Are you brave enough to source your own tenants? It’s a doddle isn’t it? I’m really happy with the refurbishment I’ve just finished and the last piece of the jigsaw is to find a tenant. I manage my properties myself and I’m starting to question whether to use traditional agents to find tenants. I had a couple of bad experiences earlier this year with tenant finds by a large reputable company. They found me good tenants and the rents were great. But in spite of £2,000 in commission per let, the admin and processing were poor.
Fate was on my side this time, as my refurb attracted lots of interest and people just knocked on the door. I’ve just agreed a tenancy with a lovely professional couple. I did all of the referencing and credit checks myself though I still needed a bit of help from agency friends. I was reminded that when you’re not doing it all of the time, it’s not so easy to make decisions around grey areas. I must confess I also had two agents round to give me a valuation, and I was impressed by their professionalism. Their advice on the local market, types of tenants and rental levels was really helpful as this was my first property in that part of East London.
The relationship between landlords and agents ought to be beautifully symbiotic, didn’t it? They deal day in, day out with tenants, landlords and lets and capture extensive local knowledge. With so much moving on line, I’m amazed they still have offices that in the 21st century renders them a quaint old fashioned geographical grounding: there are thirteen of them along the high street where I’ve just let. Certainly agents provide a degree of distance when it comes to negotiation. My tenant was really keen on my house and I know an agent would have had no qualms in getting him up to asking price. I felt a bit mean and met him half way, allowing him a bit of a discount. I’m the one that has to have an ongoing relationship with him after all. So, yes they often get us better rents – and they do the paperwork. I spent five or six hours gathering information and mulling over my decision.
Landlord associations always recommend using reputable agents. There are some out there, aren’t there? I just hear so many complaints from landlords I meet and the biggest one by far is poor management. I was at a networking event recently, where I asked a manager of a large established agency why property management departments are so often dysfunctional, expecting him to tell me his was the exception. To my surprise, he confessed that his organisation’s was dire and expressed relief that the directors were finally sorting it out. Usually, the lettings negotiators are highly motivated by the carrot of commission, only to hand over the processing to terribly nice back office staff who don’t take care of the detail in my experience. Being asked three times for gas safety certificates, forgetting to send me the deposit – there’s often no follow through, no individual care and a lack of robust information management. On top of this, tenants are charged £150 or so for an AST that we can all download online, a £45 admin fee for referencing that costs £25 and it’s no wonder Shelter complain about exploitation. I personally think the landlord pays enough commission to cover the whole transaction and tenants should not be charged any fees. Renewal fees for let only cases are also completely unjustifiable. With charges like this, it feels like agents are not on the side of landlords, but are exploiting us and tenants alike
Agents are also accused of pushing up rental prices, with unpalatable consequences for housing policy and overstretched renters. It’s hard for landlords to complain about this and it can all be put down to market forces. But commission driven letting negotiators are in effect distorting the market, then landlords get the blame for charging rents that are too high. At the seediest end of the charge sheet, the worst agents use downright deception, telling the tenant whatever he or she wants to hear and setting up the landlord for a difficult start to their relationship. Other tricks include steering the shorter term tenants to let only landlords so that in a years time, they’ll be back for a replacement tenant and the agent will get a fresh commission.
There are some good agents around, of course. The ones that don’t charge for ASTs, renewals or fees to tenants. And landlords can be the bane of agents lives too as one of my favourite lettings negotiators told me this week: “The worst kind is the cheapskate short -sighted landlord who won’t redecorate even though they want to sell the property in a year’s time” Interestingly she told me about bitter and vitriolic requests she gets for repairs where the landlord or tenant assumes that the agent is going to rip them off. I get this from new tenants too, it seems we all have to smash the stereotypes on a daily basis.
In spite of this friction, agents need a good volume of landlords to survive. One agent told me this week that 6% of their landlords sell their properties every year, leading to a serious churn in their client base. They work hard to maintain client loyalty – their staff earn salaries not commission – but they still need a sizable volume of landlords to stay profitable. They also need a supply of good properties – I’m often told that my property is among the best in the area and reminded that there’s a regrettable amount of poor quality stock out there in the private rented sector. Ironically property management – 10-15% of rent collected – is the agent’s real bread and butter and it ought to be the focus of service improvement for many.
Love them or loathe them, agents are going to have to adapt. One of my NLA Rep colleagues believes that in future there will be an increasing demand for locally based property management companies, because the role of sourcing and referencing tenants will move entirely online. With fees of £79 from the likes of Upad comparing very favourably with the standard 6-10% of a 12 month contract charged by London agents, there is surely plenty of change on the horizon.
