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  • Buy-to-Let

    Increased in Management Fee

    My letting agents have just advised me that they are increasing my management fee by 2%.  My Agreement with them clearly states that "The Terms of Business may only be varied if agreed between the landlord and the agent and confirmed in writing".  I have challenged this increase with the agent and they have offered to delay the increase from 1 May until the existing tenancy agreement is up for renewal in October this year.  I have had the same tenants for nearly five years and am hoping that they renew in October.  Can the letting agent still increase their fee in October if I continue to have the same tenants?  My understanding is that the terms agreed at the beginning of the tenancy cannot be changed by either party unless new tenants move in, so therefore the letting agent cannot insist that I pay their increased fee?

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    I doubt very much that your agreement with the agent is in any way bound by a specific tenant and therefore, however unsavoury, an increase can be made under the terms of their contract. But obviously you would need to thoroughly read their contract to be certain.

    I think we will be seeing more of this with the impending ban on letting fees, agents will need to recover this loss of revenue somehow.

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    Landlord with 25 years’ experience in the property market and a specialist in tenant referencing, ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk

    I expect they will all be doing this having lost out on charging other fees.

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    They’ve notified you of an increase in fees, i’d guess you can either agree to it and carry on or you don’t and as a result your agent terminated your agreement. As above agents will be looking to recoup income they’ll no longer be getting from tenants, there is really only one other source and that’s the landlord. In the end it’ll be the tenants that pay one way or another.

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    2% on the Management Fee, as opposed to the Letting Fee?  Or do you pay a combined fee?  Does that include the Inventories? (unlikely, so that will have to come out of your pocket too). 

    Perhaps the way they did it was insensitive, but does your Agreement with them mention the new Law and oblige them to absorb these costs (as opposed to recovering from tenants)?  If not, that might be deemed to be a 'significant change of circumstances' that could allow them to void the agreement anyway if you don't agree.  Put the rent up by the same amount and you will be no worse off (ignoring amortisation over 12 months).

    On say an annual rental income of £10k their additional 2% fee proposed is only £200?  Doesn't seem too bad to me, but then we don't use agents.  If you are prepared to do the Application admin, Referencing, Documentation, Pre-Letting Checks, Inventories etc. then you don't have to use an agent;  otherwise you are going to have to pay something, even if it's not (say) £200.  You can also do the marketing and managing yourself, but first join a Body like the RLA and get familiarised with the processes, documents and laws.


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    Assuming your tenant is happy to stay and they have been there 5 years so you have a good relationship with tenant, i would be inclined to just ask them to go on periodic agreement and drop the agent.

    Out of interest what is the rate your paying, if your getting a low rate such as 6% then I guess it's ok, possibly contact yellow lettings and see what deal they will do you

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    Slowly working towards financial freedom


    Not sure YL would be my choice of agent. Some of their advertising is appalling. I let my house far quicker than they managed to let an identical house on the market at the same time, they also had to let it for a lower rate.

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    I'm not saying they would be mine either, I only use an agent for tenant find, but if you have a long term tenant who is no trouble and needs little management then was just saying they may be cheap.

    Personally I would drop the agent and tell tenant you aren't increasing rent as dropping agent and work direct with them

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    Slowly working towards financial freedom

    Now I don't know but I compare it to the mobile phone companies that if they put their prices up mid-contract you re entitled to leave without penalty. I would suggest that you'd be able to refuse the increase and leave without penalty. However it may be different if you are considered a business.  I'm not sure if any of us know whether we're businesses or investors and even the Government don't seem to know.

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    You need to go back to the (hopefully) signed Terms of Business that you should have had at the start of doing business with this agent.  Terms should clearly set out fees and any basis for changes to those fees.

    It is quite likely that most agents will be looking to increase their charges in light of the tenant fee ban (not to mention the additional compliance which has come in over recent years) so I am not surprised; you can't really begrudge an agent charging properly for they work they do.  If they are a good agent then you will just have to take a commercial decision about paying extra charges.  You could try talking to them and agreeing something different - perhaps a new fee on tenancy renewal, after all the agent is not really incurring any extra charges for just managing your property at the moment.

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    Its not so much what the LA charges as whether you feel you get added value from the service they provide. Do they have a team of trusted tradespeople to deal with the day to day stuff or are they making expensive mountains out of every little molehill.

    An example, LL was charged £135 for a call out. "TV not working" it turned out the tenant had pulled out the lead when cleaning. Mr "odd job" was there 5 mins. 

    Another example LL was charged £85 "light bulb gone" same Mr "oddjob" was there 5 mins.   £85 every time a light bulb goes? really?

    I could go on all day and on into the following night with examples like these.

    A three month old washing machine was replaced (allegedly) because it was beyond repair despite still being under warranty.

    As you may have deduced my opinion of letting agents is very low unless they give me positive reasons to revise my opinion upwards. There are some good ones but not many. m

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