When a first time landlord meets us to ask for lettings advice, one of the first questions they ask us is "what fees do you charge". When it's an experienced landlord that question still features, but it's much lower down the list! I guess that's logical - when you're dabbling in an area you aren't a specialist in, and there's numerous companies offering similar services, the obvious temptation is to go for the one with the best price. I did this when I booked holiday car hire earlier in the year - a car is a car, isn't it - how wrong can you go? Well after I'd spent 10 minutes being transferred off the airport, 40 minutes stood in a queue, been stitiched up on the company's fuel policy and been given a car with 'eau de smoke' and tyres that certainly wouldn't have been legal by UK standards, it became pretty apparent that next time I should focus less on price and more on quality.
It's the same with lettings agents. Your buy to let property is one of the biggest financial investments you're likely to make - so why would you then delightedly announce you've placed it with the cheapest agent in town? If your agent is charging you peanuts, are you really surprised when the staff aren't great, referencing isn't all that thorough, mistakes on tenancy paperwork are plentiful, inspections aren't really undertaken, and maintenance issues slip through the cracks. If things get really bad, and tenancy deposits are used to prop up the ailing business (it's happened in both Northampton and Rugby), should landlords really be surprised? The answer is NO, but believe me they are surprised! Why, I don't know - they wouldn't be surprised if the food quality at Iceland was lower than food quality at M&S, and most would opt to pay more for the latter.
As an agency, when setting our pricing, we make a distinction between REGULATED and UNREGULATED lettings agents. We also talk about ALL IN pricing. The second bit is easier to deal with first - don't just look at the headline % for managing the property, look at all the other fees the agent is proposing to slap on around the edges - before deciding who is offering the best price ALL IN. Regulation is harder to explain - the lettings industry makes a mess of it, as does the media, and most local authorities haven't got a clue. But basically, when a lettings agent is a member of a professional body (ARLA, NALS, or RICS) the landlord can be assured 1) that key members of their staff do have some basic training, 2) that they've signed up to an external redress scheme so the landlord has someone independent to complain to if he isn't happy and most importantly 3) that some basic external audits are taking place to ensure that clients money isn't being used to supplement the agents own money. For this reason when a landlord says another agent is charging less than us, we will price match a REGULATED agent, but not an UNREGULATED agent. There's a guy in Northampton who runs an 'agency' from the back of his car, charges £50 for a tenant find and full management at 5% (no vat). Until 6 months he sold advertising space but quit so he could give lettings a go. Nice chap, but does that really qualify you to manage a property given all that could go wrong? I mean would you, really?
