Are Letting Agents really that expensive?

When, in early 2009, we first opened our shop, we did so with virtually no landlords and no tenants. We had a few friends who allowed us to advertise for tenants for them, but certainly not sufficient to form a viable business. Whilst buying a portfolio was an option, their scarcity and the likelihood of inherent problems with such portfolios meant that we didn’t.

The local paper and some of the free websites were a good source of prospective landlords, but there were invariably two problems; the landlords we spoke with had very often had expensive or bad experiences with agents in the past and as a result, we were often told “I never use agents.”

Naturally, when a landlord is actually advertising, his telephone is ringing off the hook with applicants and so, most of the time, we used to simply make a note of the number and ring back some time later.  He still very often told us that he had been a landlord for years and never need to resort to an agent’s help, but occasionally we came across one who now had a “tenant from hell” in his property.

When confronted with a “tenant from hell”, the landlord who “never uses agents” was, all of a sudden, very happy to take the time to talk with us. “What grounds should I use to try and get them out?” “The council and the Citizens Advice Bureau are telling them to wait until the bailiffs come…” “They’ve split up, he’s left, she gets benefits but doesn’t pay me…” You name it, we’ve heard it, over and over again.

A newspaper advert running for a couple of weeks might cost the landlord £30. That’s a lot less than our fees. For this bargain price, the landlord suffers the grief of telephone calls at all times of the day and night and weekend, even after the property has been let. And, no doubt, calls from agents as well!

Then the landlord needs to arrange viewings and waste time and petrol on viewings for applicants who choose not to turn up. Then he needs to do his credit checks and take references. If he does it properly, this will also cost time and money. He’s obviously going to authenticate the applicant’s identity, draw up an up-to-date tenancy agreement and inventory and then oversee the move-in, inform the utility companies and the council and then put the deposit in a government approved scheme. (which might cost more money)

And don’t forget all the issues surrounding “Right to Rent” and the Deregulation Act and all the potential fines and risks for getting it wrong. 

Once the tenants are in, the landlord will collect the rent, carry out occasional visits to the property and arrange for any maintenance issues to be resolved. If it genuinely goes according to plan, what has all this really cost the landlord? What value does he put on his time? Is it really cheaper than using an agent?

More to the point, if it goes wrong, where is the supposed saving?

We cannot guarantee that each and every tenant we place is a blue-chip tenant who will respect the property, the terms of the agreement and pay rent on time. Such a guarantee would be insane and prohibitively costly.

What we can guarantee, however, is that the landlord will only need to take the occasional call or email from us and these will be at sensible times of the day. We’ll field all the tenant calls. We’ll suffer the frustration associated with applicants not turning up. We’ll properly reference check and credit check applicants. We’ll ensure that the tenant is entitled to rent in law.  We’ll even offer a guarantee against rent default and legal expenses. And, we’ll ensure that the property is marketed to as wide an audience as is possible and is seen on all the major web portals.

What would a landlord rather, a lineage ad; “2 bed flat, town centre, white goods, no DSS or pets, references req’d £700pcm” or ten or twelve photographs, descriptions and a floorplan on dozens of websites, available to anyone anywhere in the world, 24/7? And remember, it will cost nothing if we don’t find a suitable tenant.

No doubt, there are still sceptics who argue that a landlord is able to do all of this. It’s what he does for a living, he has a huge portfolio and he does everything as well and maybe even better than we do.

That may be the case, but we would like to point out one final issue that sets an agent aside from a landlord acting independently:

Anyone applying for a property through an agent knows that we will do everything that we have mentioned above. They will be sure that we will seek references and establish, with certainty, what their financial circumstances are. Furthermore, they know that we will charge a fee for our services. And if they cannot afford, or see no reason why they should pay a reasonable fee for our services, can they really afford the rent?

We vet applicants at every stage; their manner on the telephone or in the shop, the message in their email and their demeanour on a viewing. At every turn we are looking for the reason to turn down their application. And what do you think our response is to those whom we cannot help?

“Try the local newspaper on Thursday, there are always landlords advertising there.”

If this resonates even slightly with you, why not pick up the phone for a chat or call in for a no-obligation coffee?