Do letting agents rip you off?

Lovemoney have entered the debate on whether letting agents rip off landlords.  Property Hawk has warned landlords many times about the fact that using a letting agent particularly on a full management contract can be an expensive indulgence.  Here is a detailed financial assessment of the costs of using a letting agent vs managing the tenancy yourself.

Letting agents - is yours overcharging on maintenance work

Fifteen percent management fees (more if you are London) will depress your net yields and obviously your rental profits.  It also highlights a classic con that Letting Agents working for a landlord and who recieve money for sourcing and managing tradesmen will then inflate the tradesman charges by demanding a commission.  As if plumbers aren't expensive enough!

Renewal fees 

We have covered in details the Foxtons case which highlighted the fact that some letting agents were charging landlords and tenants needlessly for renewing a tenants AST when both would be happy for it become a periodic assured shorthold tenancy.

It highlights the fact that the devil is in the detail of the contract and also the fact that when people pretend to help you out they very rarely do it for FREE. Or am I just a hard bitten old landlord?
 
Free property management software, Free tenancy agreements

Foxtons case LATEST: OFT secures High Court Order

For many landlords the Foxtons case on tenancy renewal fees seems to be have rumbling on for ever without any real resolution. We learnt just a couple of weeks ago that Foxtons had withdrawn their High Court appeal putting paid to any hope on the clarification on the legal standing of charging tenancy renewal fees.

In the latest development the Office of Fair Trading ( OFT ) has secured a final High Court Order against Foxtons to prevent the letting agent using certain terms in it's landlord agreements.

However this Order fails to clarify the situation on tenancy renewal fees.

Where the Order is clear though is that the practice of some letting agents of putting conditions in their agency agreements with landlords relating to the subsequent sale of a landlords property are unfair and no longer binding. The specific conditions are:

• Terms which require landlords to pay renewal commission to Foxtons after the sale of their property to a third party because the original tenant remains in occupation.
• Terms which require landlords to pay a sales commission to Foxtons in the event they sell the property to their tenant.

It is understood that Foxtons have now reworded their standard contract to omit these conditions. However the OFT have indicated in their press release that they will be writing to other letting agents that still include these conditions reminding them they need to comply with the law.

So that's nice and clear isn't it?

Well no not quite. The OFT under it's remit is only able to protect consumers. This term may not necessarily apply to all landlords. Where a landlord has one or maybe two properties and therefore does not rely on letting out property as their main income the law may view them as a consumer of professional service; and therefore subject to the protection provided by the OFT under consumer law. However, large portfolio landlords who rely on their letting business for their income may be considered to be a business and therefore will not benefit from the same level of protection as is provided by the consumer protection regulations and the OFT.

Are landlords consumers or are we a letting business?

This case and the involvement of the OFT highlights a huge area of uncertainty over how landlords are considered by the law. Are we consumers that need protecting from unscrupulous business types? Or are landlords actually 'rough and tough' business men and women who are quiet capable of looking after themselves?

The government and the law can't quiet seem to decide.

What do you think?

Landlord insurance

Foxtons bottle it.....letting agent renewal fees.

The news last week that Foxtons has decided to abandon it's high court challenge against the previous ruling on the charging of tenancy renewal fees may seem surprising.

However, in many ways it is not.....

The original decision last Summer gave many landlords an unrealistic expectation that it was only a matter of time before they would be able to claim back thousands of pounds in letting agents fees. However, this ideas may well be misfounded.

If we go back to the original decision by Mr Justice Mann the decision on the case related purely to the way the terms and conditions in the Foxtons agreement were worded and as to whether they were unfair when managed against the Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). He ruled they were describing them as a 'trap' or 'timebomb'.

Foxtons appears to have done the sensible thing. They have reworded their contracts so that the clauses relating to renewal fees is no longer buried obscurely in the contract and the OFT and courts have accepted these. In a press release on Wednesday Foxtons indicated that they had a set of new terms of business with new terms and a renewal commission at a lower rate than the initial commission and do not seek to charge that renewal charge for more than two years.

It seems that no letting agent wants to confront full on the legality of the 'renewal fees' issue for fear of potentially loosing them and then also having to pay back all the previous letting agency renewal fees.

It looks like letting agents will have to be pushed into a test case to establish this. Any well healed landlords volunteering?

For more info have a look at this Citywire story.

Landlord insurance