What exactly do we pay letting agents for?

7 August 2009

I’ve had the unfortunate experience of coming into contact with letting agents again recently, and I had forgotten how much they make my blood boil. 

The current economic climate has seen a surge of estate agents, with a shortage of sales on their books, turning their hand to letting property instead. This coupled with an increase in ‘reluctant landlords’ – homeowners who are opting to rent out their property rather than sell – mean letting agents are one category likely to be benefiting from the recession.
As a tenant for many years, I resented the pressure they put on - particularly in central London where finding affordable housing is hard enough – to make a quick decision on a property, by warning that it would be snapped up by other, probably fictional, people who had also viewed it.
With the worry of ending up homeless, this lead me on more than one occasion to end up in a place with either a serious damp problem, mouse infestation or a generally nightmarish landlord.
Add to the fact that you have to pay for this service and then face a struggle to get your deposit back when you’ve had enough of the place you were hoodwinked into taking, it makes the whole process incredibly expensive and stressful.
So I found it interesting, since becoming a landlord last year, that it’s not much better from the other side.
When the current tenants gave their notice to move out last month my heart sank, knowing how difficult it can be to find reliable tenants. On a tight budget, we were determined to do it without an agent however, and put an advert in the local paper.
After no calls for several days, I started to panic. Then, as if sensing my weakness, I received a call from a local letting agent telling me they had a number of people interested in the property and they could fill it by the end of the week.
Deciding to hear him out, I asked him what fees were involved.
First, a £450 finders fee. Since he didn’t need to do any finding as people were already interested, I asked if this would be waivered. It turned out not.
Apparently it also covered credit and reference checks on prospective tenants. Still, quite a hefty sum, particularly when they would expect it again in six or 12 months time, even if the same tenants remained in the property.
On top of this was a monthly fee of 12% of the monthly rental income; or 17% to include insurance for rental income if the tenants don’t pay up. This was described as a management fee, but as we’re on hand to deal with problems directly, this also seemed excessive.
On declining his services, he forcefully suggested he meet us at the property the following day to discuss. After declining again and hanging up, I received a barrage of calls over the next few days from him and several other agents.
Luckily we’ve now found a tenant ourselves. So while letting agents offer some degree of protection, for me it’s just not worth the money.