Can letting agents help take the strain of upcoming legislation from landlords?

Can letting agents help take the strain of upcoming legislation from landlords?

0:04 AM, 7th June 2023, About 4 months ago 5

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With 168 pieces of legislation in place and with more to come, landlords are turning to letting agents to help guide them through turbulent times.

A good letting agent can help provide peace of mind to a landlord and offer different services to help manage a property.

This Property118 investigation highlights the services letting agents offer and how to make sure a letting agent is credible.

A service level right for the landlord

Letting agent fees are payments that landlords make to estate agents for the services they provide.

Propertymark, CEO, Nathan Emerson told Property118 the types of services letting agents provide are all different for each service.

“Letting agents offer varying levels of service, so depending on how much a landlord wants to be involved with the property’s management, there will be a service level right for them.”

“The service a landlord uses may depend entirely on how many properties they let, their location and how hands-on they wish to be.

“Options range from letting agents just finding a suitable tenant for a landlord, through to fully managed where the agent takes full control of managing all aspects of letting the property.”

There are three different types of services letting agents offer:

  • Let-only – A letting agent will help find the tenants for the property. This includes completing all the necessary paperwork, obtaining references and making sure the tenancy agreement is signed. After that, it is the landlord’s responsibility to look after managing the property.
  • Rent collection – This service involves letting agents collecting and chasing rent payments from tenants. David Votta, vice president of ARLA Propertymark told the Telegraph: “With a rent collection service, they tend to charge a set-up fee and a percentage of the rent each month. In London, this can be as high as 12% but around 7% is more common in other parts of the country.”
  • Full management service – This service passes full responsibility to the agent who will handle everything from advertising your property and being a point of contact for tenants on the landlord’s behalf.

Set-up fees vary across the country with London usually being the most expensive. For a let-only service letting agents tend to charge a one-off fee (equivalent to around four week’s rent)

Mr Votta says that a full management service can be the most expensive: “Set-up fees are around £600 and £1,000, or around a month’s rent.

“On top of this, a percentage of the monthly rent is charged at a higher rate than for the rent collection service. This is often around 8 to 15% plus VAT.”

Property managers have a strong knowledge of the market’s changing regulations

Many self-managing landlords are now considering switching to using a letting agent.

In the English Landlords Private Landlord Survey in 2021, 46% of landlords used an agent for letting services, up from 34% in 2018. One in five (18%) used an agent for management services.

Another survey from Uswitch reveals that 63% of private landlords would consider using a property manager or a letting agency.

Almost a third (29%) of landlords say a switch to an agency would be due to their stronger knowledge of the market.

The most common reason landlords give for switching to a letting agent is not having to deal with repairs (31%).

Kellie Steed,’s buy-to-let mortgages expert, said: “With both the Renters Reform Bill and higher interest rates on mortgages having a huge knock-on effect on the residential property investment market, some landlords may find the coming months more challenging than usual.

“Switching to a letting management company offers some attractive advantages and gives landlords the scope to hold onto their investment.”

She added: “Property managers have a strong knowledge of the market’s changing regulations and can also take on much of the responsibility of owning investment property: lettings, repairs, rental disputes and complaints can all be tackled by an agency.”

57% of landlords believe the fees they are charged by their letting agent are fair

Eddie Hooker, chief executive of the Hamilton Fraser says that whilst some landlords feel that the fees charged by letting agents are too high the majority do not agree.

Research by Total Landlords Insurance reveals 57% of landlords believe the fees they are charged by their letting agent are fair.

More than half of landlords (56%) rated the service provided by their letting agent as above average to excellent.

According to the survey, 61% of landlords said they had never experienced a late rent payment from the letting agent if there was a late rental payment the majority said it was either the fault of the tenant or a banking problem.

Chris Norris, policy director for the National Residential Landlords Association, told Property118 it’s important for landlords to check the terms and conditions when reading an agreement.

“Landlords should always be clear about the fees charged by agents before signing a contract with them.

“It is especially important to read and understand the finer details of any agreement with an agent. If any landlord feels any level of uncertainty, they should seek legal advice.”

He added: “The Consumer Rights Act places a legal duty on letting agents to clearly display the fees they charge to tenants and landlords.

“Where a landlord feels the requirements of the Act are not being met, they should speak to their local Trading Standards office.”

Mr Hooker says unexpected charges made to landlords by their agent can often be resolved through communication.

“These disputes can quite often be avoided by clearer, more frequent communication. The majority of landlords don’t tend to dispute the charge itself, but the surprise nature of this reduction in rental income can often leave them in a problematic situation.

“Agents can help reduce these kinds of complaints by forewarning their landlord customers of any charges they may not be expecting.

He added: “This will help landlords to manage their own financial obligations in advance and this in turn will prevent a dispute reaching the PRS redress scheme.”

Letting agents who charge illegal fees will face paying huge fines

The Tenant Fees Act says the only payments that landlords or letting agents can charge to tenants in relation to new contracts are:

  • Rent
  • A refundable tenancy deposit capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above.
  • A refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent.
  • Payments associated with early termination of the tenancy, when requested by the tenant.
  • Payments capped at £50 (or reasonably incurred costs, if higher) for the variation, assignment or novation of a tenancy.
  • Payments in respect of utilities, communication services, TV licence and Council Tax
  • A default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement.

Landlords or letting agents who charge illegal fees will face paying huge fines. The first offence would be a civil offence, with a fine of £5,000 and if the offence is repeated within five years there could be a fine of £30,000.

How to make sure letting agent is credible

All estate agents by law must be signed up to a redress scheme if they are dealing with residential properties in the UK.

The two approved government redress schemes are the Property Redress Scheme and the Property Ombudsman.

If a letting agent is not part of these schemes, then it is best to stay well clear. Landlords can also make sure the letting agents are part of an approved letting agent accreditation scheme such as the UK Association of Letting Agents (UKALA).

Other professional bodies include The Royal Institution of Chartered Surveyors (RICS) and Propertymark.

Mr Emerson told Property118 that knowing a letting agent is part of an accreditation scheme means they must adhere to certain standards.

“It’s important that landlords do their research when finding a local letting agent.

“Propertymark members adhere to the highest standards and are qualified and undertake regular training to ensure they are up to date with the latest legislation and best practice.

“They abide by a nationally recognised Code of Practice and are provided with a range of resources to help them offer a better service.”

Also, it is good to check if a letting agent is part of a client money protection scheme such as Safeagent. This will help protect a landlord’s rent and tenant’s deposit if the agent were to suddenly go bust.

A good letting can provide peace of mind

Landlords can of course avoid letting agent fees altogether if they fully manage their property themselves.

However, many landlords may find the coming months more challenging and will turn to letting agents to help them navigate through upcoming legislation.

It is still wise for landlords to check the letting agent is right for them and to be careful and check for any add-on fees that may need clarification in the agreement.

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Mark Smith

10:23 AM, 7th June 2023, About 4 months ago

While it is reasonable for as landlord to delegate some administrative tasks to an agent it is IMHO irresponsible to suggest that landlords can hand over responsibility for legal compliance to agents .
Make no mistake a court will hold the LANDLORD responsible In matters such a licensing, legal evictions you need to know the law yourself (or take your own advice from a legal professional.
Landlord forums are full of stories from landlords who have been let down by agents, who do don't accept responsibility for their mistakes - the,n to add insults to injury, have clauses in their contracts that make it difficult to change agency during the lifetime of a tenancy (the only way to get rid of the agent is to evict the tenant which is a ridiculous state of affairs) .
But ,they sell themselves, don't just naively believe your agent has a knowledge of the rapidly changing current laws - or will monitor your properties and tenancies or promptly enough to protect your interest . Many will not.
But if you have found a good agent who keeps their knowledge up to date , looks after your interests rather than their own and acts propttly then value them - they are gold !

Caroline Hall

11:31 AM, 7th June 2023, About 4 months ago

My brief dealings with agents over a number of years have not been positive for all sorts of reasons. And infact I found the last one had not even given the prescribed information out. I also found that repairs were ignored. I an managing to do it okay 400 miles away though organising workmen can be a headache. My old plumber has not even got the internet! But he does the job quickly, arrives when he says he will and does not rip me off. I am trying to be assidous about keeping up with the law. But I am thinking of jacking it all in

Reluctant Landlord

12:34 PM, 7th June 2023, About 4 months ago

I would not say it is 'irresponsible' at all for a LL to use an agent - in fact far from it. Because of the amount of legislation etc, a lot of LL would see this as a viable solution to make sure he/he is making sure everythign is professionally covered.

This of course is based on the Agent being on top form with ALL the legislation and any local requirements themselves. The LL is where the buck stops at the end of the day.

Agents being agents and knowing this, may preclude some NOT to do their job properly ?

Therein lies the issue. You only know how good (or bad) your agent is when something goes wrong...which is why many LL still do everything themselves. Again totally undertandable.

Freda Blogs

12:57 PM, 7th June 2023, About 4 months ago

I agree with the above comments, and I also find the article itself to be somewhat patronising and self-serving.

Most landlords recognise that making an error could have expensive repercussions, but in the current environment with costs rising, tax and interest rates squeezing margins and the constant threat of rental and eviction reform, rent caps etc, many landlords simply don’t have the financial headroom to absorb the additional cost of using an agent, particularly when they are not protected from errors made them.

I have very seldom used them, and on the occasions where I have, I have known them to make errors.
Invariably staff are very young and a few months of training are not going to be a substitute for years of actual experience.

I accept they have their uses, especially where a landlord is inexperienced or located done distance from their rental property, but not for me.

Caroline Hall

13:17 PM, 7th June 2023, About 4 months ago

Reply to the comment left by Freda Blogs at 07/06/2023 - 12:57Your post made me smile. You are so right that when dealing with larger agents one usually ends up dealing with someone who is quite young and who knows very little. Another concern I have had is with inadequate referencing. I put great emphasis on previous landlord references and wherever possible will always speak to them on the phone. I had an experience with a letting agent that has franchises throughout the country. I had asked them questions about their referencing and was told they were very thorough. Ha ha. It was only because of the speed that they came back that I found out that Homelet who had done the referencing had not sought them at all because they had been living with friends for two months after they had left their last tenancies. Anyway to cut a long story short I ended up contacting the landlord of one of them who was not responding. The agent had grudgingly contacted them himself. Said landlord told me tenant was an absolute disaster. Best bit was when I said I would not touch the tenants with a barge pole the agent said "Are you saying just on the words of one person you won't take them?"

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