Rent Admin Fee

landscaperico

I agree with axomonia, it is a bad analogy, take the recruitment company as a better one, you have the person looking for a job, the agent searching and the company that pays the agent to find somone, the person looking doesnt pay any fees and its illegal to do so, the company pays the agent that finds the person.

So as we've said before why being that LA are in a very similar situation to Recruitment agents is it legal for them to charge the seeker and not for the Recruitment agents.

And they are charging for their services, to the Landlord. Or in the recruitment agencys case the company.

I dont mind paying for the credit checks but even then if it gets to that point the LA should have done their homework and use their intuition before doing a credit check. Which costs on average £10 per person.

tbs624

Jowo wrote: »

You could raise it with your local MP. Your alternative in the near future is to find a private landlord, negotiate a lower price with an agent (possible) or find one that doesn't charge tenants (rare).

Its perfectly legal for businesses to charge customers for their services - virtually all do, with the exception of charities and not-for-profit organisations. The admin fees agents charge are extremely unpopular, some might say unethical, but are legit and are the norm. A sense of outrage because the fees don't seem to reflect the work involved is insufficient, in my opinion.

It's wider than that Jowo, as has already been discussed. You continue to ignore the fact that the LL is already paying the LA for the work involved in getting a paying T into the property and that the LL has the advantage of such charges being tax deductible.

Websites design costs are an irrelevance: you want a website, you pay a designer to build you one. The web designer doesn't charge two parties for the same piece of work. The analogies to house selling and to job agencies were closer to the mark - vendor employs agent to flog house, vendor pays bill. Employers uses recruitment agency, employer pays bill in the form of a commission. LL employs LA to let property , LL should pay the bill.

Jowo wrote:

No-one. It's a free market and the fees are legal. Agents can charge what they please, whatever the market rate is, and its up to customers to accept this or take their business elsewhere. Virtually all agents charge tenants fees to process their tenancy and its all legit, if deeply unpopular, particularly as they reap charges from both tenant and landlord as intermediaries for both.

Same old ground Jowo - in some areas Ts in the private sector will find that the majority of the properties are placed with LAs.Decent LLs who self-manage tend to have Ts who stay put for longer periods of time and their properties therefore don't come up as frequently. You simply can't present an LA as "intermediaries" for both parties - the LA is not independent from either party - *s/he acts for the LL, in the interests of the LL*.

Let's follow through your blunt "no-one" reply when the OP asks to whom she can make a complaint about these fees. If Tenants and campaigning groups such as the CAB, Shelter, Crisis etc hadn't hammered away it would still be possible for LLs to deprive Ts of their deposits. There was no law against them doing so but there is now, albeit with flaws.

The issue of LAs fee structuring is clearly a source of concern to many Ts, potential Ts and to some LLs. If they want to change things they need to make their voices heard. Its interesting that the fees charged on rental properties seem to have increased considerably following the credit crunch: some EAs/LAs propping up their house sale divisions? Unless people raise their heads on this one, those costs will continue to rise as LAs think fit

LAs will make use of ARLA, NAEA etc spokesmen to present their case on such issues - if Ts merely pay up, grumble amongst themselves whilst sticking pins in an effigy of their LA, then their silence gets taken as consent.

landscaperico

Thanks TBS I'll have a look at those groups later on today! And I agree about the silence not enough people in my opinion complain about unjustified fees, you need to question what you are paying for always, and if they can give you a just answer then in my opinion there not a serious buisness. I will be writing an email to my local MP and the groups and watchdog to alert them there is someone else who will not stand for being taken for a ride!!!

Jowo_2

landscaperico wrote: »

I dont mind paying for the credit checks but even then if it gets to that point the LA should have done their homework and use their intuition before doing a credit check. Which costs on average £10 per person.

Intuition instead of comprehensive tenant screening is certainly much cheaper for all parties but I don't think a landlord would appreciate an agent making decisions to grant a tenancy on a 'hunch'.

If a landlord who rents directly to a tenant wishes to use a third party to undertake comprehensive tenant screening (as they do not always have the time, inclination or knowledge to do this themselves), then the charge is closer to £30 to cover previous landlord refs, employer refs, credit check, electoral regster check.

Therefore you are still fantasising about actual costs involved, let alone in great denial about the extra mark-up that agents are legally entitled to do.

Your options are to

-find a pressure group/charity/MP to take up your case
- find an agency with either a low or no charge to tenants
- find a private landlord who doesn't outsource the tenant screening since the tenner you wish to pay won't cover it
- continue to not pay the going rate to an agent, thus shrinking the pool of available properties to you.

Jowo_2

tbs624 wrote: »

Its interesting that the fees charged on rental properties seem to have increased considerably following the credit crunch: some EAs/LAs propping up their house sale divisions?

Well, as they are run as businesses which seek to turn a profit, then they must make changes in their interests to cover decline in other areas. So far as basic capitalism goes, no surprise here.

If tenants are successful in their wish to have only the landlord pay expenses associated with the let, then this could be counterproductive - the landlords are either going to withdraw from renting property because the rental yield doesn't make it worthwhile or they will simply incorporate the charge in the rent to the tenants.

In areas where there are high numbers of rental properties available and low demand from tenants, market rents are falling and tenants find it easy to negotiate lower rent, as the OP did.

If the forum is happy with the business acumen of the tenants in successfully negotiating reductions, then the forum can be equally happy with the business acumen of letting agents who are ensuring their businesses thrive in the recession and are in the position to offer accommodation to them in the first place.

daska

Jowo wrote: »

Another example cited is recruitment agents - they only charge the employer, not the temp. But wait a minute, they take a percentage of everything paid to the temp for the entire length of the contract. And yet all they've done is stuck an advert on the website, sent a couple of CVs through to the client and signed a couple of photocopied contracts. Outrageous that they may reap hundreds or thousands of pounds for work someone else is doing when they've only spent a few hours setting it up! Who do I complain to?

Except the temp gets the advertised rate after the agent has taken the cream off the top - unlike with renting whereas the tenant pays the advertised rate plus any admin charges the LA feels it can get away with. My LL's LA wanted me to pay them to negotiate a new contract - he didn't feel the need for a new one and neither did I.

(and even temps get paid holiday as well )

axomoxia

Jowo wrote: »

Rejecting the cost of a website design because the designer hasn't spent much time or expenditure on it is a good analogy.

Remember the OPs original post was about how he demanded an itemised bill from the agent for their services, believing the agents time spent on the matter should not be included in the fee and complaining that 'they are telling me that they want me to pay for advertising.' A lot of the negative posts about agents complain that the time/effort/expense expended by the agent isn't representative of the costs they charge the tenant.

The costs charged to the customer by the agent are not representative of the expense incurred and nor are mine when I bill my clients directly - that's how the market works.

Another example is that I recently paid a plumbing company £2500 for one days work to replace my boiler, of which £1000 was the actual hardware costs involved. Granted that the plumber is skilled but I spent the equivalent of paying the company £250 per hour for his time, plus they get to sell my old boiler parts that they took away.

Where do I complain about this outrageous charge which didn't reflect the time and effort spent by the plumber who probably only got paid £40 per hour by his company?

Oh, I can't complain - it's a free market based on supply and demand. I could either choose to freeze all winter with no hot water or pay whatever plumbers can get away with charging. As there are lots of customers, the ball is in their court.

Another example cited is recruitment agents - they only charge the employer, not the temp. But wait a minute, they take a percentage of everything paid to the temp for the entire length of the contract. And yet all they've done is stuck an advert on the website, sent a couple of CVs through to the client and signed a couple of photocopied contracts. Outrageous that they may reap hundreds or thousands of pounds for work someone else is doing when they've only spent a few hours setting it up! Who do I complain to?

Its still a poor analogy. You need to find one that involves an agent charging both parties fees for doing the same job. That is source of the OPs concern.

And your recuitment agency analogy is still flawed. For recruitment, when filling a perm role, a finders fee is paid by the company to the agent. The new employee payes nothing. For contract roles the company will pay a fee to the agency, as a finders fee and often a payroll fee. In both cases no charges are made to the employee or contractor, no "deductions" are made. You might also wish to argue that an estate agents fees are paid by the buyer, as otherwise they would have paid less for the house.

The current push by EA to replace the diminishing revenue streams from property sales in the current illiquid market with residential lettings cash flows seems to have led to increased competition amongst lettings agents and EAs for landlords business
I do see a scenario in the future where the race to the bottom to lower landlords fees to agencies will result in a zero fee to the landlord, and the entire costs fowarded onto the tenant. Hopefully before then legislation will intervene. I can foresee a scam business model whereby an agency takes a large number of administration charges, informs all and sundry that the deal is off (I am presuming these fees are charged before a tenancy agreement is signed), and then returns almost all the money charged. There do appear to potential for abuse of this business model - it may take a large amount of fraudulent behaviour to occur before anything happens, similar to how long it has taken to stop "Modelling Agencies" taking upfront fees.

landscaperico

Jowo wrote: »

Intuition instead of comprehensive tenant screening is certainly much cheaper for all parties but I don't think a landlord would appreciate an agent making decisions to grant a tenancy on a 'hunch'.


No you havent read it properly thats not what I'm saying, it was a stupid point but a minor point for a minor part of the bigger picture, I am not by any means suggesting full checks dont need to be carried out of course they do. I wouldnt even mind paying towards it. But I belive it should be a just fee.

Thats all, I'm not trying to be cheap or bring down the big capitalist evil (I quite like capitalism) but I still think there should be rules to make things fair and to stop people being taken for a ride, the only reason why LA charge so much is because people know no better and so they pay it, capitalism at work and more fool them you may say, but screw that. Its unfair unjust and it needs to be addressed.

axomoxia

Jowo wrote: »

Well, as they are run as businesses which seek to turn a profit, then they must make changes in their interests to cover decline in other areas. So far as basic capitalism goes, no surprise here.

If tenants are successful in their wish to have only the landlord pay expenses associated with the let, then this could be counterproductive - the landlords are either going to withdraw from renting property because the rental yield doesn't make it worthwhile or they will simply incorporate the charge in the rent to the tenants.

In areas where there are high numbers of rental properties available and low demand from tenants, market rents are falling and tenants find it easy to negotiate lower rent, as the OP did.

If the forum is happy with the business acumen of the tenants in successfully negotiating reductions, then the forum can be equally happy with the business acumen of letting agents who are ensuring their businesses thrive in the recession and are in the position to offer accommodation to them in the first place.

Well, I'd be rather concerned about my agent having a conflict of interest. I'd also be concerned about an agent (supposedly acting in my best interests) suggesting that tenants negotiate a _lower_ rent.

Claiming that would-be landlords withdraw from the market if they had to pay all the fees is just utter guff. There a many other business with this rule that function perfectly well, e.g. house sales. Also this a recent invention, the rental market worked perfectly well before these charges where introduced, and and I fail to see the rental market stopping working if the charges reverted back to the customer.

Jowo_2

axomoxia wrote: »

Its still a poor analogy. You need to find one that involves an agent charging both parties fees for doing the same job. That is source of the OPs concern.

Much of the concern from the OPs and others apart from the 'double dipping' feature is that the agent doesn't 'deserve' the fee because it is much greater than the time/effort/expense they incur in processing the tenancy.

I work in IT consultancy, usually on a fixed fee basis - For x piece of work I charge £x - I do not have to itemise my invoice on a line by line basis and my customers do not expect this.

My recent plumbers invoice did not split out the hardware and labour costs, nor did my gardener, or the last electrician I used. They merely quoted '£x' to do X work and it was up to me to proceed with it, or not, even though they got to keep a lot of the invoice as pure profit.

Agents are very unpopular but being opaque about the expense and time they spend in doing a particular task and thus their mark-up is very common to many suppliers of goods and services.

axomoxia wrote: »

I do see a scenario in the future where the race to the bottom to lower landlords fees to agencies will result in a zero fee to the landlord, and the entire costs fowarded onto the tenant.

I don't. Agents are perfectly entitled to charge both tenants and landlords and only changes to market conditions or legislation will prevent their practice of extracting the maximum money out of both parties at the least expense to themselves, which is how most businesses operate.