We have been reading with interest how the industry has been lambasted in the press and is being attacked on all sides. Foxtons branches being assailed, articles on “rip off” lettings agents and even our own industry press having a go with lead headlines showing images of a dodgy characters pocketing cash.
We wanted to take a more balanced view and try to ascertain if the fees charged were unreasonable. Talking to a selection of our clients using our letting agent software to ensure this was not just London centric we came up with a simplified list of the works that an agent does and assigned a cost to it, per property, based on a branch managing 50 properties with an additional 20 let only over 1 year.
- Create a brand and reputation to attract landlords £326.00
- Provide a rental valuation £54.00
- Create floor plans £80.00
- Take marketing pictures £60.00
- Check compliance – including
- Gas £5.00
- Electric £5.00
- PAT £5.00
- Legionella £50.00
- Smoke alarms £5.00
- Carbon Monoxide £5.00
- HMO Licencing £10.00
- Fire safety £5.00
- AML checks £20.00
- EPC £80.00
- Inventory £120.00
- Disability access £5.00
- Right to rent mortgage £10.00
- Advertise the property £70.00
- Advise local councils £25.00
- Property mis-description compliance / CPR regs £20.00
- Vet tenant applications – including
- Immigration £20.00
- Ability to pay / credit check £7.00
- Interview £15.00
- References £20.00.
- Manage utilities £20.00
- Flood & Water Act Compliance £10.00
- Perform viewings £50.00
- Negotiate tenancy £20.00
- Produce AST £30.00
- Lodge deposit £10.00
- Collect 1st Month rent £10.00
The average let fee per property nationally is £1036.00 and the average fee to tenants (based on our Client poll) is £225.00 making £1261.00, so a profit of £159.00 to pay staff salaries, property software and lettings software training costs, heat, light and rent etc.
Maybe we are biased but this does not seem overly profiteering, in fact it looks like pretty tight margins. The next thing thrown at the agent is that all of this money should be charged to the landlord as he is the one employing the agent in the first place. This however is simple mathematics of commitment. If the tenant does not have a vested interest in the process what is to stop him or her from applying for 10s of properties and the all the agents bar 1 suffering the costs without any income?
It seems to us that the issue is not one of economics but communication. If agents took the time to explain what is being done, how onerous it is and also the levels of experience required to undertake the profession then I think that most reasonable people would feel that the fees are fair, justified and indeed necessary to ensure a safe home for the family. This would give transparency and enable a true comparison to other professional services, where the consequences of mistakes are not so life changing and yet the fees and profits dwarf agency.
Just some food for thought!