Greedy letting agents have been caught ‘double dipping’ on fees by charging landlords and tenants for the same service.
Landlord insurer Direct Line for Business found some letting agents ask landlords and tenants to pay for small alterations to tenancy agreements like checking references, changing dates and reviewing contract extensions.
In one case, said the insurer, a South London agent charged a landlord 3670 and the tenant £90 simply for changing the date on a letting agreement.
The study also disclosed letting agents charge variable fees – the average letting agent monthly management charge is 11% of the rent, but some charge as little as 5%, while others ask for a 17% fee.
The insurer suggests landlords should look into how much the fees charged by letting agents may affect their profits by giving examples of variable pricing –
- Inventory costs can range from £65 to £300
- Property inspections from £20 to £100
- Managing a check-out – from £30 to £125
Jasvinder Gakhal at Direct Line for Business said: “While most letting agents have transparent and fair charges, a minority are doing an injustice to the majority through double dipping activities to boost their income.
“It is important landlords consider all the costs they will face when estimating the yield for a property. Taking into account agents’ fees, taxes and unbudgeted costs such as emergency property repairs, landlords can easily pay out expenses of 25% of their annual rental income for a property.
“Letting through an agent can take the hassle out of the rental process and provide additional legal protection in the event of an incident, and our research shows it pays to shop around for the best value as charges and services can vary significantly from one agent to another.”