Rent Admin Fee

axomoxia

I'm starting to see what is happening here - Lettings agencies are dropping thier charges to the landlords to win business, the shortfall is being made up by "admin fees" to the tenant. Now the business model is pretty similar to a recruitment agency - you're just placing people in property, not in jobs. An agency can't charge an upfront fee to the candidate (ignoring the modelling and entertainment industry for the moment, since they are currently under review), so why should a letting agent be any different?

rla_john

tbs624 wrote: »

I'm not sure that anyone was saying that it is the full story - see my additional comments about exactly who is getting "the service" and the fact that LAs are in effect playing a game of "double your money", ie the money in their coffers, by charging to both LL and T.



If you want a T shirt - you have many choices and price levels, right down to jumble sales and charity shops. If you are an idiot who likes labels and vanity dressing then I have no issue with a Gucci fleecing you for the "privilege" .

If your gas and elec bills are too high you can adjust your usage, layer up those T shirts from the charity shop and switch providers to keep the costs down.

If you need a roof over your head in the private sector, however, you may find that you have very few opportunities to shop around because the local LAs keep the admin fees at a similar level to one another.

Your comment about "what they can get away with" is at the very heart of this - a huge number of LAs are unqualified,untrained, unregulated and *are* currently getting away with royally ripping Tenants off (and LLs in some cases too). It's time the practice was stopped.

There are currently calls to have the Letting Agent industry regulated, which is actually very good news for both tenants and landlords alike.

Jowo_2

axomoxia wrote: »

I'm starting to see what is happening here - Lettings agencies are dropping thier charges to the landlords to win business, the shortfall is being made up by "admin fees" to the tenant. Now the business model is pretty similar to a recruitment agency - you're just placing people in property, not in jobs. An agency can't charge an upfront fee to the candidate (ignoring the modelling and entertainment industry for the moment, since they are currently under review), so why should a letting agent be any different?

The elderly law that forbids agents from charging upfront fees tends to apply to charges for property lists and viewings (not charges to proceed with the tenancy at the tenant's choice) and even the dodgy accommodation finding agencies like Spacelet in London that charge a big fee to the tenant before they view a property have successfully circumvented this with the wording on their contract, according to Trading Standards that find the law rather toothless.

tbs624

rla_john wrote: »

It may be unfair that the costs for deposit protection should be passed onto the tenant, especially when there is a free scheme out there, but the fact remains that two of the schemes come at a cost.

Unfortunately, the decision on how a deposit is protected is a business decision, for example if the landlord wishes, for whatever reason, to hold onto the deposit, then an insurance policy must be paid for...

You're merely taking it round in circles - there's a free custodial scheme and therefore, as a LL, if you choose to use one that costs then you as the LL should foot the bill, not make a further "business decision" to charge the T, whilst also presumably retaining the interest on the Ts deposits.

rla_john wrote: »

Finally, when you state " If the LL makes a choice to use one of the two insurance-based schemes who charge fees then quite simply its the LL who should pay those fees. ", does the same thought not relate to tenant credit checks or tenant referencing ?

Are you saying that a landlord should not check the credit worthiness of a tenant unless he is willing to take the hit on the cost of those checks? See my previous post.

My point is that landlords are a business and that business has costs associated to it - costs that must be recouped in some way shape or form, so if you are not going to be subjected to admin fees, you will only see rent levels increase.

See post 17:

tbs624 wrote: »

" The credit check charge could be levied on the LL as the LL is able to offset such business costs against their rental income for tax purposes. There is the halfway house option - a T initially pays for the credit check and if it leads to a successful T then those fees are returned to them.

Yes, if the Ts weren't made to pay fees to the LA then the LL may increase the overall rent costs to cover his /her own increased outlay to the LA but at least that way there would be a measure of transparency. For many Ts they don't get to know until the last minute that on top of £xxx per month rent, and £xxx deposit there will be these excessive fees from the LA, who does not work on the Ts behalf.

tbs624

landscaperico wrote: »

Thankyou TBS, I totally agree with you, read theartfullodgers post on page one!! Really interesting and shocking stuff!!

AL's comments are similar to ones I have posted on this board on a regular basis. Many people take their LAs word on all manner of things without realising the paucity of their knowledge of LL and T law.

princeofpounds

I'm not sure that anyone was saying that it is the full story

True, but it was certainly the focus of the complaints. It can actually be a valid complaint, but only if the pricing is gross-margin driven which it's unlikely to be in a service industry like lettings.

If you need a roof over your head in the private sector, however, you may find that you have very few opportunities to shop around because the local LAs keep the admin fees at a similar level to one another.

I agree, there does seem to be oligopolistic pricing. I also pointed out that there are generally few opportunities to shop around despite a seemingly competitive market because real estate is so heterogeneous - i.e. there may be many houses in an area up for rent but only one suitable one which creates a defacto monopoly as you can't choose to access that property through any other channel.

It's a bit like trains, in that in theory there is a competitive market but in reality who is going to get a bus to manchester? There is only one train line and operator. So we all end up paying stupid prices not based on the intrinsic value of the train journey, but on avoiding the pain and delay of a coach ride.

Your comment about "what they can get away with" is at the very heart of this - a huge number of LAs are unqualified,untrained, unregulated and *are* currently getting away with royally ripping Tenants off (and LLs in some cases too). It's time the practice was stopped.

Agree. My contention is that there is something structurally wrong with the market and we should fix that and continue to allow agents trying to price as they can within a better structure. I don't know exactly what the problem is, but there are a few things pointed out on this thread that are probably involved (like your point on split 'employment').

Certainly not having these split sources of revenue from LL and T would help, because the incentive structure is all wrong - Ts aren't able to choose the service they would like in terms of contracts, liaising, admin and checks because the LL effectively chooses that for them with no regard to what might be required. For instance, LAs don't even have to disclose or agree with LL what they will charge Ts, so they could hold property to effective ransom for the duration of the contract with the LL.

rla_john

tbs624 wrote: »

You're merely taking it round in circles - there's a free custodial scheme and therefore, as a LL, if you choose to use one that costs then you as the LL should foot the bill, not make a further "business decision" to charge the T, whilst also presumably retaining the interest on the Ts deposits.

Yes of course, because these days landlords must be making a rake of cash in interest on deposits :rotfl:

I'm not trying to take it around in circles, I have no reason to defend the insurance based schemes or landlords' decision to use them - I'm merely stating facts.

There are a myriad of reasons why landlords would use the insurance based schemes over the custodial scheme, not least because the insurance based schemes mean the tenant often get's the deposit back sooner after the end of the tenancy.

That said, my point was that there are legitimate costs that have to be covered and are often covered by admin fees, so then it's up to the tenant to decide if he/she thinks the admin fee is fair or if they want to try and negotiate.

J

hellokitty08

I'm going to add my two cents. I really dont understand people getting all over worked on this subject.

If you ask the fees before you view a property then your already one step ahead by knowing what the costs will be. It you feel its too expensive then dont go! Simples!

I have been a tenant for many years and now work in a letting agents. Whilst I, as much as anyone else do not enjoy paying admin fees, it is my choice to do so! No one makes me do it. If I find a nice house then I am prepaired to pay the fee.

I really dont get it, maybe it is just because of where I live, but if I wanted to rent somewhere without paying a fee, I would rent from a l/l direct, if I see a nice property with a letting agent, I pay the fee. I have choices, yes I might not be happy with then cost of them, but at the end of the day its my (your) choice.

I dont see there being any opolies at all! Its not like all l/l letting agents say you must pay this fee or else! If you feel that there is only one house suitable, thats your bad luck not the agents or l/l!

axomoxia

Replace "house" with "job".

Does what you've written still sound acceptable to you?

Why should recruitment agencies not be able to charge up-front fees, and you should?

hellokitty08

Yerh but I am saying if they did, it would be my choice to pay them if I did. I could always choose not to by using a different agency. Same logic applies. If I thought that the recruitment agency had all the best jobs, or the job that i wanted I would have to decide if I wanted to pay the fee (same)

I could of course vote with my feet and not pay the recruitment agency and use a free one! (still the same principle if you ask me!)

Actually in fact this is a very good analagy (probably spelt that wrong) If you can advertise jobs with the job centre, (which is actually free) then why do people use recruitment agencies that they have to pay a commision too? Answer, because they choose to!