What A Joke - Estate Admin Fees

juniordoc

Myself and my partner have just handed over £480 in fees to a letting agent to move into a new rental next week. We had got our hopes up after the government promised to ban them in the Autumn statement but it's transpired that was just cheap talk.

We have both sworn never again, this will be our last rental and we will be saving enough to buy our next home whatever it takes!

MyOnlyPost

Pixie5740 wrote: »

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.

There should be a bias toward consumer issues, not toward the consumer themselves. Advice should be impartial and proper

Pixie5740 wrote: »

I'm curious about your rational head. Is this the same rational head that doesn't think landlords are running a business

I should have qualified this at the time with "according to HMRC rules", which I did later in the thread. In particular I cannot pay NI contributions because of this and so am being deprived the right to build towards my state pension. I never once stated in that thread or anywhere else on the Forum that landlords shouldn't act professionally, which is what you are implying

Pixie5740 wrote: »

or that insurance is better than taking a deposit?

This is something I posted today as a musing, a maybe, let's throw it out there and see. It was somebody else's thread and I had a thought.

Pixie5740 wrote: »

As for the figures you've posted about rents in Scotland 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.

You stated categorically that rents hadn't increased since letting agents fees were banned in Scotland and I showed they went up 6.6% in a single year in some areas. The relative rents also explain why maybe Scottish landlords are able to absorb some or all of the increased fees where as I and some other landlords in my locality may not be able to.

Pixie5740 wrote: »

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.

As already stated above the £800 came from a thread where the tenant was being charged £800. My agent doesn't charge anywhere near these fees to tenants only £240 Inc VAT + Bond with no holding deposits. How far down do you think I can barter the agents from there? I am already paying higher fees than the tenant each time.

http://www.castledene.co.uk/userfiles/file/list-of-fees.pdf

£240 up front extra fees to landlord
Landlord increases rent by £270 p.a.
Agent charges 10% + VAT on £270
Agent is £27 pa better off, VAT man is £5.40 better off And landlord id £2.40 worse off. Tenant is £30 worse off in year one and £270 each year thereafter and every time rent goes up that £270 is compounded.

As stated in my answer to SwanJon I cannot afford to absorb these fees. I am sick of people assuming all lanlords are well off and should just take the hit.

Also Pixie your link is from a charity which is openly anti landlord so hardly unbiased and contradicts the one I posted which is a governement resource document

Miss_Samantha

You say you do not work so one might ask why you do not manage the properties yourself and save a bundle.

MyOnlyPost

Miss_Samantha wrote: »

You say you do not work so one might ask why you do not manage the properties yourself and save a bundle.

I would love to Samantha but I am still quite new to being a landlord and felt I wouldn't be able to offer a professional service without some help in the beginning at least. I also have 2 autistic children and as I am sure you will appreciate their needs come before mine so I have to be around when they need me.

Maybe when the kids are older and I have more experience I will but for the time being if my agents continue to do right by my tenants (and me of course) I will continue as I am.

leslieknope

my friend works for an estate agent. it costs them roughly £20 to reference someone but they charge £150 per tenant. plus they charge the landlord fees to be the letting agent. tell me how that is fair.

as a tenant i have to find 1-2 months rent as a deposit plus the first month's rent. referencing fees which can be anywhere between £20-£200. a fee to hold the property while they run all of these checks. then a fee to actually sign the contract - plus i've seem some have the audacity to charge an inventory fee to tenants! so they're being charged to be told what is in the property! and some state i have a check out fee too so they will charge me to physically leave the property and that's before the landlord potentially deducts from the deposit. this profit isn't passed on to the landlord and the LL is being charged a fee to let the property anyway. when rent costs an average of 40% of an average wage before any bills or other living costs, how do you expect people to save enough to cover the outrageous costs of moving or for a deposit of their own?

in my last property the landlord was amazing. he was understanding when my roommate was late with her half of the rent and never penalised me for it, gave me a great reference when i left and returned the whole deposit to me so i could deduct what she owed me for covering her rent in the last two months! if anything went wrong in the property he would immediately sort it and gave me his number to directly contact him so i wonder what on earth he really paid the letting agents for. the only time they ever contacted me was when the tenancy was due for renewal to let me know i would have to send them money to cover the extension of the tenancy.

abolishing these fees and making letting agents work for the fees they can charge seems to be in the best interest of both parties, IMO. i have no problems paying a REASONABLE amount for referencing and the deposit but i take offense being charged almost £1000 by letting agents just to accept a property.

MyOnlyPost

I don't think anyone is arguing to justify the excessive fees some agents charge. I have stated repeatedly as have others that fees should be reasonable and justifiable

Pixie5740

MyOnlyPost wrote: »

There should be a bias toward consumer issues, not toward the consumer themselves. Advice should be impartial and proper



I should have qualified this at the time with "according to HMRC rules", which I did later in the thread. In particular I cannot pay NI contributions because of this and so am being deprived the right to build towards my state pension. I never once stated in that thread or anywhere else on the Forum that landlords shouldn't act professionally, which is what you are implying



This is something I posted today as a musing, a maybe, let's throw it out there and see. It was somebody else's thread and I had a thought.



You stated categorically that rents hadn't increased since letting agents fees were banned in Scotland and I showed they went up 6.6% in a single year in some areas. The relative rents also explain why maybe Scottish landlords are able to absorb some or all of the increased fees where as I and some other landlords in my locality may not be able to.



As already stated above the £800 came from a thread where the tenant was being charged £800. My agent doesn't charge anywhere near these fees to tenants only £240 Inc VAT + Bond with no holding deposits. How far down do you think I can barter the agents from there? I am already paying higher fees than the tenant each time.

http://www.castledene.co.uk/userfiles/file/list-of-fees.pdf

£240 up front extra fees to landlord
Landlord increases rent by £270 p.a.
Agent charges 10% + VAT on £270
Agent is £27 pa better off, VAT man is £5.40 better off And landlord id £2.40 worse off. Tenant is £30 worse off in year one and £270 each year thereafter and every time rent goes up that £270 is compounded.

As stated in my answer to SwanJon I cannot afford to absorb these fees. I am sick of people assuming all lanlords are well off and should just take the hit.

Also Pixie your link is from a charity which is openly anti landlord so hardly unbiased and contradicts the one I posted which is a governement resource document

Letting agent fees are a consumer issue. They're a huge consumer issue in England & Wales which tenants have little scope to negotiate down.

I don't know how far down you can barter the letting agent. That partly depends on how much fat the letting agency can trim from their business. Why use a letting agent at all? Why not cut out the middleman and increase your profits?

If your business cannot afford to absorb a business cost of £270 what, every 12 months, maybe longer, then there is something seriously wrong with your business model. If you have mortgages on your rental properties then you'll be seriously !!!!ed when interest rates rise or if some major repair needs carried out.

I didn't categorically state that rents hadn't risen in Scotland at all. I said that rents didn't soar when the law on letting agency fees were clarified and that other factors such as supply & demand as well as household income were much larger drivers in rent levels. Shelter's study looked at rents in Scotland before and after the clarification in the law. The link to the Scottish government and BBC websites don't contradict Shelter's findings at all because neither look at the effect of making letting fees unlawful. All the government and BBC websites show is that rent increased more in areas of high population than in areas of lower population. In fact this exert is from the BBC link you provided, "Demand and supply are still out of kilter and in highly sought-after employment and cultural nerve-centres like Edinburgh, this overflowing competition for homes to let has topped up rent prices." Shock horror! Next you'll be telling us that bears !!!! in the woods.

No one forces you to be a landlord. If it doesn't make financial sense for you to continue investing in property then don't do it. Find some other investment vehicle(s) that generate better returns.

MyOnlyPost

Pixie5740 wrote: »

If your business cannot afford to absorb a business cost of £270 what, every 12 months, maybe longer, then there is something seriously wrong with your business model. If you have mortgages on your rental properties then you'll be seriously !!!!ed when interest rates rise or if some major repair needs carried out.

So you don't read the whole of my posts? I stated I have £750 pa of mortgage debt. Businesses very rarely absorb costs. They may for a short while but not in the long term. If business kept on absorbing costs they would soon be out of business. Don't try preaching economics to an economist, it may suit your narrative that landlords absorb extra costs but back in the real world higher costs equals higher consumer prices. Next you'll be saying that businesses are going to absorb the medium term hit in the value of the pound to stave off inflation

You also forget that the proposed change in the charging of fees is only the latest of a series of extra costs for landlords. Maybe they should all be absorbed too because it is up to landlords to provide housing, even if that means making a fiinancial loss?

Pixie5740 wrote: »

Why use a letting agent at all? Why not cut out the middleman and increase your profits?

Again I have already answered this above, I accept that fees are part of my business plan and have factored them in to my profitability. However if any of the fees I am already currently paying were to increase and I couldn't source the service cheaper elsewhere I would increase my rents to cover it. The same applies to new fees, you are keen that landlords should operate like a business but don't think it fair that they use usual business practices?

Pixie5740 wrote: »

No one forces you to be a landlord. If it doesn't make financial sense for you to continue investing in property then don't do it. Find some other investment vehicle(s) that generate better returns.

I am quite happy with my investments thank you. Like any other business if my costs go up I will seek to mitigate them and that in all likelihood will regrettably lead to higher rents

Pixie5740

I'm surprised that being an economist you are struggling so much to grasp that letting agent fees aren't really a driver in determining rent levels.

MyOnlyPost

Pixie5740 wrote: »

I'm surprised that being an economist you are struggling so much to grasp that letting agent fees aren't really a driver in determining rent levels.

And I am surprised you don't understand that when faced with a permanent or temporary increase in costs businesses will seek to mitigate them rather than absorb them over the medium to long term. For some businesses this may be the shedding of staff, shorter working hours or finding savings elsewhere. However when a whole sector is faced with increasing costs invariably this will lead to an increase in prices.

For examples see fluidity of petrol prices by comaprison to crude prices a market where supply is limited and those who supply it control the prices so consumers have very little choice on price point


Also see the cost of wholesale domestic energy vs retail price an industry that is regulated and prices are capped