He stated some agents are a lot more focused on obtaining contractors that will agree to higher commissions – up to 60pc in some instances – in exchange for massive volumes of operate, than obtaining top quality tradespeople for landlords.
“We have noticed circumstances exactly where a contractor supplied a service for £100 and the agent billed the landlord for £120 and took a 60pc cut from the contractor. Essentially the agent received £80 for arranging a job that price £100. This variety of practice drives up contractors’ costs, and landlords are forced to foot the bill.”
Will Davies, who heads home maintenance and refurbishment organization aspect.co.uk, said the practice is standard across the business but mentioned some agents are especially aggressive when demanding commissions for upkeep operate they booked on behalf of landlords.
“We stopped functioning with 1 extremely well-recognized lettings agency when they wanted to improve their commission from 15pc to 20pc,” Mr Davies mentioned.
“Landlords pay their monthly charge and they count on their agent to find contractors with their very best interests in mind. In reality agents are not concerned about top quality, they will sign up the contractor who will spend the ideal commission.”
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Mr Monjack mentioned the reality that agents do not notify landlords that they are taking these commissions is “questionably fraudulent”. He mentioned agents must have a duty to act in the greatest interest of landlords. Featherstone Leigh, an estate agent in south-west London, is 1 of the agents that have spoken out against hidden commissions.
Joanna Hamilton, a director at the firm, said it is time that the payments – which have historically been noticed as a “nice small earner” for the market – are wiped out.
The Trading Standards Institute stated it is aware of the allegations, but it has not observed any “hard, written evidence” that commissions are passing from contractors to agents. A spokesman stated the institute is not aware of any convictions or prosecutions inside trading requirements.
However, it urged landlords to complain to The House Ombudsman if they believe their estate agent is taking kickbacks.
Estate agents are not regulated but the Government is searching at introducing compulsory regulation. Till then, look for an agent that is a member of a specialist physique such as the National Approved Letting Scheme, Residential Landlords Association, UK Association of Letting Agents or the Royal Institution of Chartered Surveyors.
These bodies operate a code of conduct that requires members to meet customer service standards, but be aware that membership does not guarantee agents do not add additional charges or take commissions from contractors.
Prior to employing an agent, ask for a full list of costs and a detailed explanation of what these cover. Also ask no matter whether the agent requires any charges or commissions from contractors. It is worth requesting that the agent involves a line in its contract guaranteeing it will disclose all charges and commissions.
Ask to see original invoices from contractors after any perform is done. Make positive there is a breakdown of the total expense. The standard price of regular maintenance work such as gas safety checks is readily offered on the web for comparison. Alternatively get in touch with a nearby trade organization if you want to verify a price.
If you have a regional tradesperson that you trust, insist the agent uses them for any perform that is necessary. They are less most likely to be pressured into commission agreements than contractors who carry out regular work for an agent.
If you feel you have been overcharged, complain to your agent and ask to see an explanation of all fees. If you are not happy with the response, refer your complaint to The Home Ombudsman. The ombudsman offers a cost-free and independent dispute resolution service – but the agent has to be a signatory to the scheme. Christopher Hamer, the ombudsman, can award economic compensation.
Mr Hamer said: “While there’s absolutely nothing illegal about a letting agent receiving a commission or referral charge for arranging contractor perform at a property, you have to ask if it is fair for an agent to charge the landlord a premium on leading of the actual cost for contractor perform when the landlord is already paying a management charge to the agent.
“TPO’s Lettings Code of Practice clearly states that there must be total transparency when it comes to costs so we would advise landlords to often ask agents to offer a full breakdown of contractor charges, such as any commission arrangement.
“If an agent desires to charge a commission or referral fee to the contractor for introducing the perform, this kind of practice is not illegal and quite typical in other sectors but the monetary arrangement should be disclosed to the landlord so they are totally informed about any economic acquire the agent will make.”
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Landlords face a range of charges based on the variety of home they personal, the variety of tenancy and no matter whether they employ the solutions of a letting agent.
The following list gives an indication of standard landlord costs, according to the National Landlords Association (NLA). These are primarily based on a £175,000 house, with a month-to-month rental income of £750, or £9,000 a year.
The NLA said landlords ought to budget 10pc of their rental earnings for upkeep on best of these charges.
Letting agent charges fall into two categories. There is a “let-only service”, where the agent finds and vets a tenant, which usually charges 10pc, or £900. Full management – where the tenants calls the agent if there is a issue – comes with a 15pc annual charge or £1,350.
Other expenses incorporate credit checking, £20 referencing, up to £150 deposit protection, £24 Gas Safety Certificate, £50 landlord insurance coverage, £200 (per year).
Some agents charge a renewal charge when an existing tenant renews their contract, so it is worth attempting to negotiate a lower charge for long-term tenants.
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