Letting Agent Hidden Fees

LittleCharlie

When I moved in last month...

Adult reference - £80 (Per person)
Administration - £120

+ Deposit and Rent.

Fortunately I'm on the low deposit scheme that some places are offering, so I only paid £150 in deposit.

What a rip off. I paid £200 in admin fees just to move myself in.

When I moved into my first flat five years ago I just paid the £350 rent and £350 deposit!

PasturesNew

N79 wrote: »

On the plus side at the end of 6 months you can go onto a periodic tenancy (month to month), which can last indefinately and which does not count as a renewal.

IF they let you.
IF the tenant knows about this.

princeofpounds

The fees are disgusting, but I'll avoid that argument for now and give you practical advice.

1) Ask for a full terms and conditions of your business with the agent. Should be done at the start.

2) Now you are part-way through, negotiate. The agents want the letting to take place and are near the finish line with this one, so they may well just give in. Tell them to strike out the further fees as you know that tenancies automatically go periodic on conclusion of the fixed period and rents can be adjusted up or down by a section 13 notice, so there is no need for the

3) Contact the LL to let him know he could lose a tenant as a result of his disgusting leech of agent. Use land registry to see if there is an address for him.

Geenie

These LA's are right *******! You don't mention OP if these particular agents are registered with the ARLA, Association of Residential Letting Agents! But on there http://www.arla.co.uk/infosheets/list.aspx?id=2#, under Agents' Fees and Charges, it clearly states, and I quote.....

These will vary dependent upon local market conditions and the particular services being provided by the Agent. However, whether dealing with a landlord or a tenant, an Agent should provide clear information on what costs would be incurred, including any potential future financial liabilities to the agent that are reasonably foreseeable and quantifiable.

So if they are members, it doesn't look like they are adhering to the rules so far!

Jowo_2

tbs624 wrote: »

if the T is expected to pay the charges they have every right to query how the level can be justified. The fact that it has become commonplace for LAs to charge Ts such high fees does not make it right for them to continue to do so...It doesn't mean, however, that the T should unquestioningly cough up a few hundred extra quid to an LA for doing very little.

Tenants must either put up with these charges that are common to most letting agents, finding out the charges in advance like any other purchase, or go to a different agent or private landlord as you've suggested.

Nobody goes into a hairdressers or a restaurant before checking out the price - those that don't check can get a shock. Hairdressers aren't generally challenged for the big mark ups they enjoy - "that £50 haircut only took you 15 mins to do and you only used a pair of scissors and 5o pence worth of shampoo to do it". Restaurant managers aren't harangued by diners to say they could have cooked their 3 course meal with wine for 6 people for £30 at home when they were charged £150.

Letting agents charge high fees because they can - there's effectively no barrier against apart from market forces. I'm not a fan of the industry but like any business person, they are entitled to make a living, a good living, keeping their costs low and their profits as high as they can make them. The fact that its seen as easy money is completely irrelevant.

The kind of scrutiny given to agents is not applied to other organisations that offer similar poor value for money but are just more popular. They are gatekeepers to accommodation that people want so take them or leave them.

tbs624

Jowo wrote: »

Tenants must either put up with these charges that are common to most letting agents, finding out the charges in advance like any other purchase, or go to a different agent or private landlord as you've suggested.

Or they can campaign until the Government fully addresses the iniquity via firm regulation - campaigns offices at Shelter and the CAB, their MPs and the Housing Minister via www.theyworkforyou.com or http://petitions.number10.gov.uk/

Jowo wrote: »

Nobody goes into a hairdressers or a restaurant before checking out the price - those that don't check can get a shock. Hairdressers aren't generally challenged for the big mark ups they enjoy - "that £50 haircut only took you 15 mins to do and you only used a pair of scissors and 5o pence worth of shampoo to do it". Restaurant managers aren't harangued by diners to say they could have cooked their 3 course meal with wine for 6 people for £30 at home when they were charged £150..

.
Comparing Letting Agency charges which can be a barrier to people obtaining somewhere to live with what people may, or may not, pay to go out for an overpriced meal or get their hair done shows that you perhaps don't "get"exactly why there is so much complaint about LAs fees.

We're talking about people having a roof over their heads, not about fripperies & ditzy women or pretentious men who pay over the odds to go get themselves primped or to push a bit of nouvelle cuisine around their plates. Visiting restaurants and hairdressers are "lifestyle" choices: having somewhere to live is not, it's a very basic human need.

In areas where the majority of property that is up for let is only obtainable by going through a Letting Agent, potential Ts may have very little choice but to pay up, by borrowing from friends or family, jacking up their debts on credit cards to meet other living costs to find the advance rent, the tenancy deposit, the LA fee-fest.

It is *the LL* who employs the LA, and the LL will already be paying a % of the rent as a fee to that LA.You choose to compare with restaurants & hairdressers - how about looking over at the banks? Now their charges are levied directly on the person who benefits from their services, ie their customers, and yet they have been made to drop the charges made to more closely reflect the actual costs incurred. The LL is the LA's customer/client and yet not only does the T get charged, they are charged well over the odds. It's rarely of benefit for the T to have to deal with a LA, given that most of them seem to be lacking in even the most basic knowledge of LL&T rights & obligations, and it's effectively double dipping for an LA to charge the T when they are already making a charge against the LL. As I have already pointed out the LL has the distict advantage that s/he can set his/her costs against tax.

All private sector Ts should raise their objections about LA fees now whilst regulation is on the Government agenda: ARLA and the rest will be lobbying hard on behalf of the "rights and needs" of LAs so T's need to counteract that, as do LLs who object to LAs pricing strategies and spurious admin charges.

PasturesNew

I think one of the "issues" with Letting Agents is that just a few years back you didn't seem to get these fees.

Agents would have mostly made their money from the 10% of the rent they charged landlords each month.

If you aren't even aware such fees exist, you wouldn't think to ask. They should shove a price list in your hand when they first encounter you imho.

princeofpounds

LA fees, as I have written on other threads, are not comparable to haircuts and the like.

This is because real estate is a heterogeneous illiquid asset, in financial terms. Haircuts are the exact opposite, homogeneous and liquid.

If you want a haircut, most places can do one to a similar standard and more or less any time you want. Competition is therefore free and fair, and in fact (apart from 'status' celebrity hairdressers) it pretty much reflects the amount of labour involved quite accurately. Your average hairdresser makes enough to pay for their tools, seat rental and a middling living standard which is commensurate with the fact that they have a skill, but not an unusual one.

But in the cases of LA fees something is odd. They charge £50 for printing a piece of A4. A child could do that. So what's the difference?

Real estate is heterogeneous. All that means is that it comes in different shapes and sizes. In practice what that means is that although there appears to be a lot of real estate around, only a very small proportion of it will be suitable for any single consumer.

It is also illiquid, meaning that it does not trade easily or often, so only a small amount of it is available at any one time.

This results in a curious situation where letting agents end up forming their own little oligopoly or even monopoly for every sub-market (in terms of time and in terms of type of property).

So for example, if I were looking to rent a four bed house in Clapham (for example). I might need a garden, as I might have a pet. I might need a downstairs bathroom, as my spouse is disabled. I might also need to be no more than 5 mins from the tube as a result. I might have to move in a particular week only as I can't afford an overlap and my old tenancy is ending with an eviction order. (You can substitute all sorts of individual circumstances! These aren't me by the way, just hypothetical).

I might put all of this together and find 2 houses. Both with the same agent. The agent has a defacto monopoly, and could charge £500 and I'd still have to pay. It's totally unreasonable and unrelated to labour, but it's driven by market characteristics. It's totally 'fair' from a business perspective but a big frictional cost for the system that is not economically productive, so it's a problem despite that.

This is letting aside the debate that LLs retain agents so how can they be 'employed' by the tenants too for services?! That's a whole other matter!

caljoemor

:mad:What a disgrace!!

I work for a letting agent and this is one of the things we do not agree with, charging tenants to top up operational profits!

We don't charge tenants any admin fees, we charge the landlord for credit checks on the tenant and they are free to ask the tenant to cover the cost (£25).

I think charging renewal fees is also ridiculous and if they are managing the property the check in and check out should be included in those fees which the landlord pays.

Letting agents have gotten away with too much for too long! I would ask for these clauses to be removed but as previously noted I doubt very much that they will be happy to do it. I would note that they probably will not be paid by the landlord untill the property is tenanted so you do have quite a useful bargaining chip.

I feel genuine frustration for your situation and hope that one day all letting agents work on a fair basis.

Good luck!

Out,_Vile_Jelly

Most people do not quibble service charges when it is transparently evident what particular skill or expertise you are paying for and when they cannot provide that themselves. And many probably like the idea of LAs, as they have a veneer of professionalism that suggests respectability and knowledge. Having an office and rep nearby gives the impression of contactability, and I think many tenants feel secure with the vague idea that contracts and legal matters are being dealt with by an organisation that is accountable in some way (rather than a distant, never seen individual).

The problem lies with the fact that, as is daily evident by posts on here, many many LAs are woefully inefficient in their (quite simple) duties as property managers, and usually lack basic knowledge in the requisite housing regulations and contract law. Their fees regarding credit checks and tenancy renewals appear to be based on the "money for old rope" business model.

- costs of LA advertising and viewing to be paid by the LL
- tenant to be allowed to organise and present their own credit check through one of the recognised companies
- industry standard contract drawing up fee to be shared by tenant and LL
- no charges for contract renewal where this simply involves changing dates and printing another copy