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As a time served agent I can't say profits were extortionate, but the firms I have been involved with never overloaded the charges to tenants. However, if you want a professional job doing you have to pay for it; the market will no doubt find a new equilibrium.
I no longer have an agency but do own a portfolio of houses. All management is done in house but we use agents for the letting, everything up top moving the tenant in. Frankly, I'm happy to pay for their expertise, local market knowledge and, of course, time. Yes, I could do it myself but I lack the inclination and the compliance paperwork drives me mad.
I would also comment that I know what we had to pay good staff to do agency work. It's not always the most popular job - the sales side always seems more exciting for people. I guess that paying and keeping people in a big city agency is very expensive, given my experience out in the sticks.
The admin fees we charged not only covered the actual costs of the references, but also the staff time in dealing with the application and following things up.
Agents' fees will no doubt rise so landlords will have to decide what they think is good value. There will almost certainly be a spate of agency closures in response. The biggest issue we have here is actually getting new stock - this is something that is only going to get worse.
I echo what Graham has said we've only ever charged a one off modest fee, never adding in a number of additional fees to overload either landlords or tenants, covering costs of referencing and staff time in dealing with application, tenancy setup and follow up.
However, it is interesting if you look at what others charge locally, I did a fee comparison not so long ago and happy to share, will be interested in people's thoughts on charges.
These are four competitors compared to ourselves, in total their are 12 competitors across the two towns we operate in. Note I said towns, it's the agencies in citys and corporate that were the ones taking advantage of people in the first place that has led to the ban.
But even in towns that have some corporates in, doesn't take long to identify those from my comparison here........
We wrote to all our landlords in March giving them 3 months notice that from 1st June 2019 they will be charged a £125 Tenancy Setup Fee per Tenancy from that date, taken as a disbursement from the 1st months rent on new tenancies.
EPC, GSC and EIRC along with any other works carried out on the property are truly transparent, contractors invoices provided to them and taken off as a disbursement with their monthly statement, some of our competitors in the comparison charge 10% + on any invoices or have standard charges for certain things they too make a profit on......
very informative post and clearly some agents have been taking the biscuit.
QQ - how are you dealing with rental contract extensions - contracts that were written under previous rules?
All our tenancies / contracts are for 6 month AST's that roll onto Statutory Periodic Tenancies so don't have any rental contract extensions.
I’ve shortlisted candidates by having them provide their own credit report which they can get for free from the likes of Noddle (think they’ve just been taken over) plus proof of address and ID like passport so I can verify it isn’t some fabrication and then follow up only my preferred tenant with an OpenRent check to minimise expenses. I encourage prospective tenants who want to proceed to come ready with paperwork to a viewing.
It's going to be interesting. Where I think 'fairness' comes into it really is that previously tenants didn't have a choice if they wanted a particular property, whereas landlords do have a choice of which letting agent to use (if at all). But to answer your question, up to £25ish seems reasonable.
Re " I'd rather be 100% sure that every tenant who came to the landlord through us got referenced than leave it to the landlord who might not actually do it! ".....
I'd rather do it myself rather than leave it to an agent who may not do it.
I too use Open Rent BTW.