[sinclairuk]

Hi, I am about to let the flat I am currently living in in SE London, and had planned to use a letting agent. However, I have heard so much bad press about agents (especially Foxtons!!) in terms of hidden fees and ripping off tenants that I am tempted to try and do it myself. Does anyone have any advice/tips/experiences that they can share?

[Bluey]

These boards tend to be used by tenants rather than Landlords/Owners so tend to report problems from their perspective when using a Letting Agent. You are in the wrong forum - go to a specialized forum like www.landlordzone.co.uk/forum for proper advice by professional landlords and housing solicitors and/or buy yourself a guide book.

The only interest that Letting Agents have and their whole purpose in life is to gain commission and make money - the satisfaction of tenants and owners is secondary to that. Their first priority is profit.

There has been a couple of historic discussion on this forum around this area.

http://forums.gumtree.com/viewtopic.php?t=7122&highlight=letting

http://forums.gumtree.com/viewtopic.php?t=5402&highlight=letting

http://forums.gumtree.com/viewtopic.php?t=4702&highlight=letting

You should only seek estate agents that are accredited to professional bodies, such as ARLA, as anyone with a shiny suit and a mobile can set themselves up as a Letting Agent, but ARLA offers some, albeit very modest protection, from the worst abuses.

If you can't manage it yourself because you live far away or have time constraints, then try to find a friend to manage it for you or look into letting it to a housing association (which has a lot of drawbacks but the net rental is similar to a letting agent less their fees).

Or try to let it out yourself for the first year or two so you gain experience and knowledge and can scoff at the Letting Agent when they try and make out that will have to spend hours looking after the property when they will make just an occasional phone call to a plumber.

What you need to know is that all the risk remains with you - if the tenants don't pay, it's your problem and you face all the legal fees and may still have to pay the agents fee even though no rent is being received.

Letting Agents should undertake thorough tenant checks (which they charge the tenants for) but may not even bother to take up employee and previous landlord references. Their first priority is making money (bit of a theme here) so it makes sense for the cowboys to charge the tenants a fee to do this but then not do it, or not do it thoroughly.

You may state your preference in terms of the type of tenant (such as no students or no DSS) but they may not bother to honour this. Their first priority is making money so the sooner they cram the place with tenants, the better, and being fussy just slows this down.

The worst direct experience I have concerns an estate agent who took all the rental income from the tenants while telling the owners that the tenants were witholding it and then did a flit with tens of thousands of pounds. The worst story I read about was a guy who owned his house outright and went to work abroad - the tenant who rented it stole his ID and sold it (though I don't know if this was through an agency or self-let).

Any Letting Agent that you send round to do a market appraisal will bend over backwards to assure you of their competence and professionalism but once you sign their contract, they will then see any contact from yourself as a nuisance.

Also, a large estate agency chains may not provide any better service than small independent letting agents but having said that, their charges and Terms and Conditions will be virtually identical - there's no real competition out there to stimulate them to offering better services.

Being a high profile long established agency does not guarantee good service while being a small newly established agency doesn't guarantee that they will be bad. So there are just as many little cowboys as big cowboys and the cost of their services are similar.

If you are looking for a full letting and management service, a cool quarter of the gross rental income could go to them for a few hours work each month. This is because their management fee of 15-16% excludes VAT. It also excludes most other basic tenant services which are charged additionally to it (tenancy contracts, inventory, inspections, etc) so when you actually calculate the true total sum, it's mind boggling. Then you have to consider the cost of a gas certificate, getting it up to standard for renting, the increase in insurance premiums and other costs.

A standard tenancy agreement can be bought from WHSmith or downloaded from the internet and costs a tenner (and then a penny each time it's photocopied). An estate agent might charge the tenants £50 to draw it up and the LL £150 - a cool mark up of 95% for 15 minutes to completing the blank fields. They will, of course, tell you that each one needs to be customised and thoroughly reviewed.

Most Letting Agents expect the bulk of the fee to be paid up front, rather than on an ongoing monthly basis when it is first let - basically you cough up big time for their fees in advance of them providing any decent service and then have to pray that they do the job you've just paid them for.

So make sure you do thorough research before even inviting a Letting Agent round to undertake a market appraisal. You will be told that their terms and conditions are standard and non-negotiable but once you show disinterest, they will be keener to negotiate. Ask yourself why you would pay 25% of the gross rental income to a 3rd party who doesn't share any of the risk?

However, self-managing a private property can be a nightmare - this forum is stuffed with tales of tenants who bail out of properties without paying rent, apply to live in properties they can't afford, fall out with their fellow tenants, illegally sublet and so on.

At my current place, the owner of all the flats has discovered that some of the tenants have managed to change their utility accounts into his name and the bills now stand at thousands of pounds. You might prefer to lose a quarter of the income just not to suffer all the aggro.

[sinclairuk]

Wow - you've given me plenty to think about there. Thanks for taking the time to send such a comprehensive answer - I really appreciate it.

[Bluey]

This isn't really the best forum to gain the insight that you want but it's not exactly crammed pack with people raving about positive letting experiences.

On the other hand, I guess most pass tenancies pass without incidence so there's nothing to write about.

But the attitude you should have about Letting Agents is to appreciate that they don't offer you any kind of service, nor do their contracts promise this. If you ever read the terms and conditions contained in their contracts (lots of estate agent sites have these ready to download), it's basically about what you owe to them, when you will pay it, how often it is to be paid and makes it as clear as they can, in complex legalese, that you are responsible for all of the risks.

Essentially, they are sales people and their skills are to persuade you to part with good money and convince you that they are actually doing you the favour. They are sales people that aren't incentivised by the nature of the market to do their best for you. In theory, they represent your interests. In reality, they serve their own.

There's next to no true competition in the market. The housing shortage means a surplus of tenants for the number of properties and lots of buy to let investors seek agents to manage them. I've used the phrase before but estate agents have a captive market and it's like shooting fish in a barrel. Loads of tenants register for their services. Loads of owners approach them. They just sit and broker them like a dating agency - there's no real need to hustle and it shows.

One of my mates asked his letting agent how many properties she had on her books and she cited commercial confidence for not giving the figure. That's as maybe. However, this is just to circumvent the quick calculation that will reveal how little time she can truly spend on each property on a monthly basis despite bragging how long she spends sorting out each. Despite declining to give a number, she'd already spent most of the meeting boasting about the '20 properties' for such and such local Landlord and the 15 flats of another and so on and so on.

There are stories galore on this forum about tenants who claim to have been ripped off by Letting Agents and multiple reports on particular ones so they don't even really have to try hard to be unprofessional as there's lots of tenants that don't even know their basic rights and are ripe to be exploited.

However, I am not saying that there aren't dedicated estate agents who are professional in outlook, nor am I saying there's a crude conspiracy to fix fees.

It's just the nature of the market, supply and demand and the cutting face of pretty unregulated, free market capitalism.