As Foxtons is investigated for extortionate hidden charges, Liz Hodgkinson, an experienced landlord, explains why she manages her own properties.
The story about Foxtons charging a total of £616 to fit a security light in a tenanted property has made many people wonder what on earth letting agents are playing at.
The landlord in this case, law lecturer Chris Townley, was so outraged at his bill that he broke it down into component parts and discovered that the agents had charged him £137.50 commission, plus 20 per cent VAT.
Now the whole matter of hidden charges is being investigated by the law firm of Leigh Day and must have many letting agents, not just Foxtons, shaking in their liveried cars.
The trouble arises, as I see it, when unsuspecting landlords sign up for full management, imagining that a huge burden will instantly be taken off their shoulders.
The promise is that for a fee of 15 per cent plus VAT (at least) of the monthly rent, every landlordly care will be magically whisked away.
The agents will take over all worrisome aspects such as rent collection, deposit protection, issuing required certificates and carrying out safety checks. They will draw up the inventory, inspect the property regularly and arrange check in and check out, plus professional cleaning at the end of each tenancy. They will advise you when a repair is needed, and some agencies even have their own team of contractors to do these jobs. Many also offer a refurbishment service, and will kit the place out for you, right down to curtains, bed linen, cutlery and matching scatter cushions.
All you as the landlord have to do is sit back and watch the rent money roll in.
Sounds wonderful, doesn’t it?
Except it’s not quite like that. Many landlords find that full management actually creates headaches rather than removing them. Because so many agents these days use their own contractors, you cannot get the best price for the job. You often get charged top whack – plus commission.
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Also, when a serious problem does arise, they tend to go all wimpy and put the ball back in your court, as “reluctant” landlord Adrian Fine found.
Having inherited his mother’s flat when she died, he decided to rent it out rather than sell it. He had the whole place renovated from top to bottom, then instructed a local firm of letting agents.
Because he had a full-time job and didn’t want to be bothered with day-to-day running of the place, he signed up for the full management package.
They found him a tenant instantly and did everything. All appeared to go well until the tenant gave notice 18 months later.
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“I went round to the flat and was horrified,” says Adrian. “The tenant had been burning incense and there were black marks all over the walls. The flat would have to be decorated again before it could be relet.
“Naturally I expected the tenant to be responsible for this work, but when I contacted the agents, they told me they couldn’t take sides. They suggested that the tenant should pay half the cost of redecoration, to come out of the deposit, and I should pay the other half myself. To me that was ridiculous as the place was immaculate when she moved in, and she had caused all the damage. While we were arguing the toss, the flat remained empty and I lost a lot of potential rent. It could not possibly be relet as it was.
“The agents wouldn’t budge and I ended up paying half the cost rather than have it standing empty any longer. But I never used those agents again. Much later, while I was throwing out old invoices, I discovered that they had kept back £800 out of the rent ‘against future lettings’, whatever that meant.
“I queried it and got it back but I might never have noticed it and the agents would have it to this day. I also found that they had overcharged me for servicing the boiler and that all their quotes were expensive. When I got a local handyman in instead, the jobs cost about half what the agents were charging me.”
As a landlord of more than 20 years’ standing, I have never had full management. I take the vastly cheaper lettings-only option and then self-manage, which you are entitled to do. Agents will do their utmost to persuade you to go for management, but this is not compulsory. My agents just find me the tenant and then it’s up to me.
This means I protect the deposit, I collect the rent, I arrange for certificates and safety checks, and I see to maintenance and repairs, using my own contractors and handymen. I also write out my own inventory, check the tenants out and return the deposit to them.
Yes, it does mean extra work, but it hardly requires a PhD in estate management.
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It also means I keep a bigger slice of the rent and that I cannot be ripped off, because I look after my properties myself. My tenants come direct to me with any problems and they like the personal touch, I find, rather than dealing with an anonymous letting agent.
The more hands-on you are, the less likely you are to be ripped off. For landlords who are not brave enough or don’t have the time to manage their properties themselves, there is another alternative, and that is to use an online service instead of the high street. When Felix Gauri, 41, first became a landlord in 2006, he automatically signed up for full management with a high street agency.
“I was working as a management consultant, going all over the world and I didn’t have time to see to the properties myself,” he says. “But things soon started to go wrong. At first, rents were a bit late and then I had an email to say a shower door was faulty. Like most new landlords, I assumed the agents knew their job and asked them to fix it. They charged me £500 and I then discovered I could have got the same job done for £140.
“You never get a competitive quote and I soon worked out I was paying more for management than it was worth. Also, check ins and check outs were never done properly.”
Please click here to read the original article ‘Letting agents can rip you off. Who can you trust?’
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