The tenant fees ban has changed the dynamic between landlord and letting agent and although some agents see the change as a threat, for others it is an opportunity to reset the relationship and refocus how they work with landlords.
Extra income can be gained from offering tenants third-party services and products but, as ARLA Chief Executive David Cox has said, it’s also an opportunity for agents to offer a wider range of services to their landlords to help justify increasing their fees to cover the shortfall created by the fees ban.
We asked three landlords to reveal what they expect of their letting agent and why they use one.
Properties: Two student houses and a two-bedroom family rental flat all in Brighton and Hove.
I cashed in shares several years ago when I left a job working in the entertainment industry and used the money to buy the three properties to give me a pension.
Pretty much hands off. I receive a monthly statement from my letting agent every month but I’m too busy to get more involved. When I first started out, I managed the properties myself but after a few 11pm calls from students who had locked themselves out, I brought in an agency to fully manage them.
Renting has massively changed since I first brought my first property in 2010. The government’s tax changes have massively altered how much money I make from them and now there’s the tenant fees ban. I used to have a really good deal at 7% for fully managed and my agency have always been fantastic, but that’s increased to 9% since the tenant fees ban.
They told me they lost 80% of their turnover after the ban and have no choice now but to charge their landlords more. They also bill more fees on top of the management costs for things like serving Section 21 notices and for tenancy renewals too. I understand they’ve been putting up my rents, particularly for the students lets, to help me cover this extra cost.
Properties: three-bedroom apartment in Balham, SW London
It was my first home purchase in the late 1990s but when I came to sell it in 2002 the market was slow and finding a buyer was difficult. I remortgage it instead, bought a house also in London and then rented out the flat to finance the mortgage.
I live nearby so I could manage it myself but I’m often away with work or away on weekends, so I need someone to manage it, but I’m not a completely hands-off landlord. I want to feel like I know what’s going on.
Above all I want them to keep the tenants happy. That means responding to problems quickly and going the extra mile when things do occasionally go wrong. The ceiling fell down in the bathroom of the flat last year and the agent involved had it cleared and usable before the tenants got back from work that day.
Also, they locked themselves out of the flat one evening and the agent went around to give them a spare set of keys. When you’re paying a 10% management fee, that’s the level of service I expect.
Properties: medium-size portfolio in the East Midlands
I was working full time and bought my first property in 2006 and got the bug after that. It’s become a lot harder, particularly in recent years with all the restrictions but I hope to be able to expand further.
Professional property investor
I use letting agents just to find tenants, but I’ve used them for full management over the years too, but I think as the sector professionalises and also following the tenants fees ban, they will need to work harder for their money.
For example, I think offering a service which operates outside office hours is going to become more the norm whether it’s fully 24-hour or just weekends and evenings.
The problems at my properties happen outside office hours when tenants are at home, not during the day when they’re working. Most of the agents I’ve used for full management have been great, but sometimes I’ve ended up having to fix problems myself out of hours, which makes you wonder what you’re paying them for.
I believe lettings agents should offer a more flexible and holistic service, similar to the kind that sales agents do, and be more tailored to the tenants’ needs.
The lettings market is going through a period of change, increasingly so following the tenant fees ban. Landlords may be anticipating an increase in management fees as a result of the ban, but letting agents should be aware that there will likely be the expectation for more in return.
In a market where agents are stating that one of their biggest challenges is finding landlords, now might be the time to take note of what landlords are looking for. Based on the interviews that we’ve run, an around the clock service, speed of communication and more transparency on what fees cover would be a start.