Unscrupulous letting agents that are charging tenants and landlords for the same service such as checking references or alterations to contract extension agreements, new research has found.
They are charging for the minutest changes, even when revisions to the contract amounted to just a change of a date, says the research published by insurance firm Direct Line for Business.
The research revealed how a South London letting agent charged a landlord £670 for a simple contract extension, which only necessitated a change of date, while the tenant was charged £90 for the same action.
The research also highlighted the variance in fees landlords pay when they rent out their property through an agent. While on average landlords are charged 11% of the revenue they receive on a monthly basis if they rent out their property through a letting agent, the research found a range from as low as 5% to a high of 17%.
When calculating the yield they hope to generate, landlords should consider the range of additional charges involved in renting out a property. The research revealed the cost of a letting agent completing an inventory on a property ranged from £65 to £300, property visits from £20 to £100 and the charges for managing a checkout from £30 to £125.
Other charges landlords often encounter include paying for the cost of running credit checks on prospective tenants, reviewing references and checking tenants into a property.
‘Whilst most letting agents are transparent and fair, a minority are doing an injustice to the majority through double dipping activities,’ said Jasvinder Gakhal of Direct Line for Business.
‘That aside, it is important landlords consider all the costs they will face when estimating the yield for a property. Taking into account agents’ fees, taxes and unbudgeted costs such as emergency property repairs, landlords can easily pay out expenses of 25% of their annual rental income for a property,’ he explained.
He pointed out that letting through an agent can take the hassle out of the rental process and provide additional legal protection in the event of an incident but research shows it pays to shop around for the best value as charges and services can vary significantly from one agent to another.
To help landlords keep track of charges paid, ongoing expenses and to assist in calculating the yield on their portfolio Direct Line for Business has launched a new landlord app, Mobile Landlord. It enables landlords to manage up to five properties on the go through a single online, mobile portal. Mobile Landlord is free to download and available on both iOS and Android.