majority through ‘double dipping’ activities.
"That aside, it is important landlords consider all the costs they will face when estimating the yield for a property. Taking into account agents’ fees, taxes and unbudgeted costs such as emergency property repairs, landlords can easily pay out expenses of 25 per cent of their annual rental income for a property. Letting through an agent can take the hassle out of the rental process and provide additional legal protection in the event of an incident, and our research shows it pays to shop around for the best value as charges and services can vary significantly from one agent to another.”