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  • Buy-to-Let

    Letting agent business model after Fee Ban?

    Realistically, how will they make money, when one of their major ongoing cash injections will be no more from June 1st.

    Can anyone list how they will make money?

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    I suspect it will be the Landlords paying more for tenant find and they’ll be trying to find more commission paying products like the no deposit insurance and rent guarantee insurances some of them offer. Inevitably, I fear, this just leads to the tenants paying more in the long run but whoever said the government had some foresight when it comes to housing policy?

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    Well it will align landlords and agents interests in terms of minimising churn. - So maximising the ongoing management fee and minimising the cost od servicing it will be key to agents ?

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    If they're smart, they'll do what they always should have done and cross-sell complimentary services.

    -EPCs

    -Gas & Electric Checks

    -Mortgages & Insurances

    -IFA services

    -Accountancy Services

    -Painting & Decorating

    -Gardening

    -Cleaning

    The list could go on.

    Anyone who is any good at business knows that there's far more money in developing relationships with existing clients by delivering first class service than being a one trick pony constantly chasing new business.

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    Your list is good JohnA but none of those services are actually provided by the shiny suited LA though? They are by third parties that can be found quite easily online.

    Time will tell I guess.


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    but none of those services are actually provided by the shiny suited LA though?

    My point exactly if you re-read my post.

    They need to skill up.

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    I have just got quotes in from a few LA's as we are buying two HMO's in a new area and they offer all the extra services like EPC, HMO landlord certs etc but one with just the standard fees, + VAT + tenant find +++ the fees add up to 27% of rental if the Tenants change every 6 months (hopefully not!) but on 12 months turnover which for an HMO is not unreasonable although we obviously aim for 24+ then the fees are still over 20% - needless to say we wont be using their services but they werent the only one at that level of fees.

    I know HMOs take more management as we have other rentals including an HMO but it is still OTT


    I dont think the LA's will go hungry Smile

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    The LA's will go hungry if they charge that much! They won't have any customers because everyone will react in the same pragmatic way that you did Smile
    They'll have to go back to charging the sensible levels they used to, before fees went crazy.

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    My company manages HMO's in Berkshire and we only charge £50 per room per month. The reason high street agents charge high fees is that HMO  is a different beast to single lets and they see it as a lot more work, my company is structured in 2 separate entities (single lets & HMO's) so can cope with the demands.

    I suggest that anyone looking for HMO management find a proper HMO management company as opposed to a high street agent.

    We also wont be increasing landlord management fees as our tenant fees were minimal in the first place so we are prepared to take the hit instead of ultimately increasing rents for our lovely tenants.

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    Adam,

    I'm new to this, what is changing on June 1st?

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    Its a ban on charging tenants a fee that will come in

    https://www.arla.co.uk/lobbying/letting-agent-fees.aspx

    LA`s make good money this way so it will hurt their pockets

    They will offset it in numerous other ways I anticipate and has been highlighted already

    The LL will pay a bit more no doubt and rents will rise .

    And some cash incentives in brown envelopes will increase and go under the radar I suspect

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    Jonathan Clarke. http://www.buytoletmk.com