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  • Property-a-holics

    Room lets - whats the normal rate to pay an agent?

    In reading Vanessa's comments that room lets are becoming more popular, and seemingly something most agents won't do, I was wondering, when you find an agent that will do this, how much do they typically charge?
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    Good question Sally!
    It stands to reason that room lets are "higher maintenance" so charges should be higher. However, if you have systems in place, you can make this manageable.
    The room letting agent I use charges me 10% fully managed. However, she lives close by to the properties and can reach them within 5 minutes. She is also very organised and does "Open Days" at the house to rent as many rooms as possible in one hit.
    I think 12% fully managed would be considered reasonable, considering the extra work involved in filling and managing rooms on an individual basis.
    Worth bearing in mind that the marketing is potentially a lot less expensive as you can advertise on gumtree.com and other such sites free of charge.
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    Thanks Vanessa,
    I thought your blog about room lets really useful by the way. I think when the letting climate is as it is with larger dwellings left empty, it makes sense for Landlords to consider doing room lets opposed to trying to let the whole unit - and the returns are better to as higer rents are achived when you add up the revenue of all the rooms. I would be interested to read more on how you approached room rents and how it is working in a future blog.
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    Thanx Sally. The main thing for me is that the house has to work in a multi-let format. There needs to be an extra room - say a dining room - that can be used as an extra bedroom. That gives the "cream" on the cash flow front. There needs to be enough bathrooms - a maximum of three people to one bathroom - so I look for rooms with ensuites, as I can charge a premium rent too.
    A lot of people forget parking. If you have four tenants in a house with four cars, it can cause problems for obvious reasons!
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    Hi Sally, I run a couple of multi-lets. My ideal property is a new build 3/4 bed town house with 2/3 bathrooms with a kitchen/diner on the ground floor and a living room on the first floor. I turn the living room into a bedroom and rent out 4 rooms. Garages are not really necessary but you do need a couple of allocated parking spaces and on-street parking. If you get working professionals as tenants, they tend to look after the house well and treat it as their own home. I advertise on spareroom and gumtree for tenants myself and also use an agent. I usually fill the rooms on average in two weeks!
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    Hi Adrian
    Thanks for that - its really helpful. Would you be able to tell me how much you pay the agent - do you do a fixed fee or percentage?
    regards
    Sally
    Adrian Standing said:
    Hi Sally, I run a couple of multi-lets. My ideal property is a new build 3/4 bed town house with 2/3 bathrooms with a kitchen/diner on the ground floor and a living room on the first floor. I turn the living room into a bedroom and rent out 4 rooms. Garages are not really necessary but you do need a couple of allocated parking spaces and on-street parking. If you get working professionals as tenants, they tend to look after the house well and treat it as their own home. I advertise on spareroom and gumtree for tenants myself and also use an agent. I usually fill the rooms on average in two weeks!
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    Sally said:
    Thanks Vanessa,
    I thought your blog about room lets really useful by the way. I think when the letting climate is as it is with larger dwellings left empty, it makes sense for Landlords to consider doing room lets opposed to trying to let the whole unit - and the returns are better to as higer rents are achived when you add up the revenue of all the rooms. I would be interested to read more on how you approached room rents and how it is working in a future blog.
    Sally,
    You need to be careful in terms of the legal requirements. A 2 bedroom flat with 2 sharers would be an HMO and legally needs to be run as such. A building converted prior to 1991 where 2 of the 4 self-contained flats are let rather than owner occupied makes the whole building an HMO. Being an HMO requires
    When a building or a unit is an HMO then there are special rules for fire regulations and other details. If the property is an HMO over 3 floors with 5 people (3 unrelated) then you need a license to operate the HMO. Even if you do not need a license councils can imposed special conditions for any HMO in their area.
    Multi-let or HMO (including student lets) can be a great way to generate cash flow and run a great business. Just be careful as to the regulations. Being unaware is not a valid defense when the council starts handing out fines. The fines can be very large.
    DYOR - Do Your Own Research. Know your market and the regulations that apply.
    John Corey
    https://www.ChelseaPrivateEquity.com/blog
    https://www.Twitter.com/John_Corey
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    John Corey 


    I host the London Real Estate Meet on the 2nd Tuesday of every month since 2005. If you have never been before, email me for the 'new visitor' link.

    PropertyFortress.com/Events

    Also happy to chat on the phone. Pay It Forward; my way of giving back through sharing. Click on the link: PropertyFortress.com/Ask-John to book a time. I will call you at the time you selected. Nothing to buy. Just be prepared with your questions so we can use the 20 minutes wisely.

    Hi John
    Thanks for that. However I disagree with your comment in your first para regarding a 2 bed to 2 sharers being a HMO.
    I agree with comment in other paras though.
    Thanks
    Sally
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