A buying agent who find properties for affluent overseas purchasers says they are often surprised by letting agents charging them what they regard as high fees.
Henry Sherwood, managing director of The Buying Agents, says: “Foreign clients are delighted for a buying agent to find a property and negotiate a good price in return for a 1.5 per cent fee. But then they let it out and can’t believe the 10 or 20 per cent charges they receive from letting agents.”
He says many UK landlords, by contrast, take fees at these levels for granted. “Most don’t even look at what the charges are for. Smaller items of a few hundred pounds are often lost amongst bigger costs of 10 per cent for this and six per cent for that” he says.
Sherwood says he now increasingly favours letting agents or property management services which offer alternative lower cost business models. One is The Happy Tenant, founded by media lawyer Jonathan Monjack: this levies an annual fee plus a one-off charge when a new tenant moves into a property.
Happy Tenant then uses its bulk purchasing power - it has 600 properties on its books - to secure what it calls reduced price services from mainstream agents to find tenants, and from a range of service providers to handle the likes of EPCs and routine maintenance.
The result, says Sherwood, is that a membership-style agency like this charges substantially less than a traditional letting agent for providing broadly similar services.
“We have also heard of situations where landlords actually think agents are inventing jobs during quiet periods to increase their revenue. In many cases the landlord does not even know it is happening, they simply think they have “bought a dud” or are abroad so have no way of checking” says Sherwood.
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That's certainly a nice fat fee Henry, as a buying agent !
Is this an advertorial for "The Happy Tenant" ? If not, it sounds like Mr Monjack has found a friend in Henry Sherwood ! Good luck to them both, I say.
Well, I'm not sure about this, I'd like to see a list of the countries these investors come from and know about the letting market in those countries. In general however, on a like fo like basis, UK fees are usually low by comparison to other countries, this is certainly the case where selling fees are concerned. I am aware of Letting fees in Spain and Australia where they are comparable to the UK, I don't know any details on Russia and China, it would be interesting to know, hint hint!
I agree that agency fees in UK are too high. However, I have experience of the Spanish market where estate agency fees of 15% are common. Maybe we are not the only country where sellers, buyers and renters need to exercise their consumer power.
Well said, Andrew. Fees are too high but if we all sit back and do nothing about, will anything ever change?
But...but...but...they do such fantastic, selfless work and need to be rewarded handsomely. No letting agent has ever done anything wrong, it's all just a conspiracy created by the media to scapegoat them.
Am I along the right lines?
@Jon Tarrey
No, you are not.
Yes, some UK estate agency fees can be high but when you compare us with other countries it is a different story. Estate agents do get a lot of flack, but on the most cases, they provide a skilled, faultless service over a long period of time and are responsible for arguably your most valuable asset.
Some letting agency fees have reached ludicrous levels in recent years. That's why online estate agents have really flourished, offering flexibility in costs and services to meet the individuals needs.
Sorry, John, but I think your bitterness towards letting agents is clouding your judgement somewhat here. As a landlord myself, I'm happy to pay a small fee if I know the letting agent I employ the services of is going to do a fantastic job, keep my property in ship shape and help me keep my tenants happy. Yes, letting agent fees do seem a bit high, but they're not that high compared to others in Europe.
Obviously, if a letting agent is providing shoddy work and charging extortionate fees for it, then that's not on. I've no doubt there are some letting agents who do this, but the ones I've dealt with so far have all been mostly excellent. Some really do offer good value for money. They have to make a living, like the rest of us.
Their fees might be unpalatable to some, and I can see why they would be seen as another extra, undeserved expense if people have had a bad experience with letting agents, but in some cases the fees are proportionate and fully justified.
@Rob Davies nobody wants to just sit back, but what can we do about this? Tell letting agencies to be less greedy?
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