Do agents take commision if tenants dont pay

[Bel]

In general, will agencies only claim their 10% or so , if the tenant pays rent. I.e., if the tenant defaults , will the LL , in usual agency practice, still have to pay commision to agent?

[jeffrey]

In general, will agencies only claim their 10% or so , if the tenant pays rent. I.e., if the tenant defaults , will the LL , in usual agency practice, still have to pay commision to agent?


There are two independent contracts, aren't there?
L and A
L and T
If L appoints A to act, L has to pay A. Unlikely that A's fees will be forgiven if T bilks L.
If A receives % commission on collections, however, it incentivises A to collect. No collection = nothing against which to deduct fees. What agent would do that?

[Bel]

Jeffrey, in your post, the bit about 2 contracts confuses me with the rest of the answer. If you could point out what the implication is, I would be grateful.

To clarify, you say than unless the terms actually say commision on 'rent collected', the agency will still charge monthly management fees on rent due, even if the tenant will not pay.

And am I am I right thinking that the latter case is usual agency practice?

I felt the need to ask this question after recently looking at the terms of business for several agencies. I noticed one agency said 10% on rent collected. And another just said 10% on rents due, deducted monthly. When I asked another agency who did not furnish me with their terms of business in the first instance, whether commision is payable if the tenant does not pay their rent, he was very evasive and said that's why they do tenacy checks etc, and that they wouldn't have any money to deduct their fees from. I didn't feel they were being straight with me.

[jeffrey]

Jeffrey, in your post, the bit about 2 contracts confuses me with the rest of the answer. If you could point out what the implication is, I would be grateful.

To clarify, you say than unless the terms actually say commision on 'rent collected', the agency will still charge monthly management fees on rent due, even if the tenant will not pay.

And am I am I right thinking that the latter case is usual agency practice?

I felt the need to ask this question after recently looking at the terms of business for several agencies. I noticed one agency said 10% on rent collected. And another just said 10% on rents due, deducted monthly. When I asked another agency who did not furnish me with their terms of business in the first instance, whether commision is payable if the tenant does not pay their rent, he was very evasive and said that's why they do tenacy checks etc, and that they wouldn't have any money to deduct their fees from. I didn't feel they were being straight with me.

Well, they won't want to work free. "Rent due" is different from "rent collected".

Read Agents' terms of business carefully, so you know their entitlement and your obligations.

[justaboutsane]

We collect our monies from the rent as it comes in. If no rent comes in then we get no monies! Makes us work harder to get the money in and ensures that we get the best tenant into the property in the first place! .. Its swings and roundabouts. Sometimes we "don't" earn our % as the money arrives by BACS on time and the tenant is trouble free.. other times its like getting blood out of a stone!

[Bel]

Thanks Jeffrey. If I ask an agent a question I expect to get an answer and not a smokescreen. Anyone would think they were ashamed! I do not begrudge agents there rightful dues, but a client needs to know where they stand if they ask a question. There are obviously many different terms and conditions; all agents are not the same. Your experience is much greater than my own, and I appreciate any help you can give regarding professional practice.

Justaboutsane; would you be within your rights to invoice your client for the remainder that would not be covered by monthly rent income, say at the end of the tenancy? Might you waive that right according to circumstances?

[Surrey]

Bel, you appear to have grasped the point, by looking at the agency's terms and conditions. "Rent due" and "rent collected" are indeed not the same thing.

Also expect to see that if you do a tenant find, the agency will charge a percentage, e.g. 10% of the rent for the term agreed, payable up front. If they are also asked to do rent collection they will charge an additional 2.5% but it won't be up front but payable monthly. That still appears to mean that they are due the money whether the tenant pays or not.

But all that aside, the final agent you spoke to was cagey and evasive so you got the feeling that you didn't like them. So go with your feeling and don't do business with them. They are effectively your employee, so if you wouldn't employ them to work for you in a job situation, don't employ them to work for you in a letting situation.