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The Great Management Swindle: how letting agents have been ripping off landlords who need tenancy management

Originally published at: The Great Management Swindle: how letting agents have been ripping off landlords who need tenancy management | OpenRent Landlord Hub

For many landlords using OpenRent, especially those who live close to their property, using a traditional management service provided by a high-street letting agent is completely unnecessary. But for some landlords do require a full management service – if they’re strapped for time, or if they live a long way from their rental property. We’ve…

The issue of property management is a very interesting point and has several traps.
I became a LL in 2011 and at the time thought best to arrange my first property to be managed by a letting agent who stated they would;
Advertise for a Tenant
Collect the rent
Inspect the property on a regular basis
Check tenant in
Manage repairs
What I actually received was;
A tenant I didn’t have the opportunity to approve.
Rent that was passed onto me several weeks after it was collected by the agent.
Repairs that were sanctioned and implemented by the agent without any discussion with me and the first I knew about it was when I received a billed deduction from my rents
No property inspections.

When I confronted the Agent and complained I felt that I wasn’t getting good value by using their services and wished them to cease managing my property I was told that for them to stop managing the property the current tenancy would have to be terminated and the tenant would have to be checked out of the property. This would mean I would have to start again finding a new tenant. Very crafty move to deter LL’s terminating agent services.!
By coincidence the tenant gave notice a few weeks later and moved on their own accord and I was then free to dispense with the Agent .

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Agreed 20% is a lot Harry but what’s the minimum? There are lots of lettings agents and they’re all on a scale from bad to good. Also, landlords can vote with their feet! My question to Openrent is: why do you offer a flat fee management charge? I have a two bed rental property-why should I be charged a higher proportion than a six bed HMO for your service? Surely that’s unfair?

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In some ways this really works for us. We set up a company and manage our own properties. We dont charge anymore than the high street would charge to manage our own properties. As a result the taxable income on the properties actually gets reduced and since it is managed with an LLP the profits can be allocated in whichever order the partnership agreement permits.

Having managed my property for 10 yrs, this time I decided to use an agent. The agent turned up, did a valuation and told me their charges varied from 13% to 22%, depending on level of service. When he emailed me the T&C, I was shocked by how little I got for the cheapest level. For 13%, all he did was advertising, viewings, contract signing and rent collection. For things like inventories, gas EPC, repairs, I would need the premium service at 22%. He admitted himself that I would still have to pay for all repairs. Their brochure stated that they would spend 200 hrs advertising and doing viewings. In the end, I did it all myself via Open Rent. Had 8 viewings in 2 evenings. Must have spent 7-8 hrs in total incl. viewing, checking references via Open Rent, which was painless etc. Tenants have now moved in and assuming they stay 3 years, I have saved myself £12k. We heard in news 2 months ago, someone managed to sue their employer over sex discrimination and was awarded £180k compensation or 1.5 yrs salary. Her job was … estate agent in London…

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Estate agent earning £120k p.a.

The only downside to using OpenRent was the realization of how much money I’d wasted on letting agents in the past.

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The agent was lying about saying the tenant would need to check out. You can’t just ask them to leave. You would have to evict the tenant or serve a Section 21 notice.

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This is precisely why I moved away from the high Street letting agents to OpenRent.

On one occasion, I was charged £350 to repair an overflowing toilet cistern. A few months later £250 for a detailed condition report of the property which, surprise - surprise highlighted an overflowing cistern in need of repair.

That was the trigger to pull my properties away from them.

At the time, the letting agent wasn’t concerned about OpenRent but now whenever I place a property for rent on OpenRent, the high Street letting agents are the first people trying to take it back under their wings. They will call and leave voice messages to call them back or post a latter through the latter box saying we noticed your property is on the market. Desperate for anything.

The death of the traditional estate agent is self inflicted and inevitable.

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I have 2 properties in London and they both came up for rent at the same time this summer, a little unexpectedly at the same time. I am now an overseas resident.

One had been happily rented with OpenRent to the same fabulous tenants, the other was through an Agent.

I considered putting the OpenRent one through the Agent at a more reasonable ‘letting only’ rate. However when they views they advised it really needed a repaint. They advised my fotos weren’t good enough for their website.

I organised a painter and asked my amazing ex-tenant to manage the OpenRent viewings with the perfectly good 3 year old fotos before she left that property. Within a week I had a new tenant arranged to move in the day after the painter finished.

All was done and dusted and the new tenant had moved in through OpenRent while the Agent was still viewing the other ‘highly sought after property with garden’. Finally they found someone and I’m still dealing with the Agent, the new contracts and the moving-in admin.

Moral of the story - it’s simply easier and quicker and great value to organise everything through OpenRent!

Why didn’t I switch the other property to OpenRent?

I need a localised key management and viewings service.

Property Management I find it’s easier to do myself from overseas to avoid the Chinese whispers that happen when an Agent is also involved. I would consider trying the new OpenRent services though!

same here agent wants me not to use Open rent for the place I am renovating now. Some chance.

Replying to Simon30, for localised key management and viewings service you could check out Viewber.

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I’ve just let my property with Open Rent after 10 years of paying an agent 10%.

The agent found my previous tenant for me, all I can say is, he wouldn’t have been my choice and in hindsight, due to his behaviour, I should have served a s21 years ago and moved on, I trusted them to advise me, I don’t think I got the best advice.

Property inspections were cursory, maintenance was always overpriced and on a number of occasions I ended up sorting my own tradesmen as the agency markup was significant. I even ended up sourcing my own company to do the boiler cert each year as that had a massive mark up. In the end, My tenant stopped paying rent, the agents served a s8 - it turned out it was incorrectly served, the guy wasn’t for leaving despite not paying rent and the agents were wringing their hands. He ended up finally agreeing to leave when I spoke to him direct. So at the end of it all I would say that the agents were generally a hindrance rather than a help.

I’m so happy to be letting direct. Through OpenRent I had no end of enquiries and found really lovely tenants within a couple of days.

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I’d rather lose rent than line the pockets of an estate agent. Used a well known and top tier international agency the first time I let in 2008. Utter waste of money. Been managing myself ever since. Great tenants which I hand pick and really very few issues. Estate agents and the self-regulating environment they operate in are on their way out. It will take time as there are large vested interests involved.

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I used an agent for many years as although I lived near my properties I was running a busy full time business as well , however since retiring and moving 200 miles away and sick of my properties not being cleaned properly despite paying extortionate cleaning billsagents checking and giving the ok when clearly they were not and as a result being left according to how they took it over, along with shoddy repairs I have furnished them lightly and stay in them myself in between tenants , as a result they are cleaned maintained and presented to a much higher standard and have been able to increase the rents substantially therefore attracting better quality tenants who appreciate it, I personally meet them get them to tick their opinions on takeover cleanliness so they know what I expect it to be left like and if it’s not I will deduct the cost . So far so good my property maintenance has reduced substantially as a result of greater care taken . Obviously with the input and help and support of open rent doing the legalities and collecting payment.

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Calling it a swindle is over the top. These people provide a service to those that cannot do it themselves, they are not a charity, and running any business these days is more costly than people can imagine. They do all the paperwork, supply the AST, viewings, inspection, property repairs ect. I am not advocating them as I do all of this myself and save a fortune, but not everyonecan.

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Leslie1 you are right. a business does cost money to run We choose who we want as a service, if we do not like it ,we can go elsewhere. They will make mistakes ,we will make mistakes . The man who never made a mistake never made anything

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Absolutely right Leslie.

I now live overseas and, by necessity, need an agent for lettings / viewings, key / maintenance & utilities management, inspections and rent collection. Their fee has risen from 6% originally to 7%, granted it is a compact portfolio of 18 properties, i.e not far to travel, and they do a very good job. I know I’ve been very lucky with this private letting specialist, they’re not a high street estate agent, I tried those twice and sued one of them.
I still use Openrent for marketing alongside my agents Rightmove marketing, as I believe it covers a bigger market particularly with their own website and the Gumtree site, although I must say that Openrent applicants are 75% time wasters. I think a lot of chancers try it on because they think they are dealing directly with a soft or inexperienced landlords via Openrent.

Of course there have been the odd errors and slow turnaround of properties needing refurbishment, but I cannot expect them to do the same job as I would hands on myself, and they even said so at the first meeting.
I receive regular detailed inspections with photos.

All in all I have no complaints, and they have a better record of rent collection and far fewer problem tenants, than I ever did, I think I was too soft. I also now enjoy my retirement in a tropical paradise, whilst the business continues with very little input from myself.

I once had an agent ask for 17.5% for a property in Surrey, I showed him the door, and found a very good agent at 10%. I would never pay anymore than that.

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We’ve been working with the same small letting agent in Bristol for more than 10 years and are very happy with the service we receive at a fair price. We used to manage all our properties once the agent had found a suitable tenant but as we get older and choose to travel a lot more, it has been great to pass on the day to day responsibilities for what we feel is a reasonable fee of 8% plus VAT. This covers finding the tenant, the AST, inventory, all ‘legals’ being up to date and quarterly inspections. I think it reasonable that we should be responsible for repairs due to wear and tear and have confidence in the agent if it is otherwise.

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I used an estate agent only once when I was concern about finding a suittable tenant. It was 2005, my first experince as landlord. I will not going in details but I had to evict the tenant turn up to be a drug addict with no job and in benefit. I been lucky enough to have a gurantor paying the rent, but this is the kind of sutuation you don’t want to be in. So I request the full fee paid back to the estate agent after find out that vetting and searches haven’t been carry out and failing to provide those evedences when requested. I obtain 80% of the fees paying after threating them for drag them to court.
That was a lesson: if you have to take the risk, take 100% of it. Save money and learn how to find tenants.

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