Election, referendum, election; Stamp Duty reform, tax reform and the rise of the online agent – one could be forgiven for believing that the golden age of agency has been and gone.
I’ve been in the industry ten years, so perhaps it passed before I even started, but I also firmly believe that we are entering a new era that the high street agent is primed to embrace.
I believe it so firmly, in fact, that I’ve actually opened my own agency in Shoreditch, east London.
This is because, firstly, there just plainly aren’t enough estate agents in east London and, secondly, the argument for a premium service is stronger than ever.
Online agents are disrupting the market on the sole premise that selling your home is unnecessarily expensive.
Once a high street agent slashes their fee in order to secure the instruction, they are only reinforcing that principle. I have been informed on numerous occasions by online valuers that their bosses are so well backed that they are willing to lose money until they are the leading brand – good luck with that race to the bottom.
And agency isn’t the only industry being turned upside down by these young upstart-startups.
Webuyanycar removes all the hassle from a process that strikes such fear into the heart of novice car sellers that they even tell you in their adverts you’ll get less money by selling through them, but won’t it be painless?
It’s a similar vein of apathy that an online agent will tap into. Dealing with a high street agent is tiresome because a) we’re dinosaurs b) we’re overly expensive and c) who can be bothered?
We have been fighting these accusations as best we can, but there is one aspect of agency that is currently making news where traditional agents have done themselves no favours; in fact, they have played directly into the hands of these online disruptors: lettings fees.
As a new agency, we will not be charging tenancy fees.
Had there not been legislation banning lettings fees, we would still not be charging them.
They are fantastic earners, of that there is no doubt, but they are, to me, reprehensible.
Already I can sense the itchy fingers ready to type their outraged responses. EYE seems to have an article a day predicting the zombie apocalypse that will occur as a result of banning fees: tenants and landlords will walk dead-eyed amongst the ruins and only the agents hold the life-giving serum required to save them.
At an average of £400 per tenant, you cannot change my mind. Even those only charging £150 per tenant. What do you pay at the moment for a reference check? £12? £15? Perhaps you have a ‘premium’ service that costs £20. Oh, but the contract!
Are each of yours hand painted on goat parchment? Does it have to be touched up and lacquered each renewal, hence the further £100 to the tenant? Or is it just a Word document that your property manager changes the date on once a year?
“We’ll have to pass the cost on to the landlord, though.” Well, if it’s so expensive for tenants, maybe you should have been anyway.
If you do, will you break it down for them? I’ve been through the calculations for what it’s going to cost us per tenancy and I’m willing to take the hit.
Tenants pay these outrageous costs because they have no choice – there’s a word for that, but I worry it may make a number of you uncomfortable.
No, I am fundamentally opposed to agency fees and you should be too.
These are such easily scored political points that my bar for surprise has to continually be adjusted as yet another agent performs his King Canute impression.
Acting in favour of a lettings fees ban is as easy for a politician as it would be fighting big tobacco.
In fact, the only opposition I can see is from agents themselves. Hint: when the world seems against you, it might just transpire that all those trees you’ve been shouting at could actually be an entire wood – you just haven’t seen it yet.
I’m not Jerry Maguire, I’m not arguing that you should be making less money. I know you work very hard for it and, especially now, every penny is important.
But perhaps now is the time that agents need to be thinking about their reputation as much as their profit margins.
Instead of fighting the ban, get ahead of it. Disrupt the market.
* Alex Proudfoot is co-founder of a new agency, Sans Pere
Best of luck recruiting and retaining the best staff.
Best of luck offering the very best service to both tenant and landlord.
Best of luck still trading in three years.
Never ceases to amaze me when every new agent opens up their unique USP is always service and pricing.
We can do it better and cheaper. Course you all can.
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Smile please the earliest worm! Thanks for your comments.
First off, this isn’t a gimick, we’re not looking for a USP that will promote the agency, indeed I only wrote the article as I approached EYE to say that I didn’t see many arguments supporting the ban – to be expected on an industry portal, I suppose.
We have recruited staff and I’m delighted to have them on board. Not charging tenant fees doesn’t detract from my ability to offer a personable, professional service. As for three years from now, let’s see, but we’ve certainly projected for the long term.
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Did you employ them based on being able to let a property or pour a coffee?
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Boom boom. We only have brokers on board with a minimum five years experience. The people that make the coffee are equally qualified in their respective field.
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I’m a strong believer in smaller profit margins, if it means doing the right thing. I think this is a great thing to do ethically. Do lettings Agents really need to be charging that amount of money in ‘admin’ fees? You guys know that it’s too much, but you don’t want to change it, and come up with every excuse not to, because you’re all greedy little pigs. Not all of you obviously! Just some.
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Ha ha so naive.
How much do you think I should pay my letting negs?
How much do you think the average managed rent is?
How much do you think the monthly overheads are to run a letting agency?
How much a business owner do you think I should be allowed to take home as a wage?
Do you agree we should offer an on going service to both tenant and landlord?
Once you have worked out the above, feel free to edit your comments.
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What are your profit margins after all of that? If they’re not great, then maybe you’re doing something else wrong as a business. Maybe not enough people use you, perhaps you are not strong enough to want to be number 1, and you’re using extortionate admin fees to prop you up.
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You are so naive.
As with any company we can cut corners.
We can pay our staff less
I am far from rich but I lead a comfortable life and why should I not? I take a risk opening a business I employ local individuals on a sensible wage.
You have such a blinkered approach to business. Profit is not a dirty word. Owning a letting agency is not a charity.
We offer a super service to both tenant and landlord. To offer this there is a cost.
I agree some take the micky with fees but in the main they are the minority.
Agents should be allowed to charge tenants and landlords both a fee for services as they are both our client.
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Actually that’s an interesting topic of conversation. How much do you pay your letting negs? How much do get via property management/introductions? How much are your monthly overheads for lettings? How much do you take home as a wage? What services do you believe you are supplying to the tenant?
Genuinely interested as I’ve rented through many a good agent, but encountered more BAD agents where the negs where hopeless, the fees were absolutely ridiculous and no services were being supplied to the tenant. I didn’t use them but folks still did, some had too. I’m assuming you’re one of the good ones.
It’s true that we’re all running businesses here, but if you take the p!$$ then you’re going to get slapped by the (not so) invisible hand of the state, which is where we’re at now.
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Did you get free viewings?
Did you get there time on check in?
Did you get time to talk throught the letting process?
Did you call the Letting agents when problems occured?
Did you ask the letting agent to keep you updated on new properties when you were looking?
Did you make an offer on the advertised rent and ask the agent to negotiate?
Did you want to decorate rooms and ask for permission?
Did you meet the agent on check out?
Did you receive a inventory that helps protect you?
Did you receive an AST that was legally written to protect your interests?
Did you view multiple properties with agents?
If you moved into a new area did the agent help advise you on schools and transport?
There are many things tenants take for granted that they get for free, the above is only a small amount of what we offer as a service to a tenant.
Let me also give you a real life example i had recently which i have previously mentioned on here.
We had a tenant move into a property, complained the TV arieal did not give them good reception and could not get all the freeview channels they wanted. Asked us to replace the tv antenna with a new digital one.
Landlord said no, they pay for a safe habitable home which they have. no mention of a working tv arieal was in the lease.
We appelaed to the landlords better nature that £150 in the grand scheme of things to keep his tenant happy was worth it.
Without going further into the story, tenant had the arieal replaced no charge to them.
That is an example of us working / servicing the tenant. (one of many on a daily basis).
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You do sound like one of the good ones.
I have had assistance (above and beyond) from one letting agent in the past which had half made up for all the terrible service they previously gave (no names to protect the not so innocent).
Some of the things you listed though are actually services you provide to the landlord. You do those things in their stead. Yes it benefits me as a tenant, but the service is primarily for the landlord. I think that’s why the public end up sitting with raised eye brows and crossed arms, things like contracts which other business seem to be able to set up without charging. This however seems to be raised as some kind of freebie in lettings? I see and hear it often. The same for referencing. People don’t charge new employees for references but lettings agents seem to charge both the new tenant AND the exiting tenant? Lets not forget lettings agent are supposed to earn their money via the landlord paying YOU to manage/introduce.
>Did you get free viewings?
If you charged that would be massively unfair. This would negatively affect the landlord (no one would actually view).
>Did you get there time on check in?
A service you supply in the landlords stead. Yes it benefits the tenant, but the service is primarily for the landlord.
>Did you get time to talk throught the letting process?
A good service, many lettings agents almost throw the contracts at the tenants and let them get on with it. One could say however, that you a obliged by regulation to do so.
>Did you call the Letting agents when problems occured?
That’s your job as a management service. Yes it benefits the tenant, but the service is primarily for the landlord.
>Did you ask the letting agent to keep you updated on new properties when you were looking?
That’s your job as a management service. Yes it benefits the tenant, but the service is primarily for the landlord.
>Did you make an offer on the advertised rent and ask the agent to negotiate?
If you do this then fair play. In a sellers market though it seems odd that any landlord would entertain this considering stock shoots of the shelves, or maybe it doesn’t?
>Did you want to decorate rooms and ask for permission?
That’s your job as a management service. Yes it benefits the tenant, but the service is primarily for the landlord.
>Did you meet the agent on check out?
Is this not a regulatory obligation? How else could you complete an exit inventory or pick up the keys? Perhaps this is a service I and others take for granted. One could argue though, that this is your job as a management service.
>Did you receive a inventory that helps protect you?
Are you not obliged by regulation to do this? Either way this service is primarily for the landlord but does also benefit the tenant.
>Did you receive an AST that was legally written to protect your interests?
You are obliged to do this for the landlord and by regulation surely?
>Did you view multiple properties with agents?
That’s your job as a management service. Yes it benefits the tenant, but the service is primarily for the landlord.
>If you moved into a new area did the agent help advise you on schools and transport?
This is above and beyond, love it.
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How about making your client pay. Thats what usually happen in a sales/service industry!
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We might be greedy little pigs but at least we don’t ask friends, family, staff and even tear jerkingly compasionate small children to prop up an egotistical project using their invested cash to stave of our demise through ongoing losses and borrowings.
I would suggest using other people’s cash to disrupt an industry that makes reasonable profits on which it pays taxes after employing staff, paying rates heating, lighting and national insurance contributions is possibly not the morale high ground most of us in the mainstream of society and wider economy would recognise.
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‘nextchapter’
Please confirm – are you the Brentwood-based outfit that goes under that name?
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I notice that you are not going to charge letting fees, but the proposed ban is all charges to tenants. So I assume you will still be charging for renewals of tenancy, or changes to the tenancy such as a change in occupier etc?
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Hi lettingsguru. We will be charging lettings fees, just not tenancy fees i.e. ‘admin costs paid by the tenant outside of their first week’s rent and deposit.
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Question, what are your landlord fees for let only and managed, plus what’s the average rent in your area.
For agents outside of London average management is circa 10% including vat and average rent £800pcm. If your pricing and average rent is above this that’s how you’ll be affording not to charge tenant fees, not by being a charitable person of the people.
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To add, we don’t charge renewal fees to tenants or landlords and for let only it’s a one off fee at the start of a tenancy, (£500 on average, returning customers sometimes pay less) nothing is charged beyond that until the tenants leave.
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Hi Jrsteeve,
Our average fee is around £1,500 + VAT. It certainly occured to me that there is a gepgraphy at play here when it comes to the decision making process. That’s not to say that we’re being charitable or are scrapping fees because we can ‘afford’ to. I’m as keen to earn a living as every other agent.
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“Our average fee is around £1,500 + VAT.”
Forgive me potentially hijacking this conversation thread – but this one line raises two questions:
1. “Average fee” for what, exactly? Sale? Let? Tenancy? Buttering a croissant?
2. WHAT “average fee” (present tense) would that be?? As far as I can see you haven’t a single property on your books yet! How do you know today what your “average fee” will be (future tense)?
OOPS – that’s three questions. Sorry.
Oh – a fourth question pops up on the back of the first:
Will you be quoting “+VAT” fees – or are you intending to be somewhere near legally compliant when you gain an instruction?
The floor is yours, Mr Broadfoot…
…but there may well be more questions to follow.
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Cost of referencing depends how well it is done. This is one area where I am happy to pay a good price for a good and detail service. The company I use charge £40 for a serviced reference which included right to rent checks. Anyone who cuts corners on referencing quite frankly get what they pay for and what they deserve. It should be so much more than a quick cheapo credit check!
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Hi Will.
We will be undertaking a full reference of all prospective tenants, nit just a credit check. We’re certainly not looking to dilute the process or cheapen agency – that would be the opposite of a premium service which we should all be working away from.
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If our landlords were willing to pay a minimum management charge of 15% plus vat and tenants not embracing a something for nothing culture (try getting a doctors appointment nowadays) I too might agree with you Mr Proudfoot. Good luck with your new venture which will great for your tenants, but first you need landlords.
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I think you would be hard pushed to find a tenant (especially in London) who believes that they are getting something for nothing these days! The fact needs to be put on the landlord that, if he wants to use a high street agent that supplies quality tenants, he needs to pay for that service – which will mean referencing them properly. If not, get on Gumtree and do it yourself.
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I have an even better idea. I’m going to set up as a solicitor and specialise in Conveyancing• – but I will only charge the vendor, the buyer gets it for free.
*creating a tenancy is not just changes to a few bits on a Word document, it is Conveyancing- do not undersell an agents role!
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I can see where you’re coming from, waco79, and we’re certainly not underselling the agents role. My position is that you’re charging the wrong person for the service – and certainly at a hugely inflated rate!
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“I’ve been in the industry ten years…”
You wanna check what you’ve got listed in your LinkedIn profile and either amend that or the wording of this article, Mr Broadfoot?
“…I’ve actually opened my own agency…”
From the still-to-be-completed website –
“Made up of a patisserie, homeware store, speciality coffee bar, architectural studio and a property sales and lettings team, all under the same roof”
It’s great to see that you’ve got your priorities in the right order – in terms of probable profitability, at least…
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Jack of all, master of ……
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Smile – not that this response is anything to do with the story or contextualised to Alex… but that saying is often badly misquoted.
The full saying is “A Jack of all trades and a master of none, is oftentimes better than a master of one.”
The implied common meaning of the saying is actually the opposite to the reality of it.
As I say, not related to the story but still interesting.
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Never heard the full quotation,
Very interesting and by 9am on a bright and sunny Wednesday learnt somethig new 🙂
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Ah, PeeBee, I almost forgot that I had a link’din page, so thank you for reminding me I should probably update that. I have worked for agents for many years, outside of those that were permanent employment – but thank you for checking!
Yes, we are opening a shared space in which my agency will work alongside a patisserie and a cafe. We have one of the UK’s top five barristas running the cafe and our pastry chef is ex Bvlgari Hotel. We’ll have a full team of agency staff specialising in sales and lettings, both resi and commercial.
Over the years (certainly five of the last ten), I have seen walk-ins dwindle to the point that, before I left my last role, it would be fair to say that 1 in 15 clients probably never came to the office or even knew where it was.
At Sans Pere we intend to sell 100,000 coffees a year. That’s multiple times more hits than most agents websites get let alone people you get to actually have the chance to shake hands with. On that basis, I find it hard to suggest that we haven’t got our priorities in order.
On the tenant fees… PeeBee, this train’s-a-comin’. Wouldn’t you prefer to board it, rather than lie on the tracks? Agency isn’t in itself changing, but the industry is evolving – stop being a creationist!
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I have never believed in ongoing tenant fees. In fact when I opened my own agency, very early on, I scrapped renewal fees etc for tenants. The result being more tenants took up further fixed terms which landlords were happy with and they remained happy to pay what had always been their share of the cost of the contract, this fee didn’t rise either which in turn resulted in our renewal fees going up considerably.
I don’t charge check in fees, check out fees, I don’t charge for sending out arrears letters etc.
It is extremely rare for a tenant to pay anything after they have moved in.
However one thing I have never compromised on is the set up process. This takes much time and costs money.
It’s not just a case of a tenant walking in and signing a few bits of paper!
We use an external company for full referencing, we always ensure the landlord has rent guarantee insurance for the first six months at least (this is included in their own set up fee), there’s the How to Rent Guide, the Right to Rent forms (we’re nearly always continually chasing up passports etc before we can even start the referencing process), our own compliance forms to prove they have received XJ&Z before we even get to the tenancy agreements & inventory, postage costs, costs of calls and covering wages, travel costs (most tenants will want to re-visit before they move in) and I’m sure I’ve probably left much more off the list. (Including all the health & safety checks, verifying the landlord etc to ensure the property is fit & viable for tenants before it even goes on the market. I’ve often walked away from properties saying I can’t take it on until certain things are undertaken).
I’ve never taken a holding deposit, once the tenant pays their referencing fee & set up fee I take this as their commitment.
We work through the forms with them, they are told that providing the information they have given us is honest & true they will be able to take up the tenancy, they are also told that if they’ve omitted information that results in them failing they will not get their referencing fees returned. At this point we either move forward with them or they walk away.
With no financial consequence on the tenant at this point, how will agents cover their costs of thorough referencing, the failed applications & those who think that because there are no penalties they can apply for more than one tenancy to cover their backs?
An outright ban on fees will be hugely detrimental to the industry where reputation & standards are already pretty low!!!
A decent agent will prevent good tenants from being placed with rogue landlords & good landlords from being burdened with bad tenants. I believe tenants should pay a fair cost towards this process as part of their commitment.
It will be interesting if some of the agents who have undercut landlord fees and abused tenants fees will now thrive so well.
I myself have had to find ways of preparing for a total ban, at present this does not include putting fees up for landlords, but instead looking at other income streams.
Here’s hoping the good & honest agents survive & good luck to this agent absorbing the total costs of not charging anything to tenants – it won’t be easy if doing it well but something we’re all now potentially facing due to those who have continually taken unnecessary advantage of tenants over the years.
I’m still clinging on in hope that common sense will prevail & there will be a cap on fees but preparing for the worst & not burying my head in the sand.
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I take my hat off to you, Maria. It would be nice to hear as cogent an argument coming from the industry as a whole. Best of luck to you and your company. Alex.
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Look here young lad if you want to stay in business you need to make a profit, not one that you spend down to the bone month by month, one that is put away for those rainy days to get you out of jail. As for letting referencing you got that all wrong, paying a third party £12? £15? is not referencing. It is more like credit checks. If that is all you do you need to wake up or you are going to get very badly burnt by some inscrutable tenants, the ones you are rolling over to keep happy and given in to. True referencing takes at least 8 hours, some footwork and costing’s or you will be spending a lot of your time fire fighting once they are in. Agreed the high end rip off fees should be capped as they do only the work of the £12, £15 but a good agent, doing the job properly cannot do it under £90 – £100. That money has to come from somewhere, your profit = your loss.
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Hello Woodentop. I’m not averse to making a profit, it would be a poor agent that is. What we are doing is finding ways of reducing that cost without reducing the quality. We’re looking for ways to spread the cost to us, and to remove it entirely from the applicant. Of course there are risks involved, but there are already for the current system too.
There is a lot of new technology out there that agents should be investigating. There are even more disruptors out there who are going to enter the lettings game in the same fashion as purpleBricks and, by then, it won’t be landlords you’re struggling to find, but tenants themselves. Time to rethink the whole system and let the high street agents be the ones driving the change this time instead of fighting it.
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Don’t forget that the fee ( a reasonabe fee) keeps the tenant from hell away. It makes a commitment that those that have something to hide from can’t afford to loose. This sorry saga of no fee’s announced in the Queens Speech is really to do with making it difficult to stop tenants renting, in particular the bad ones. You know the ones that the local authority have already kicked out or refuse to take and want some unsuspecting landlor/agent to house them. The red herring is the fees, being used as an excuse. You cannot do referencing and duty of care to your landlord unless you put more than a sniff of work in. Proper referencing is not form filing and just using a referencing company. It is linking the dots which requiries leg work, time and costings.
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8 hours?????? Maybe with a seven hour break. The rubbish that some people write.
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I don’t totally disagree in fact i don’t think that agent need to charge as much as some of them are doing, a small admin fee like we charge £60 is still making a profit.
The thing is agents are entitled to make a profit just like any other business, imagine the next big thing reducing solicitors fees. LOL
cant see that one happening, yet we have to pay them some of the biggest fees on the market.
there is nothing wrong with a business charging a fee, just with the idiots who are giving the industry a bad name being extortionate.
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Lettings fees in general are commensurate with the time the agent must invest in the process and the associated costs involved in delivering that process to a reasonable standard and leaving an acceptable profit margin as any business would look to seek. There are much higher margin businesses out there.. just look at the food and beverage / restaurant or coffee shop industry for hugely inflated profit margins..
Martin Taylor.
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Sounds like Shelter have set up letting agency. Maybe Citizens Advise Lettings will set up in competition and it will end up paying tenants instead!
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Easy to set up but they might have difficulty in obtaining instructions!
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Clearly he has not factored in viewings. The average viewing costs about £30 (petrol, car, wages, etc,). Shed loads are a complete waste of time no matter how much you qualify them over the phone. You then get the ones who now need to view again as their partner could not make it. You get the ones who say on the viewing ( I now need to disclose my CCJ, I actually cannot afford it, I’m not really looking for three months etc). You also get the ones who never turn up (even though they only booked that morning) or the ones who cannot find the property as they could not be bothered to research the location. You also get the ones who are half an hour late as they set off at 3pm for a 3pm viewing. More than ever now people are dithering over taking properties and we seem to do more and more viewings per property. Then if you do get a taker, quite a lot want to go back and measure or go back and see any work has been done that you had to negotiate with the landlord. As an agent who has traded for fourteen years, these are the real hidden costs that you cannot avoid and will really bite with no applicant fees.
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If I could like this comment more than once, I would have done so !
There will be so many disappointed applicants as we currently process one at a time as the applicants have made a financial commitment. Where we have waived our fees, my staff spend time chasing applicants that have no real interest in the property !
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Note that his firm is called ‘Sans Pere’ – which of course means ‘Without Father’.
If this is a mis-spelling (perish the thought, PIE) and should be ‘Sans Pair’, meaning ‘Without Equal’, then that would say something about this somewhat mis-guided individual…………
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marcH
I actually thought ‘SansPair’ was an admission…
…that he doesn’t have the ‘nads to charge decent Fees!
;o)
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The company I work for Barrows and Forrester Property Group have the same policy. We don’t charge tenant fee.
Don’t get me wrong I don’t agree with the ban. I have worked in letting for a number of year and I know fees must be charged to get the work done.
I do think there should be a cap in place as some companies do charge excessive amounts which are unacceptable.
As a company our model allows us to not charge an admin fee, but that doesn’t mean tenants get a free ride, they still need to pay a holding fee to secure the property and we charge for late fee etc.
I get this model doesn’t work for everyone but it works for us!
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“As a company our model allows us to not charge an admin fee, but that doesn’t mean tenants get a free ride, they still need to pay a holding fee to secure the property and we charge for late fee etc.”
You wouldn’t care to point me in the direction of where on your website you display those Fees, would you, ‘rozialli’ – in accordance with current legislation…
…’cos I can’t see them anywhere.
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fair shout Alex
tenants fees have got completely out of control, and I will bang the same drum, most of the biggest culprtis are ARLA members
I see the Tenant Fees Ban will be in the Queens speech today
http://www.bbc.co.uk/news/uk-politics-40345280
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How can banning fees be in the Queen’s speech when the consultation on the fee ban closed after the Government was dissolved? This country just does not know what it is doing.
If the fees for taking a property and renewals are banned then what motivation is there for agents to work for tenants? We charge nominal fees more as a commitment. If there is no fee involved, there will be no incentive for tenants to move their backsides to get documentation returned, etc. The application fee is not just for a £12 credit check! It’s for the hours of work involved in getting a tenant to the point of being considered suitable for renting someone elses house.
This whole sorry mess is down to fat cat agents in London and it needs to be called out!
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Christ i have just seen the website …..
Can i have a skinny latte and an AST please.
I bet in 6 months they have a bigger income coffee than property.
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I think its been said before but as well as contributing towards the costs of setting up the tenancy does it not also show a proper commitment by the tenant and stops the multiple applications on a variety of properties with different agents.
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And how much “unfair profit” is there in a Latte? Surely you should only charge for the beans, water and milk? I get the feeling you will be selling more coffee than you will houses…
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Lets be honest!
Profit are not the problem, politics and goody two shoes people who need for nothing think they’re making a better world.
If agents who work hard want to keep their profits, they’d better fight for them.
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Alex
I’m a great believer in enterprise and people starting their own business/agency and it is fantastic both personally and for the economy. But let me give you this analogy when you start asking “What do you pay at the moment for a reference check? £12? £15?”
I know from experience that Asda pay approx. .13p per tin of Heinz baked beans. So following your logic you should being going in to Asda paying 13p for them?
No, in fact you pay .73p. But how can this be so?
Well, you’re not paying for the tin of beans, your paying for the warehousing, transport and staffing that allows you to walk in to the staffed, heated and lit building where you know you will get the beans & service you expect.
Tenants don’t have to pay fees. They can go on Gumtree and pay a deposit to a complete stranger in the hope they actually own the house, haven’t taken a deposit off 30 other people and have ensured that the property is in a fit & safe state to live in.
I must say as well, this is not so much an article, more of an advertisement !!
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I run a lettings business and we have been operating for 15 years. I strongly agree that some agents have ruined it for the rest of us by completely exploiting the vulnerable.
I used to work at an agency where they would offer rewards for:
* The First negotiator to charge a new Tenant £500 for an Inventory
* £1,500 admin fees for the next 3 move ins etc
* £500 for a Pet Clause to be added to the agreement
When leaving that type of organisation I vowed never to run my own business in the same way. We therefore charge the Tenant the amount it costs our business to perform the tasks that are essential.
We manage a large portfolio and we are very proud of the service we offer to Landlords and Tenants alike. However the fact of the matter is that when the Tenant fee ban comes in, in order to recoup that loss it is quite likely we will have to make 2.5 members of staff redundant and I will be devastated to do so, however I need to consider the future of my children. We have worked hard over the years to build our branch and maintain our reputation within our market place and I am not prepared for my children to pay the price .
Do I think the gimmick of ‘no Tenant fees’ will ensure a lasting career and a successful Branch in your area? No, probably not as we’ll all be joining you soon enough and I doubt you will have had time to build a Brand to compete with the well established Branches in your area who will be offering the exact same thing.
Ultimately to build your brand, you need Landlords and this is the biggest struggle for all agents. With so much competition in all areas, Landlords are constantly seeking the most competitive price for management and want the highest price in rent possible. The also want to hold agents accountable if there are any issues throughout the tenancy. I therefore don’t think they will be looking for an agent who are ‘fair to Tenants’.
I wish you the best of luck with your new business whilst I lay awake at night dreading the looming ban.
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the Oracle is always a new agent/business or a subsidised pay to list on these pages. Want to try something radical? Find yourself 300k ( preferably your own but just as likely somebody else’s ) and a decent sized market town or small city, budget 20k a month and get a some decent staff, a nice office and pick your poison R/Z/OTM, open up and do it well, work really hard and be super helpful, and do it for nothing, nada, zilch. The competition cannot adapt quickly enough, once the pipeline has burned through there’s no income, the financial stress is causing professional, emotional and marital meltdown in the independents and the corporates start wielding the axe, do it for a year and you own the place where property is concerned, month twelve you’ve got 60k left, switch to full service no sale no fee and hope the gambles gonna come through, all for the price of a modest house south of Birmingham and quite a nice one further up
Or something..
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Can I add to all the comments, that you DO have the ability to charge the landlords?
If you dont want to charge the landlords for finding them a fully reference tenant (which protects the landlord) draw up a tenancy agreement (which in reality protects the landlord not the tenant), comply with deposit legislation (which is a landlord obligation not a tenants), then that is your decision.
we do NOT work for free unless you decide not to charge the landlord for services
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Guess it’s all laid out in the Queen’s speech now then!!!
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Superb article…absolutely bang on.
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Yowser! We do love to patronise each other in agency don’t we? Win, lose or draw we all take a different approach. I for one applaud Alex’s approach- and he will be a direct ‘competitor’ of mine as he is opening about 100m from my front door. Am I worried? Hell no- I welcome him and an agent trying a different yet quality approach.
One of the biggest issues is that we continue to debate this on a national scale but it is a regional problem. Dealing in the middle-upper, full service London market I am lucky enough to average around £3k (Inc) for a Let Only service and as such do a lot of things for free and have managed to charge some of the lowest T fees in the UK. However, there are agents operating in markets where monthly rents (and often fees) are around £400 for most of the same work. These agents need our (and the governments) consideration & support as this must be terrifying for them!
Most of us will make it through the other side better & stronger. I feel an essential part of that must be the embracing of PropTech to streamline businesses. This will mean some loss of jobs (hopefully NOT at the cost of quality/service) but that is an issue faced by every industry & every sector in the world of tech, AI, robots etc.
Good luck one & all and hopefully see many of you on the other side! Good luck Alex- looking forward to my ‘tour’ soon!
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All of this comes down to the same thing. We run our businesses to make a profit. Most of us run them properly and try to earn a reasonable living after the vast amount of tax that we generate for the government in VAT, Income tax, p11d payments, NI and corporation tax. Whoever pays us will have a knock on effect. Either tanants moan about the fact they want everything for free, or Landlords are put further off buying BTL properties as investments which will reduce supply and increase rents, also forcing more properties to be bought by housing associations (how much do their chief execs earn?) which requires more public money and developers to make higher profits from smaller amounts of private sale properties.
Tenants never used to pay
fees, but management fees were 10-15%. At that time landlords benefitted from tax relief on mortgage payments and didn’t pay 3% extra in Stamp duty. However interest rates were around 7%.
Soamt variables. Ultimately if there is no profit there is no business. The crooks will move on somewhere else and the public will
get ripped off somewhere else. Just introduce a capped fee per tenant of £250 which has to be reviewed against RPI every four years.
Keep it simple and transparent and we can all build our business model around it.
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