A buying agent who find properties for affluent overseas purchasers says they are often surprised by letting agents charging them what they regard as high fees.
Henry Sherwood, managing director of The Buying Agents, says: “Foreign clients are delighted for a buying agent to find a property and negotiate a good price in return for a 1.5 per cent fee. But then they let it out and can’t believe the 10 or 20 per cent charges they receive from letting agents.”
He says many UK landlords, by contrast, take fees at these levels for granted. “Most don’t even look at what the charges are for. Smaller items of a few hundred pounds are often lost amongst bigger costs of 10 per cent for this and six per cent for that” he says.
Sherwood says he now increasingly favours letting agents or property management services which offer alternative lower cost business models. One is The Happy Tenant, founded by media lawyer Jonathan Monjack: this levies an annual fee plus a one-off charge when a new tenant moves into a property.
Happy Tenant then uses its bulk purchasing power - it has 600 properties on its books - to secure what it calls reduced price services from mainstream agents to find tenants, and from a range of service providers to handle the likes of EPCs and routine maintenance.
The result, says Sherwood, is that a membership-style agency like this charges substantially less than a traditional letting agent for providing broadly similar services.
“We have also heard of situations where landlords actually think agents are inventing jobs during quiet periods to increase their revenue. In many cases the landlord does not even know it is happening, they simply think they have “bought a dud” or are abroad so have no way of checking” says Sherwood.