As a passionate, independent letting agent, we always strive to offer our landlords and tenants as much information about the industry as humanly possible. We pride ourselves on our honesty, and our transparency.
Which brings us to today's Property Patter topic: an agent telling contractors to add 10% to bills to help offset the loss of income brought on by the letting fees ban.
Recently, it came to light that a notable UK letting agent advised its contractors to slap on an extra 10% to their bills as an administration fee to the letting agent to mitigate the loss of income as a result of the upcoming fees ban. Of course, this was a hush-hush, ‘under the carpet’ effort that the agent attempted to keep from its unwitting and trusting landlords.
An official letter came to light in which the national agent, in writing, advised its contractors to take this course of action. As it was in writing, it has now become part of the public consciousness, blowing the shady operation wide open.
What was particularly striking about the discovery is the fact but it seemed to be common practice across the chain to ask contractors to inflate their invoices to add a kickback to the agent. And when you think about it, this regrettably looks like it is standard practice amongst many other agents up and down the country. What’s more, this inflated charge seems to run deeper than maintenance alone; it also looks as if it extends to the likes of gas tests, inventories, and more.
From our research, it seems that on a national level, the fee that agents are secretly slapping on landlords equals roughly an extra 1% of their management fee. The fee is based on gas tests, electric tests, pat test, legionella tests, inventories, and any maintenance on a property over a year period.
To put this charge into perspective here's a hypothetical calculation of these kinds of costs:
£500 rent = £60 monthly management fee = 12% inc VAT
Rent £500 = £60
£6000 as yearly rent = £720 yearly management fee
£500 maintenance per year on average = £50 as a hidden contractor fee
This totals at around an extra 1% on the management cost, so 12% becomes a sneaky 13%.
As you can see, this is quite staggering. Not only is it costly, but it’s conniving and disloyal and manipulative.
Our advice to you is that if you feel that something isn’t quite sitting right regarding fees, ask your letting agent if they add on any contractor commissions: if they won’t reply in writing, they probably do, and if they are honest about it, they’ll tell you. Either way, you’ll find out.
If you're in the North Staffordshire area and you're looking for a letting agent that not only knows the local area inside out but is honest, professional and guarantees great value for money, we would love to hear from you.
WE can categorically say that we don't charge secret fees so you can rest assured that what you're paying for is exactly what you'll get.