Do tenants have choices?

by Mark Alexander

8:41 AM, 16th April 2013
About 6 years ago

Do tenants have choices?

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Do tenants have choices?

Do tenants have choices?Am I the only person in the world who is sick to the back teeth of hearing stories of letting agents charging extortionate fees to tenants? Same goes for poor quality properties.

Either I’m living in a bubble here in Norfolk or something is wrong with these claims.

Very simply, if I were to use the wrong agents and they charged rip off fees I would find it harder to let my properties, my tenants would look for alternatives elsewhere. Surely fees are self regulating? As landlords, it’s important for us to choose letting agents who’s fees make our properties competitive is it not?

If fees charged by letting agents to tenants are not competitive then surely it is the landlord who pays the price, either in void periods or being forced to charge lower rents to be competitive.

If my properties were grotty I’d struggle to find tenants unless I massively discounted the price. If I were to allow my properties to become grotty then surely my tenants would seek alternative accommodation?

My argument is that we don’t need rent capping or more rules and regulations regarding how much can be charged in fees. These factors are best left to market forces in my opinion.

It’s no different to the cost of fuel, a loaf of bread or anything else. If a person selling a product doesn’t get their pricing structure right they will be the ones to lose out in terms of lost custom at the end of the day.



Comments

Lynne Davis

9:44 AM, 16th April 2013
About 6 years ago

What we need is transparency in terms of fees charged. Yes, market forces SHOULD regulate costs, but I think that tenants generally find a house they like and are only then hit with the fees, and don't realise that not everyone charges so much. The new rule about agents stating their fees upfront should help with this.

13:01 PM, 16th April 2013
About 6 years ago

Not that I have ever been a prospective tenant; but I think Lynne states it correctly.
Tenants tend to look for a property first and then are shocked by the LA charges.
They don't tend to look for properties with LA that charge the least fees.
It isn't even in their initial thinking!
That is why I think disclosure of fees upfront is appropriate.
I think this lack of DD on fees by tenants could be caused by the shortage of rental properties.
Therefore the tenants' priority is to source an appropriate property and then worry about any fees.

Mark Alexander

13:30 PM, 16th April 2013
About 6 years ago

@Lynne and Paul, I certainly agree that Letting Agents should be made to disclose their fees of all property portals. The trouble is they call them so many different things. I could easily come up with half a dozen boxes that had to complete and they would then make up fees for boxes which were not there to be filled in. For this to work there would have to be a law something like tenancy deposit, i.e. call it what you like but fees changed to tenants are fees charged to tenants regardless of what you want to call them. Therefore, fees for tenancy agreements, referencing, contract preparation, guarantor referencing, inventories, administration, viewings or whatever else the agents want to call it would still fall under the scope of fees payable by tenants. I spoke to Rightmove about this a few weeks ago and they think this will be an absolute nightmare to administer and to police.

9:22 AM, 18th April 2013
About 6 years ago

How letting agents can justify charging fees to prospective tenants for administration, contract preparation etc never ceases to amaze me. Agreements are standard, computerised and they just fill in the blanks and press the print button (cost equals ten sheets or so of A4 paper.). All this should be covered in the landlord's fee. The only thing I can think of to make a case for is Referencing costs where it is possible tenants might make an application and withdraw after refs are taken & paid for. Do any letting agents seriously make a charge for carrying out viewings?!

Sam Cowen

10:48 AM, 18th April 2013
About 6 years ago

Agree with you that in theory tenants have choices, but I've been there done that and come a cropper myself. In a competitive lettings market like London, where you're on the edge of affordability anyway, an additional fee can really set you back. You've finally found a place you can afford and at the last minute the agent lets you know about extra fees. It's not like you can choose another agent for the same property - you have to start your search all over again. Often you're up against a time limit - for example if the landlord wants to move back into their flat and has given you a month's notice - this happened to me twice in my 4 years renting in London! It's hard to find something affordable in a short time frame, and good properties get snapped up quickly. If you're working you don't have time to traipse all over town inspecting properties. Transparency on fees would be a great starting place, so at least you know not to bother if they push you over the affordability limit.

Joe Bloggs

11:47 AM, 19th April 2013
About 6 years ago

i think agents do charge tenants rip off fees because they are sneaky, greedy and tenants are often naive. i have discussed agent fees with many tenants who just seem to accept this as a fact of life. i cant fathom why. we never use agents and yet sometimes get enquiries from tenants who only want to deal with agents rather than direct with landlord. and we dont charge any fee whatsoever, not even for tenancy deposit. strange!

Bernard Adey

21:56 PM, 20th April 2013
About 6 years ago

I recently had two vacancies out of my five units and as I an getting older ( past it ? ) I decided to use an agent for the first time in a long time, my leaving tennants had been in residence for three and a half years and seven years, I first gave the property to an agent who I had used in the past and was quoted 7% for find only service for a one year SHT plus £100.00 for documents and any insidentals, plus VAT. No agreement to sign up to as they work on a hand shake with landlords they know and worked with before. They also charge tennants £100.00 plus VAT for credit checks and incidentals. After six weeks I had had a number of viewings but no offers so I told the agent I wished to try letting myself by advertising vie Discount Letting cost to me £59.00 plus VAT including three basic credit checks and free download of SHT agreement form and other useful forms ie guarantor form and Bank standing order form. I said to the agent I wanted to lower the asking rent by the equivalent of the fees I would save by not having to pay agents fees and VAT and he said he was OK with that but he would keep it on his books at the higher rent as long as I agreed to accept his tenant if he found one, subject to status of course, and in that event I would pay his fees. After two weeks I let one unit myself but niether I nor the agent had any offer on the other, so I decided to look at other local agents and had a shock. My research on the net gave me an Idea of which agents were most active and so I approached the nearest one that rated highly They quoted me 11% plus VAT plus £200 plus VAT for paper work, plus what I thought was illegal a repeat annual charge on the annual anniversery of the tenancy agreement until the tenant left. I think everyone in the letting business must remember the 'Foxtons' saga many years back now I thought that had put a stop to charging fees for doing nothing but I must be wrong. When I told the agent that I would not accept such onerous terms he offered to negotiate, but I told him I have principals and would never deal with anyone who would even consider trying to make such an agreement with some unsuspecting landlord as if that is what he would do to person who could become a regular customer what would he do to the tenant who probably he would never have to deal with again. My happy ending was that I let the other unit two weeks later to a first class tenant who told me that she thought I was joking when I asked her for £25.00 for the reference check as she had been to Foxtons to look at a flat and was asked for £500.00 for the paperwork. I ask for £25.00 as I do not rely on the free check from Discount Letting I always follow that up with a much more comprehensive one through an insurance company. If the let goes through to completion I refund the £25.00 after the deposit has been paid.

18:59 PM, 22nd April 2013
About 6 years ago

In Scotland we have been notified recently of 33% increase in letting fee to landlords because agents no longer allowed to charge tenants for references.


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