Letting, did I missunderstand something?

RedDwarf82

If a landlord would want to find new tenants for his property, and he went to Foxtons (only find tenants, not managing)...
Let's say it's a 2 bedroom flat in London, which could be rented for ~£1,300/month. The landlord lives close enough to it to manage it himself.
Looking at http://www.foxtons.co.uk/landlord/terms/terms_and_conditions.html

He would need to pay Foxtons £2059.20 the first year. And since Foxtons takes its fees first, that would mean the landlord would not receive anything for the first month, and only £759.20 the second month.
And if the tenants stay for two extra years, even if Foxtons does nothing, the landlord has to pay Foxtons £1,684.8 each year. So a total of £5,428.80 for finding a tenant in London, probably the place on Earth with the highest density of people looking for a place to rent.

Foxtons obviously has an interest in finding a tenant ASAP, not in finding a good tenant.
As far as I know the only thing they tell you about the checks they do is "it has passed the checks" or "it has not passed the checks".
Since they take their fees before paying anything to the landlords they create an incentive for landlords to opt for short tenancy agreements (1 year instead of 3 or 4), which is exactly the opposite to what they may want otherwise.
Foxtons agents availability to show your property is limited.
Foxtons will also charge £420 to the tenants, lowering the interest in the property.


Meanwhile that same landlord could go to https://www.openrent.co.uk/ (not trying to make publicity, feel free to comment about alternatives) and for a total of £50 get the same plus:
A detailed credit check report from which he can decide if the tenants fit his risk profile: https://s3-eu-west-1.amazonaws.com/staticimages.openrent.co.uk/content/OpenRent+Sample+Referencing+Report2.pdf
He will actually see all the tenants, being able to get his own opinion about them.
The landlord may have a normal office hours work. Meaning he will be able to arrange viewing only after those hours... EXACTLY the most convenient time for the prospective tenants, at least most of the ones with a job to pay the rent.


This landlord which has multiple properties in London and a London salary, meaning he is a 40% tax payer. Now, if I understood it correctly, HMRC will give him back 40% of the £5,428.80 Foxtons fees: £2,171.52. Which it looks to me like the government subsidizing Foxtons' business... which seems plain wrong to me.


Now, please, tell me I misunderstood something. Because there are landlords in this situation actually using Foxtons to find tenants...

PS. Kudos to Foxtons for actually publishing the fees. How do others compare?

princeofpounds

Now, if I understood it correctly, HMRC will give him back 40% of the £5,428.80 Foxtons fees: £2,171.52. Which it looks to me like the government subsidizing Foxtons' business...

No comment on the rest of the stuff, but in this case it is not a subsidy. The assumption is that the LL is running a business.

Businesses get taxed on their profits, not on their revenues.

The fees are a business cost just in the same way as your salary is a cost to the business that employs you.

Now, there is a separate argument about

a) whether it is fair to allow landlords to benefit from a business tax structure when the same reliefs are not available to owner-occupiers.

b) why BTL investments benefit from the business tax structure when other personal investments, such as stocks, do not.

But there is nothing odd about this within the existing framework.

AlexMac

That's the way it is. Unsurprisingly Foxtons appear not to be running a charity. Their staff have nice manners, suits, extreme haircuts, the office (here at least) looks like a trendy bar and as it only opened 2 years ago is sparkly new, and those Mini-coopers have lovely livery...

Which unfortunately doesn't impress me... so I go to the grumpy old long established agent up the road who charges me half as much to find tenants who have never once given me grief!

eddddy

Hi RedDwarf82

It's a simple business decision for the LL to make. If the LL believes that using Foxtons service will increase their income by £2k+ (or whatever) then it's a sensible thing to do....

...Either because the LL believes Foxtons will achieve a higher rent, or they will get a tenant in quicker.

A friend of mine chose Foxtons to sell one of her flats, even though they charged the highest commission, because she believed that their liveried minis, 'cocktail bar' branches and sharp suits (and selling techniques) would attract buyers who could be persuaded to pay higher prices.

MSEers might say that they aren't taken in by that kind of puff, but I guess MSEers aren't Foxtons' target market.

The good thing is that there is a choice of EAs - those that are like Foxtons, and those that aren't.

RedDwarf82

eddddy wrote: »

The good thing is that there is a choice of EAs - those that are like Foxtons, and those that aren't.

The bad thing is that the supply of properties in London is extremely limited. And Foxtons taking part of them makes the city a worse place for tenants.

In any case, if any landlord reads this, I always look first for agency-free properties.
If you are going to rent your property for £1,300/month, and only get £1,100/month... I would rather pay directly to you £1,200/month. You win, I win.
Give it a try...

anselld

You are sounding like a spammer now!

G_M

Letting Agents (Tips for selecting, and tips for sacking them)

caprikid1

Go on to You Tube or google TaxTheRich

You will see the foxtons kids playing with very expensive cars. The lastest is sliding a New Rolls Royce Raith on Grass in their enourmous country estate. Opinion will be divided on their antics but no question of their wealth !.

harrys_dad

Foxtons, and all other agents, do not publish their fees through choice; the law has recently changed and they are obliged to.

MrSilk

Also, landlords aren't permitted to view prospective tenants credit reports, not even us estate agents don't see them. We only know if they have CCJ's or are bankrupt

Prothet_of_Doom

In an open market, the buyer of a service is free to choose whether to buy the service. If you don't think the service is good value for money, find someone else to do it, or do it yourself. It's not a difficult concept.