What is a Lease Fee

Mrsmoneypenny

Can anyone explain what a lease fee is?

I am a landlord myself, an agent deals with our properties, but never come across the term. We are at the moment helping our son get a rental property and have been asked for a lease fee of £57.50 on top of his deposit.

I have emailed his agent but not heard from them yet, is this a refundable amount and what does it cover?

Thanks in advance

MX5huggy

No it won't be refunded it will be fee charged by the LA for setting up the lease. Basically they want paying twice once buy the LL and once by the T for the same thing! It's quite common but I belive totally out of order.

You can bet after 6mths the LA will want a "lease renewal fee" as well when they dont have to do anything.

sooz

As above...it's an excuse to get more money out of you. It is not refundable. It is a 'fee' for [STRIKE]writing[/STRIKE] photocopying the AST - which they are also charging the LL for. Watch out for all the other add-ons.

Mrsmoneypenny

Is it something i could negotiate with the agent over? my son will be sharing with one of his mates, they will both be charged 57.50 each.

Nice little earner!

MX5huggy

Of course you can negotiate, but are you willing the lose the house, are there plenty of other properties from other LA's without these rediclious fees?

princeofpounds

You can negotiate for anything you like, including complete removal of the fee. But I doubt they will agree.

These sorts of fees are quite common, and usually involve things like contract preparation, extension, delivery of keys, credit checks and other forms of admin. They have been inflated quite severely over the past few years, so if you haven't been in the renting game for some time it might come as a shock!

It's a tricky area because there are good reasons why these fees should not exist.

- The letting agents provide a service for the landlord, not the tenant. In fact, they often charge both parties for the privilege!
- High charges are a disincentive to rent through a particular agent, which is a conflict of interest with what is good for the landlord/client.
- The charges often bear little relationship to the work involved (such as photocopying an AST). Credit checks do have a genuine cost but they are not expensive and agents usually mark them up.

All good reasons to detest (most) letting agents!

In their defence, there is some incremental work involved with processing an application and if a tenancy does not result, that is a cost to the agent. It also help stop time-wasting speculative applications.

In reality landlords tend to ignore or remain unaware the letting agent is cheating them, and tenants have little practical option but to swallow it given the time constraints involved and the fact that lettings agents often restrict direct access to a particular landlord.

You should be able to ask the agent for a breakdown of the services they are providing for this charge and ask them to justify the costs.

If you want to play hardball should they not budge, you can contact the landlord directly by finding his details on the land registry (or getting them from the agent if possible on some other pretext!). If he finds out that he is missing out on £150 per week (or whatever) because his greedy agent wants £57 for photocopying then he is likely to weigh in. He might just not care though, and the property may disappear in that time... and if the agent manages the property as well as tenant-finding it might be a fractious relationship.

I would love to see a world where these charges are eliminated, but it's just a frictional cost of the current set-up of the industry and I've never heard a practical solution. I am surprised more landlords have not found a way to enforce proper ethics in their business relationships with agencies (after all, most of these excess charges are a tax on rent above the normal % agreement).

Mrsmoneypenny

I suppose i wil just have to take this on the chin. If I stick my oar in my son and his mate might well end up without the flat and I would be public enemy number one not the agent!

I shall have a look into what my agent charges for on our rental properties. Could well be that I have been paying this fee out and never even knew about it.

My agent is really very good, i dont know whether we are just lucky, but she goes to each property every few weeks to inspect the properties, keeps us well informed of everything that is going on (even told me that Somerfield was being taken over by Tesco). We have never had a property empty, unpaid rent or anything that would make me feel that I could get a better deal somewhere else, so perhaps i will just thank my lucky stars and keep paying out the amount i pay.

thanks for all your help