What A Joke - Estate Admin Fees

MyOnlyPost

The Scottish system seems much fairer to tenants but is it fairer to landlords too?

Also have fees in Scotland been abolished or are they just not allowed to charge them to tenants? One of the problems with what has been mooted in England & Wales is that the fees won't be abolished, just won't be charged to tenants and therefore agents will be able to charge them to landlords.

I think most people in England & Wales are sceptical that agents will just take the loss of income and I personally feel they will instead look at gaining that revenue by other means. Hopefully I am being cynical but I genuinely feel anything but the complete abolishment of fees will be worse for the tenant.

Maybe the governemnt should consider abolishing the need for referencing by making it much easier to evict a bad tenant whilst strengthening the rights of good tenants. If I could go to a mythical authority and prove my tenant hadn't paid rent for a legally defined term (no more than 3 calendar months) and regain posession quickly I wouldn't ever need a reference again. I would also support a holding fund where in a dispute tenants could pay their rent to an arbitrator, rather than withhold, where it would be held for the landlord pending completion of works. Slumlords would soon get work done if collecting rent depended on it.

I think there are a lot of fair minded lanlords (or potential landlords) out there and if the rules were changed to support good landlords and good tenants whilst making it harder for bad ones we could rid ourselves of the minority who give the rest a bad name. Nothing less than a complete overhaul of the system is needed with input from both sides of the argument to reach some fair middle ground

SwanJon

MyOnlyPost wrote: »

I don't live in Scotland or have any knowledge of the Scottish rental market. I also don't know the relevant laws regarding letting in Scotland so can't comment. What I do know is that 1) I would not use an agent who charges my tenants ridiculous fees, I do everything I can to keep my tenants costs to a minimum 2) Other things being equal if those fees were passed on to me I would have to put my rent up to cover them.

or 3) find another agent with better fees? Which you as the landlord have the power to do.

MyOnlyPost wrote: »

Unless the agents stop charging the fees altogether then somehow it is likely the fees will be passed to the tenants in the majority of cases and with the agents taking a cut of the rent the rent will increase by more than the fees would have been so the tenants will be worse off

It will introduce a competitive advantage to the agents who charge more appropriate fees, as they will get more customers (landlords).
Tenants will be able to see at first glance the cost of a property as it will all be rolled into the monthly rent.
Moving home will not create as high a hurdle for tenants - they will not be stung by these costs - possibly on a 6 monthly basis. (It's possible that this may have an effect on landlords/rents but I admit its going to be a very light pressure. It's still a hassle to move)

MyOnlyPost wrote: »

I don't live in Scotland or have any knowledge of the Scottish rental market. I also don't know the relevant laws regarding letting in Scotland so can't comment. What I do know is that 1) I would not use an agent who charges my tenants ridiculous fees, I do everything I can to keep my tenants costs to a minimum 2) Other things being equal if those fees were passed on to me I would have to put my rent up to cover them.

Unless the agents stop charging the fees altogether then somehow it is likely the fees will be passed to the tenants in the majority of cases and with the agents taking a cut of the rent the rent will increase by more than the fees would have been so the tenants will be worse off

MyOnlyPost wrote: »

The Scottish system seems much fairer to tenants but is it fairer to landlords too?

Also have fees in Scotland been abolished or are they just not allowed to charge them to tenants? One of the problems with what has been mooted in England & Wales is that the fees won't be abolished, just won't be charged to tenants and therefore agents will be able to charge them to landlords.

Only fees to tenants. I imagine that most agencies in E&W already charge landlords, as well as tenants. As above these activities are for the landlord's benefit so it makes sense that they pay it (and count it as a business expense)

Pixie5740

Guest101 wrote: »

Do you lose it if you pull out?


Just wonder if there's a bit of a scatter gun approach to properties (apply for 4 you like and then pick one)

No you shouldn't lose it if you pull out. The letting agent/landlord might try and keep the holding deposit but you are legally allowed to ask for it back. Shelter Scotland have some template letters available.

I've never heard of someone applying for lots of rental properties at once but that's not to say it doesn't happen. Maybe it results in shorter referencing times.

MyOnlyPost

SwanJon wrote: »

or 3) find another agent with better fees? Which you as the landlord have the power to do.

And if you read point 1 I have

SwanJon wrote: »

Tenants will be able to see at first glance the cost of a property as it will all be rolled into the monthly rent.

I was answering Pixies post about rents not going up in Scotland so saying the fees will be rolled into the rent proves my point.

I did this calculation on another thread. It is purely an example, not what I think is fair

Agent Charges £800 up front fees to tenat, tenant pays £800
Agent Charges £800 up fron fees to landlord
Agent Charges 10% + VAT per month for management
Landlord increases rent by £910 pa to make back the £800 after 10% dedcution

Net result agent is £91 better off, VAT man is £19 better off and tenant is £110 worse off, Landlord stays the same. The tenant then loses £910 per year for each subsequent year they stay

Pixie5740

MyOnlyPost wrote: »

The Scottish system seems much fairer to tenants but is it fairer to landlords too?

If landlords in Scotland weren't making enough money through letting properties then they would sell up and people wouldn't still be clambering to get on the BTL bandwagon.

Everyone needs a home but no one needs to invest in BTL so it's right that tenants are protected from obscene letting agent fees.

MyOnlyPost wrote: »

Also have fees in Scotland been abolished or are they just not allowed to charge them to tenants? One of the problems with what has been mooted in England & Wales is that the fees won't be abolished, just won't be charged to tenants and therefore agents will be able to charge them to landlords.

Letting agencies aren't doing it out the goodness of their hearts. They are trying to make a profit just as landlord are trying to do which means letting agents charge landlords for their services. Are landlords willing to pay the kind of referencing and start-of-tenancy fees currently paid by tenants in E&W? Probably not which means letting agents will need to make their pricing more competitive.

You keep going on about fees being passed on to the tenant even if such fees are abolished even though there is evidence to show that will not be the case as it hasn't been the case in Scotland.

MyOnlyPost wrote: »

I think most people in England & Wales are sceptical that agents will just take the loss of income and I personally feel they will instead look at gaining that revenue by other means. Hopefully I am being cynical but I genuinely feel anything but the complete abolishment of fees will be worse for the tenant.

Fine, let's just ignore the evidence and the fact that letting agent fees aren't really a driver in rent levels and go with your feelings instead. :cool:

MyOnlyPost wrote: »

Maybe the governemnt should consider abolishing the need for referencing by making it much easier to evict a bad tenant whilst strengthening the rights of good tenants. If I could go to a mythical authority and prove my tenant hadn't paid rent for a legally defined term (no more than 3 calendar months) and regain posession quickly I wouldn't ever need a reference again. I would also support a holding fund where in a dispute tenants could pay their rent to an arbitrator, rather than withhold, where it would be held for the landlord pending completion of works. Slumlords would soon get work done if collecting rent depended on it.

Is this mythical authority of which you speak like a county court for example? You don't even need to wait for 3 months unpaid rent before taking a tenant to court under the current legislation so why would you want to string it out even longer?

Who's going to pay for this holding fund? Who will decide when tenants can and cannot pay into the holding fund? It won't change anything for slum landlords. Slum landlords get away with what they do because they are usually letting properties to people on the lowest rung of the housing ladder. Tenants who are frightened, who don't know their rights and are quite often vulnerable. Legislation doesn't stop slum landlords from operating it just gives councils a bigger stick to hit them with if they ever get caught. Even then the penalties for being a slum landlord aren't that severe otherwise they wouldn't take the risk in the first place.

MyOnlyPost wrote: »

I think there are a lot of fair minded lanlords (or potential landlords) out there and if the rules were changed to support good landlords and good tenants whilst making it harder for bad ones we could rid ourselves of the minority who give the rest a bad name. Nothing less than a complete overhaul of the system is needed with input from both sides of the argument to reach some fair middle ground

All the changes in legislation have come about being a significant enough number of landlords and letting agents keep !!!!ing it up for all the others.

MyOnlyPost

Everything I have ever read you post pixie is biased in favour of tenants. I try to put my rational head on and consider fairness on both parties. It also appears that you feel people shoudn't be able to express opinions, only bare facts.

The law in Scotland was clarified in 2012. The Scottish governement reports an overall increase in rent for the year 2014-2015 of 2.2% but as high as 6.6% in some metropolitan areas with rents going down in more rural areas. Neither you nor I nor the Scottish Govt can say what has caused these increases in urban areas but they are above any rate of inflation you care to name for that year and represent a record high for Scotland according to the BBC Dec 2014. Also note that the lowest avergage rent for a 2 bed house in any area of Scotland is the same as I charge for my highest 2 bed rental property in the North of England with the highest areas being double that, so maybe rents in Scotland hit their ceiling years ago and landlords can therefore afford to absorb the cost more easily?

http://www.gov.scot/Publications/2015/11/3376
http://www.bbc.co.uk/news/uk-scotland-scotland-business-30591580

Furthermore as the clarification of the law is still relatively new the effects will still be trickling through as tenants who have been established for a number of years vacate properties and new tenants are found at new higher rents.

You have stated an opinion that rents in Scotland haven't increased since the legislation change but not actually provided any facts. I have illustrated there is an increase in rents and stated that avergae Scottish rents are much higher than the avergae rent I charge for my properties in the North of England when compared like for like. As I stated previously I know nothing about the rental market in Scotland but I do know about the markets where I operate. Don't preach to me about my area and I won't preach to you about yours.

I have stated the pure economic principle that when costs to a supplier increase the end user bears the brunt in the form of increased prices. Maybe housing in Scotland is the one exception to this general rule of free market economics?

Guest101

Pixie5740 wrote: »

No you shouldn't lose it if you pull out. The letting agent/landlord might try and keep the holding deposit but you are legally allowed to ask for it back. Shelter Scotland have some template letters available.

I've never heard of someone applying for lots of rental properties at once but that's not to say it doesn't happen. Maybe it results in shorter referencing times.

Thanks Pixie, informative as always

SwanJon

MyOnlyPost wrote: »

And if you read point 1 I have

Fair enough, didn't read it that way. If costs all came through the LL then maybe more would think like you.

MyOnlyPost wrote: »

I was answering Pixies post about rents not going up in Scotland so saying the fees will be rolled into the rent proves my point.

I did this calculation on another thread. It is purely an example, not what I think is fair

Agent Charges £800 up front fees to tenat, tenant pays £800
Agent Charges £800 up fron fees to landlord
Agent Charges 10% + VAT per month for management
Landlord increases rent by £910 pa to make back the £800 after 10% dedcution

Net result agent is £91 better off, VAT man is £19 better off and tenant is £110 worse off, Landlord stays the same. The tenant then loses £910 per year for each subsequent year they stay

Just because they haven't gone up, doesn't mean they are not rolled in - probably a mix of agents and landlords earning less profit.

Your example is entirely possible, and I'm sure it has happened, but I think it is the difference between what it costs the agency and what they charge that opens up the possibility of the biggest change.
If the cost the agent is £100, yet they charge £800 there's £700 to play with. All it takes is another agency to come along and say that 600% profit is enough.
Agency charges LL £700 (+10%+VAT = £784)
LL passes this onto tenant. Tenant is £16 better off in year one.

Add on the removal of 'Renewal fees' for a new 12 month contact and you're a few months into year 2 before the tenant has paid more. If competition on the profit margins on the fees drives them down this time gets longer.

MyOnlyPost

SwanJon wrote: »

Just because they haven't gone up, doesn't mean they are not rolled in - probably a mix of agents and landlords earning less profit.

There is a general assumption amongst the public that all landlords are making loads of profit from BTL which isn't always the case. You only have to look at house prices and average rents across the country to see that there are huge discrepancies in prices and this also applies to rental yields too. I have 2 houses I own outright and 3 I own 50% of. My total turnover in rent is under £20,000 due to the area I operate in and this is my main income as I am unable to work. After costs I barely earn enough to pay taxes on and I have only £750 per year of mortgage debt. I appreciate some Landlords may be able to absorb the extra costs if they are in more affluent areas but not all can

SwanJon wrote: »

Your example is entirely possible, and I'm sure it has happened, but I think it is the difference between what it costs the agency and what they charge that opens up the possibility of the biggest change.
If the cost the agent is £100, yet they charge £800 there's £700 to play with. All it takes is another agency to come along and say that 600% profit is enough.
Agency charges LL £700 (+10%+VAT = £784)
LL passes this onto tenant. Tenant is £16 better off in year one.

Add on the removal of 'Renewal fees' for a new 12 month contact and you're a few months into year 2 before the tenant has paid more. If competition on the profit margins on the fees drives them down this time gets longer.

I agree with this whole heartedly. I used £800 as an example as the thread I initially posted that in was talking about £800 of fees IIRC. I feel that all agency fees should be limited to actual cost + a fair alowance for time. My agent charges me £200 more for tenant finding than I would pay elsewhere but I do this because they keep the cost down to the tenant. Just today I have waived referencing for a young man because he couldn't raise the funds for both referencing and a bond and he needs to move from where he is. I have literally taken the agents word that he has been a good tenant for the past 3 years. I do try to be a socially responsible landlord so I will never make excuses for investing my money in property rather than the stock market

Pixie5740

Given that this is a forum designed to discuss consumer issues it's hardly surprising that there is a bias towards consumers. Next you'll be complaining that there's a bias towards borrowers on the Debt Free Wannanbe board.

I'm curious about your rational head. Is this the same rational head that doesn't think landlords are running a business or that insurance is better than taking a deposit?

As for the figures you've posted about rents in Scotland in 2012 and 2014, what do they have to do with letting agency fees? It's hardly surprising that rents in urban areas such as Edinburgh have risen more than in rural areas. That's just supply and demand. More people moving to urban areas where there are more jobs. The same reason that rents in London are higher than rents for similar properties in NE England.

I didn't state opinion I stated facts based on a study which I provided a link to. Not only that but I lived as a tenant before and after the clarification of the legislation in 2012 and not just in the same property so I have first hand experience too.

Your example with the £800 letting agent fees is an over simplification. Do you really think a landlord would pay the same fees as tenants were previously charged? The landlord would shop around, negotiate the price down or decide that (s)he wasn't getting value for money and self manage.