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TODAY'S OTHER NEWS

Are more landlords about to ditch letting agents and go it alone?

A significant number of buy-to-let landlords do not use letting agents to find or manage properties, and it has been suggested that many more should consider ditching ‘rip-off agents’.

Buy-to-let landlords have once again come under the media spotlight following the announcement last week that there will be a ban on letting agents charging fees to tenants, which many experts believe will lead to higher rents, as landlords seek to raise extra funds to help support agents who will undoubtedly shift the fees on to them.

But one commentator has suggested that it is easy for landlords to avoid becoming “villains” after the tenants fee ban by choosing to simply “ditch rip-off agents”.

Simon Lambert, editor of This is Money, wrote on the website: “Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential future villains in the ban on tenant fees.

“The theory on the news that Chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises.”

But Lambert suggested that buy-to-let landlords have as much right to be “as angry as tenants over letting agency fees”.

“Many [landlords] pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for.

“A check with their agent on the level of double-charging going on would leave a landlord as grumpy as their tenant.” 

Lambert also pointed out that landlords do not profit from these tenant fees – “they go to the agent”. Consequently, while agents will be keen to maintain their revenues, the financial journalist believes that an attempt to simply claw back lost earnings by “lumping extra costs” on to landlords would be a “high risk strategy”.

“Those landlords, already facing a tax and mortgage squeeze, are likely to see any big hikes as a catalyst to move elsewhere.”

He continued: “Ask any long-term landlord and they will tell you that the difficulty is in finding a good letting agent, who takes all the worry of sorting any problems for you off your hands. They will have a network including plumbers, electricians, and handymen or women, who can get things fixed ASAP, do essential maintenance swiftly and at a fair cost and keep your tenants happy.

“Happy tenants are the key to buy-to-let success, as unless you are in a hot property area such as London where places rent instantly, its vital to avoid rental voids. Even one month of your property sitting unlet but your mortgage and other bills needing paying, proves expensive.

“Yet many landlords stick with letting agents who don't do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees.

“If your agent can't explain exactly what the charge is for and justify the cost and why you aren't already paying for this, leave.” 

  • Brit Sixteen Sixty Four

    There are also many landlords who are selling up their buy to let properties with the tax changes coming in April. Many are selling some of their portfolio to bring down debt across the portfolio and others are selling up completely before house price falls spread across the country.

    This will probably be a double whammy for letting agents combined with the autumn statement changes.

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    Why do you say house prices will fall? They are the biggest asset that people buy and they borrow diminishing pounds on a rising asset. See what %age house prices haven risen over say the last 20 years and then see if buying a house is risky. I think not.

     
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    So the agents don't add a %age on the contractor costs? Yeah like pigs can fly! Most of them do it and this will never be stopped as this is open top abuse in that the agent employs a contractor on a basis that they add the 'fee' they have to pay back to the agent to their invoice costs.

  • Brit Sixteen Sixty Four

    Paul house prices have rises and falls but over the long term rise. The falls occur when the rises have been very large and triggered by some economic change. Just like 2008 when property prices were very overheated. When they started falling it was extreme measures by the BOE like QE and drastic interest rate cuts used to stop them. The BOE has run out of ammunition almost and its effectiveness is diminishing.

    This current property bubble has already burst in London and is starting to spread to the South East. Tax changes have already started taking the heat out of the market and effected sentiment. Unless the government introduce more stimulus like Help to buy the way is down for the currently overvalued property prices. Remember wages aren't going up, inflation is rising and house prices are beyond affordability even with record low mortgage rates. That isn't a recipe for house price rises but falls.

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    As I said dim wit - how have they changed over the last say 20 years. You are only looking at the period from 2008 and my calculations show this is only 8 years.

    Please engage brain before making spurious comments.

     
  • Calum Brannan

    This is why we launched www.noagent.co.uk :)

  • Claire  Empson

    I have come across landlords that charge referencing fees to their tenants, and check out fees, and deposit reg fees and ask us to add this in the contract, with us not charging at all - will this ban affect landlords charging fees too - I assumed it would - this article emphasises "letting agent fees" I thought it was just "fees to tenants" can someone please clarify this? A cap was the way to go.. it is a service that we provide and we can't afford to pay staff to do it and then provide it for free - as we don't charge very high fees for the lettings service compared to many. We currently do all referencing in house apart from a credit check, and it is very time consuming. If landlords don't wish to pay for it, the future might have to be we don't do it at all?! - and if the landlord wants referencing they will have to arrange it and pay for it directly to the referencing agency themselves. Or the tenant is made to engage a referencing company themselves -and pay them directly - and the agency sends us or the landlord the results? Or we just have to charge a higher letting fee in the first place like all the rest. It will level the playing field for us against the really bargain bucket agents that undercut even us on letting fees because they make it up elsewhere on the tenant fees however! I did wonder how they could afford it - it seems to be on the mark up of tenants fees and contractor commission (we also don't do that - but maybe we may have to in the future if we have to make up the loss!) I'm a bit fed up with everyone assuming all agents are greedy - yes there are some that have spoilt it for the rest of us who have had up to now decent/honest business models and fair fees to both landlord and tenants. It's a shame we are now tarred with the same brush and will be seen as "rip off" if we try to charge for a service we provide now to the landlord.

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    “Yet many landlords stick with letting agents who don't do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees."

    We do none of the above, that statement offends me

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