In this week's episode of Good Landlording, Suzanne Smith and Richard Jackson discuss tips to help landlords understand what to look out for in the contract with letting agents, so they know how to strike a fair deal when signing up with them This is a practical episode that not only gives the perspective of letting agents, but also explores the experience that landlords have when dealing with agents, the ins and outs of the different services letting agents provide, what to look out for in the agency agreement, and what protection landlords have under the law. It's is the second episode in the series on letting agents, carrying on from Episode #3: Guide to selecting good letting agents. There are golden nuggets all the way through, but there's a particularly good one at the end. What we cover in Episode #41. The competitive environment for letting agents2. What packages do letting agents offer landlords?3. What should landlords look out for in agents' terms and conditions4. What protection do landlords from unfair terms in agency contracts?5. Why it's important to keep copies of all recordsGolden nuggetCredits >> Submit a question: Click here for question form 1. The competitive environment for letting agents The competitive environment has become very challenging for letting agents over the past few years. The Tenant Fees Act 2019 reduced income streams for letting agents as they could no longer charge tenants fees. Landlords have baulked at the extra costs, especially as interest rates and general costs like insurance and service changes have gone up. There are very low barriers to entry for letting agents as no minimum qualifications or licensing are required. There are unfortunately lots of agents who compete on price, at the expense of a quality service, and others who try to lock in landlords through unfair terms in contracts. Disruption from technology is beginning to gather steam, first with OpenRent who have already become the biggest agent in the UK, albeit an online platform. There are also new entrants like Hello Neighbour with their fixed price, no lock-in property management, and recently their new self-service letting package to compete with OpenRent. (Hello Neighbour advertise on Good Landlording, but Good Landlording is not an affiliate of Hello Neighbour). The NRLA are also doing more online. This all increases the pressure on traditional "high street" agents. The industry has been consolidating, with big players like Countrywide buying up small local firms. Some are doubling down on customer service. A prime example is Kristjan Byfield's Base Property Specialists in London, who genuinely care about providing a quality service both for tenants and for landlords. Unfortunately, others try to stop landlords from leaving by tying them in or charging them a high exit fee if they want to terminate property management or in rent collection. This can make it very difficult for landlords to terminate rent collection and property management contracts. 2. What packages do letting agents offer landlords? These are the four key packages of services that letting agents typically offer landlords: a. Let-only / Tenant Find / Introduction Service This is the most basic level of service, and not all agents offer it. It's popular with self-managing landlords. The agents find tenants for the landlord, and hand the baton over to the landlord once they have checked in the tenant. The agents typically advertise and market the property, carry out viewings, and recommend a short list. Once the landlord makes a decision, the agent will carry out referencing and the right to rent checks. The landlord will usually pay extra for an inventory and the tenancy agreement. The agent handles the deposit and the first month's rent, and checks in the tenants. The landlord pays an upfront fee for this which can range from 3-8 weeks' rent, including all the costs.
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