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by Mary Latham
15:11 PM, 27th December 2013, About 10 years ago 23
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I didn’t want to start a New Year talking about a negative issue but this is too important to ignore.
The biggest change that has happened to my business in the last few years is being able to find great tenants through property letting web sites at a cost of less than £100. Previously I was paying a High Street Agent an average of £600. I did not use their tenancy agreements; I only use National Landlords Association ASTS because I know that they will be there to support me if the AST fails me. I did my own referencing because I want to speak to previous landlords and get a feel for their relationship with prospective tenants, credit referencing costs me less than £10 and I check my prospective tenants with LRS to make sure that I am not taking another landlords bad tenant. I like to do my own viewings because I am more experienced than most Agents, having been in the business for almost 42 years, and I am good at picking up on “fairy stories”. I need to know that I am comfortable handing over my expensive investments to a stranger. I protect my own deposits because I will be managing the tenancy and I will be the person who prepares the Inventory and inspects the property when they move in and out. I only used a High Street Agent to find tenants because I could not advertise my properties on the big letting web sites and I was prepared to pay an average of £600 for this privilege until my High Street Agent let me down for the second time.
The first time the agent signed up a tenant for 6 months, took their fee from the first month’s rent and deposit. The tenant did not pay the second month’s rent and I spent weeks chasing him, he did not pay the third month’s rent and I served a Section 8 Notice. I called the Agent to be told “We are not managing the property and we let it in good faith so there is really nothing we can do”. The tenant moved out at the end of month 3 taking all the keys to the house and the only keys to the garage. I had 6 weeks rent as a deposit (the Agent kept the first month to cover the fee &VAT) and by the time I paid the lock smith to gain access and change the locks on the garage (I always change locks on the house anyway) I had 5 weeks rent to cover a total of 3 months occupancy – I cleaned the property myself. I called the Agent who offered me 10% reduction on the next let!!! I should have left them at that point but I will always allow for one mistake.
The second time the agents let a house, agreed a move in date, this meant a month’s void but the Agent said that this tenant was the best person who had viewed and would be a good long term tenant. On the day before the move in date I called the Agent to find out why the AST had not been signed. The tenant told the Agent that he had decided not to move in!! The Agent told me that they would start marketing the property again and offered a 10% discount. I asked for the rent that they had taken from the tenant who had not moved in and I was told that they had only taken a holding deposit, equivalent to one months’ rent, and this was theirs to cover the work that they had done letting the property. I pointed out that they had not let the property ….I won’t bore you with the rest.
At this point I began searching on line for another Agent and I found an Online Agent who would place my properties on Rightmove and Zoopla, vet the enquiries and pass on prospective tenants to me all for less than £100. I was delighted, I had not heard of online agents until then. I have been using this agent every since and I have taken on some great tenants. without losing a month’s rent in fees every time I turned a tenancy or paying 10% management fees throughout the year, and this has enabled me to keep my rents below the market rates while offering nice homes.
On 9th December I read an article on Estate Agents Today which made my blood boil. In a nutshell the High Street Agents have put pressure on Zoopla who have decided to stop online letting agents advertising on their site unless they change their business model to offer the same services as a High Street Letting Agent and of course that would mean charging self managing landlord the same fees for services that we don’t want or need. What is the Officer of Fair Trading (OFT) doing allowing Zoopla to have this impact on free trade? The online agents are paying them their fees, they are placing ads in the same way as a High Street Agent, they are complying with ASA standards and all of this is very much the business of Zoopla. What is NOT the business of Zoopla is the service that the online Agent offers to landlords and tenants.
Imagine this:
BP Will No Longer Sell Fuel to Drivers of Private cars.
From January 2014 BP will only sell fuel to drivers who offer lifts to strangers in exchange for a fee. Those who use their cars only for themselves and their families and friends will no longer be able to buy fuel from BP services stations or those that they supply.
The move comes after mounting disquiet by Taxi and Private Hire companies Only days ago Mr Important of the Taxi Owners and Private Hire Self Interest Association criticised the big fuel suppliers for allowing “what are, essentially, private vehicles to buy fuel at the same pumps as professional drivers ”.
This could not happen because of conclusion of the last OFT investigation of the industry in May 1998
ANNEX 3.1 – FUTURE MONITORING OF THE UK PETROL MARKET
1 We see the purpose of any further monitoring of the market as being to determine whether any participants are singly or collectively abusing a dominant position and thus reducing choice to consumers and forcing up prices. Monitoring will thus concentrate on any prospective structural changes to the market, crude oil prices, margins, pump prices and site closures and openings.
2 Mergers which qualify for investigation under the mergers provisions of the Fair Trading Act will be closely scrutinised to see whether they should be referred to the Monopolies and Mergers Commission for investigation. (Mergers qualify for investigation where two or more enterprises cease to be distinct and either the gross assets of the acquired enterprise exceeds £70 million or a market share of 25% or more is created or enhanced.)
Why then do the same rules not apply to Property Advertising sites?
In June 2012 Zoopla and The Digital Property Group, who own Prime Location, FindAProperty and Globrix merged with approval from the OFT. At that time David Dutton, Chairman of Digital Property Group, said,
“This is an exciting day. Our combined businesses have the scale and the resources to transform the online property sector for the benefit of consumers and advertisers alike. We are committed to providing the most innovative products and the most cost-effective advertising propositions, which will give our users and members a genuine powerful alternative in our marketplace.”
In their notes to Editors they said
“At Zoopla.co.uk we are fans of transparency and everything we do is aimed at making the market more efficient for both property consumers and advertisers alike.”
What this actually should have said is that they would now have the power to control the property letting industry and would use that power to force landlords and tenants to use High Street Letting Agents thus increasing costs to consumers. What next? High Street Agents will only deal with properties that are offered to them on the basis of full management?
Thousands of landlords and tenants choose to use High Street Letting Agents and those who do a good job enable busy people to become landlords, but thousands of us choose to manage our own properties and I, for one, resent having this choice taken away from me. There has been a lot of pressure on Government this year to regulate Letting Agents and in particular, to stop some of them charging unreasonable fees to tenants. Self managing landlords don’t usually charge fees to tenants and this, coupled with the fact that we can keep our rents down because our overheads are lower, gives tenants the chance to rent a home without finding huge amounts of money before they can even move in. Zoopla are taking away the choice of tenants too.
I am pleased to say that Righmove has not indicated that they intend to take the same action, though I have no doubt that they will be under a great deal of pressure. If they have the courage to continue to allow a free market I will not really care about Zoopla because most tenants come to me having used Google or Rightmove to find properties for rent in my area and if Rightmove are still advertising my properties they will be let anyway.
This does not alter the fact that Zoopla are using their muscle to drive costs up, in a business to which they are only a service and which has provided them with £29.5m profits this year, all this will be at the expense of tenants who will see rents increasing to cover the additional overheads – I hope that tenants become aware of this a boycott their sites. I wonder what Shelter will make of this?
This move must be investigated by the OFT which exists to protect consumers from Giants who use their market position to push prices up and choice down and there is no business more fundamental than the supply of homes.
Zoopla will not want the adverse publicity ahead of a potential stock market listing that could value the property website at over £1bn and this is the best chance we’ve got to stop them. Come on Property118 use your considerable marketing skills to protect our freedom of choice – Please.
Mark Alexander - Founder of Property118
18:50 PM, 27th December 2013, About 10 years ago
Further thought regarding the BP analogy and taking it a step further this is no different to a taxi firm using red diesel really is it?
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Mary Latham
19:38 PM, 27th December 2013, About 10 years ago
Mark a Taxi firm using Red Diesel would be breaking the law because it carries a tax subsidy for agricultural use only.
My online agent has been told that they have until 7th January to change their business model and their website or their ads will be removed from Zoopla. It is far from a storm in a tea cup for a self managing landlords like me.
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Mary Latham – follow me on Twitter @landlordtweets
Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver
Glenn Ackroyd
13:58 PM, 31st December 2013, About 10 years ago
A Zoopla rep came to see us recently and told us that this was going to happen.
You can see why- they'd rather have a fragmented marketed with thousands of agents paying - than lots cancelling subscriptions because they are being by-passed.
As a letting agent - this is good for us. As a free market believer, this is wrong.
However, good agents should offer landlords wanting a complete package a great service to justify the expense. Sadly, as Mary points out, most don't. They should not have to rely on protectionism.
Mary Latham
18:34 PM, 31st December 2013, About 10 years ago
Reply to the comment left by "Glenn Ackroyd" at "31/12/2013 - 13:58":
VERY well said Glenn.
It is time that Agents realised that there is a market for landlords who, like me, want to choose our own tenants including doing viewings, prefer to use ASTs provided by our landlords associations and want control of deposits. If I could find an Agent who understood my need to do all of these things but was prepared to deal with the day to day management issues I would probably begin to step back.
I would be a very easy customer for an Agent because I like my properties kept in good order and I am prepared to pay for repairs and replacements without hassle. I don't get into deposit disputes and aim to return 100% to my tenants I am realistic in my expectations of wear and tear and would not put an Agent under pressure to make my tenants pay for trivial things from their deposit. I would however like to have some peace and leave an Agent to take the calls and organise the repairs etc. on a day to day basis - in my opinion this is what the word Agent means - a person who simply acts on my behalf but does things the way that I want them to be done. I don't want someone to be me, I am the landlord and I want my good reputation protected. Agents of the future need to be more open to changes in their business model to enable long term landlords to pick and mix the services that they want - they will tap into a big market by doing so. One size does not fit all.
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Mary Latham - follow me on Twitter @landlordtweets
Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver
10:40 AM, 1st January 2014, About 10 years ago
Hi Mary,
I agree with you and think it would be good to see lettings agents adopting the "Ryan Air" model.
i.e. Having low price points for "basic" services, and then add-ons at additional expense.
A "pick n' mix" approach does allow landlords to create their own solution and "mass customisation" is a huge business trend which agents should consider adopting.
Many of the on-line services are already doing this, but the off-line ones could follow suit.
Agents, by law, now need to be transparent about all their fees, and this helps consumers a great deal when choosing which agent to work with.
However, when it comes to agents, I always look at "value" not price point.
I happily pay a bit more to work with an agent who deals with our properties in the manner that I wish.
Good agents are like gold dust and such an important part of any landlord's team. Let's celebrate the good ones in 2014 and out the rogues!!
Mark Alexander - Founder of Property118
12:40 PM, 2nd January 2014, About 10 years ago
It's good to be back, Happy New Year folks 🙂
As you may know, I hold two non-exec Directorships in competing letting agencies, both of which operate online business models. On behalf of these letting agencies I have now spoken to Zoopla about this issue and, as I suspected, their primary concern is to protect the Zoopla brand which in turn has only ever supported letting agencies and not advertising websites operating a back door into their marketing portals.
I agree with Mary, Glenn and Vanessa. Landlords should retain freedom of choice and good letting agencies should be able to persuade their landlord clients to outsource more than just their marketing to them. However, if a business is masquerading as a letting agency but can't actually offer any additional services other than marketing then I have a great deal of sympathy for Zoopla's approach.
The reason that Zoopla reps are looking at their members websites is to establish what is the core business of their members. If the primary business model is just a case of re-selling advertising on Zoopla then they don't want to deal with such businesses and that's fine in my opinion given that has always been in Zoopla's T&C's for it's members. In fact, it's actually quite difficult to get a Zoopla account and it's certainly not a case of anybody who agrees to pay them £399 + VAT per month being able to have one. Therefore, I can only surmise that Zoopla are concerned about having had the wool pulled over their eyes by some operators and are now dealing with this. Perhaps it's overkill that they have issued the same warning to all online letting agencies and it is those warning which have sparked in the online letting agency world. However, I think it is likely that before Zoopla do cancel any firms membership they just want to be seen to be taking an even handed approach to the entire market and I support that stance wholeheartedly.
With regards to Mary's specific request, I imagine this is relatively unique in that most landlords will require at least one of the additional services which Mary undertakes herself. Having said that, it was interesting to read that Mary would consider using an agent for management if she could do her own viewings, deposit protection, check in's, inventories, check out's and tenancy agreements.
Vanessa made an excellent point that menu driven pricing might also be the way forward. I have held the same opinion for quiet some time, hence I was pleased to support my business partners decision to acquire a 26% stake in a business doing just that.
I think what we need to be careful about here is that there are clear lines of distinction of responsibilities between landlord and letting agent and indeed the differences between what is a letting agents vs a reseller of marketing support. For example, in Mary's case I assume that she really only requires marketing, rent collection, maintenance management and reporting? If she really does only want marketing that should be fine providing she is utilising the services of a letting agent which isn't reliant on that as it's core business model. Also, given that Mary's future requirements could include money being handled then I feel that Client Money Protection is an absolute must for any agent offering this service to have.
One of the firms I act as a non-exec Director provides a menu based service exactly as described by Mary as one of it's menu options. They are members of TPOS and ARLA and carry Professional Indemnity Insurance as well as Client Money Protection. For the service requirements outlined by Mary the cost is £99.99 up front and £9.99 pcm plus VAT per property and may be cancelled by giving just 30 days notice or payment in lieu at any time. I should also point out that maintenance bills are not loaded. Perhaps they should call it the "Landlord 999" package?
The high end service is obviously far more comprehensive and costs £200 to set up and then £63.48 per month but includes pretty much everything any landlord could possibly require in terms of letting, management and maintenance and is far too much to summarise here in terms of features and benefits, therefore, please see >>> http://www.property118.com/?p=44858
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Mary Latham
13:44 PM, 2nd January 2014, About 10 years ago
How many Letting Agents, online or High Street can say that they send their staff for training to become accredited? The foundation course of accreditation is not about marketing, sales etc., it is about legislation, regulation and communication, in other words its about the day to day management of rented properties and the seminar is geared to landlords not agents. My agents send their staff on accreditation training when they recruit them and the reason that they do this is that they want their staff to be in a position to be able to advice and support landlords and tenants. They do not charge for this service it is all part of what they do.
I was also asked to write some articles for their web site and recently they have asked me to focus on information for tenants - my pieces are on their site to help tenants - once again there is no charge for this service it is part of what they do as is talking to people who are looking for property to rent even when they haven't a specific property to offer them - how many other agents do that?
If this agent was simply an aggregator they would not need to understand the regulation and legislation that pertains to the day to day job of renting property - in my opinion this alone proves that they are a Letting Agent in the real sense of the word. They offer the same services as the ones Mark has mentioned and many landlords choose to use those services - at this point I choose not to and I am happy to have that choice.
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Mary Latham - follow me on Twitter @landlordtweets
Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver
Mark Alexander - Founder of Property118
14:06 PM, 2nd January 2014, About 10 years ago
Reply to the comment left by "Mary Latham" at "02/01/2014 - 13:44":
Hi Mary
Following our telephone discussion and my review of your agents website I can see the problem and also the cure.
Your agents are indeed offering a full service, however, they are also offering Zoopla advertising only which contravene's Zoopla's policy. It wouldn't take a lot of work to go through their website and make it compliant. The only thing your agent is doing wrong is advertising a service which they are not allowed to advertise. I know it's semantics but there is nothing to stop them providing the service they provide to you but Zoopla do have rules about advertising the fact. As a famous Irish comedian often used to say "it's the way I tell em".
As you may be aware, I now offer a Consultancy service priced at £150 + VAT per hour or £500 + VAT for a four hour session. I could probably help your letting agents to become fully compliant with Zoopla marketing policies within just one session and would be pleased to sit beside them whilst they log into their website to make the necessary changes. Alternatively, if they would prefer simply to book one or two hours telephone based Consultancy that's also fine.
For more information about the Consultancy services I provide please see >>> http://www.property118.com/?p=61522
16:19 PM, 2nd January 2014, About 10 years ago
Reply to the comment left by "Mary Latham" at "31/12/2013 - 18:34":
Hi Mary
National-Lettings was set up to provide self managing landlords exactly the service you are looking for.
We agree that Landlords should do their own viewings and we have no problem whatsoever in them using their own AST's, dealing with their own deposit protection and completing their inventories or outsourcing them. However, that doesn't make us an aggregator.
We offer a GUARANTEED rent collection service which costs just £89 per tenant then 5% of rent thereafter. Landlords can choose whether to pass these fees on to their tenants or to pay the fees themselves.
Please let me explain GUARANTEED rent collection. What this means is that you will be paid on the due date whether the tenant pays or not. You will continue to receive your rent on the due date until the tenant is evicted at the expense of our joint venture partners at FCC Paragon. You can protect your own deposits and use your own tenancy agreement, all that we ask is that a few extra clauses are added into the tenancy agreement regarding the liability for rent.
For obvious reasons relating to risk, our guaranteed rent collection option is only offered when we do our own tenant/guarantor referencing which is what the £89 per tenant pays for. Whatever checks you do on top are entirely up to you. Whilst I appreciate that you wouldn't want us to produce tenancy agreements or to deal with deposit protection this is available to landlords who do require this service for a fee of just £80 plus VAT.
You are clearly a very established landlord and I would very much value your feedback on our Guide to Finding Perfect Tenants" - please see http://lettingagentsonline.co.uk/free-guide-to-finding-perfect-tenants/
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GP
14:14 PM, 4th January 2014, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/12/2013 - 18:50":
Seems to me this is the example of the market as it gets down to a few oligopolistic situations. Ie only a few competitors that cooperate.
Once the fierce competition has gone with mergers its a winner take all.
The bigger the better like ebay and Amazon with more going to those.
However the nature of letting is it is all aggregating. Zoopla are an aggregator!
Landlords are left with all the liabilities ever more these days and regulations as agents pass them off. Im sick of having bad tenants passed to me trying it on to get them off their books whilst renting a high quality property. That would be called churning on the stock market.
Wild west is only kept in check by Landlords dealing direct IMHO after the initial contact.