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Lettings "Agency Finders Fees"


Demitri_C
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Just wondering if there are any pros in the lettings field? I am a bit stuck as I am new to this whole thing.

Basically me and the missus are biting the bullet and finally getting a place to rent for a year just to see how we go. Found a nice little place.

It’s with the kings group they told me I need to put a deposit down and first months in advance which is fair enough.

The problem I have is the girl I am dealing with want a finders fee. She said to me that originally its £310 per person so £620 in total but she said she will do it for £450 for both! She said this covers referencing, and administration fees. Sounds a bit ridiculous to me. I asked a few people and they are telling me that the landlord should be paying them a finder’s fee and if I am to pay one it should be about £100-£200 max as it’s just for credit checks. Someone from the industry that I have spoken with told me I should report them as what they are doing is illegal. Anyone know anything about this?

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Never, ever heard of a tenant paying a finder's fee. I mean, you found the property for ****'s sake. I'd tell them to stick it, or better yet ask for a detailed cost breakdown.

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Just wondering if there are any pros in the lettings field? I am a bit stuck as I am new to this whole thing.

Basically me and the missus are biting the bullet and finally getting a place to rent for a year just to see how we go. Found a nice little place.

It’s with the kings group they told me I need to put a deposit down and first months in advance which is fair enough.

The problem I have is the girl I am dealing with want a finders fee. She said to me that originally its £310 per person so £620 in total but she said she will do it for £450 for both! She said this covers referencing, and administration fees. Sounds a bit ridiculous to me. I asked a few people and they are telling me that the landlord should be paying them a finder’s fee and if I am to pay one it should be about £100-£200 max as it’s just for credit checks. Someone from the industry that I have spoken with told me I should report them as what they are doing is illegal. Anyone know anything about this?

I am a landlord and I can tell you now this is rubbish and I wouldnt trust them, as far as I remember its illegal too.

The landlord has to pay them a significant finders fee and they also take 10% management fee on top, loads of other "admin fees" on top.

As a previous tenant also I can say that we never paid a finders fee, they do get you on fees for keys and when the contract is up the bastards charge both the landlord and tenant another admin fee!

Avoid this company as you can bet that there will be even more hidden fees.

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I have paid agency fees before but never that much.

This is just another case of hand over your money for no reason. All to common in the UK these days. I'm expecting customs to charge me a squillion quid for the boxes I just sent home.

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I've rented properties twice in the past and never had to pay a finders fee. A desposit, of course. but not a finders fee. That should come from the Landlord's side, if at all.

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thanks guys. thought so as much. they are trying to rip me off. i paid a £200 deposit already then the bitch mentions it. is that £200 going to be lost now?

someone said i should report them, but i am not entirely sure if its iellgal what they are doing?

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Seems its rife but yours is excessive!

Link 1

Letting agents' hidden charges prompt calls for tougher legislationAdmin fees, insurance fees, cleaning fees, fees for charging a fee … the list is endless, says Penny Anderson, author of the Rentergirl blog

Penny Anderson The Guardian, Saturday 13 March 2010 Article history

Penny Anderson thinks big charges for renting a home will be with us for a long time. Photograph: Christopher Thomond

The escalating fees charged seemingly at random by letting agents defy the laws of economics. I half suspect they make them up as they go along, daring each other to see what they can get away with.

Penalties are disguised as "admin fees" or "key money". In fact, the names are as ingenious as the fees. I once heard of a tenant being charged a "finance fee"; that is, the agent had the audacity to charge clients a fee for charging them a fee.

Recently, when I was flat-hunting, I discovered admin fees ranged from £75 to £200. Then there's an "inventory fee", "insurance fee", "checking-out fee" and a "cleaning fee". Bear in mind the letting agent is likely to be charging the landlord a "finder fee", plus a part of the rent, often 15%. Then they sting the tenant as well.

The agent letting the flat I was due to move into tried to charge me £150, claiming in mitigation: "We have to pay for our office costs." In that case, surely, I should be able to invoice them for my own costs, as those removal vans don't pay for themselves. (They agreed to reduce the fee to £100 as they wanted "to be reasonable").

In order to amuse myself while sitting in the office signing my badly photocopied, legally dubious, rental agreement, I timed them. Producing the ready-copied documents and checking over my credit rating (which they seemed to do in front of me) took 10 minutes. Another two tenants were in the process of signing up (it appeared they were charged £100 each). That makes £300 for 10 minutes' work. I wish I was paid that rate.

Now here's the catch: the usual excuse for letting agents who charge fees is that they cover time spent checking references which, if true, might be reasonable. It's just that I know, for a fact, that my (excellent, I'll have you know) references were never checked, which means that if my landlord was also charged a fee, those arduous 10 minutes of pulling pre-printed forms from a file could have earned them roughly £500.

So here is the problem: I'm assertive and know my rights. But what choice do desperate renters have when faced with an agent who – as here – simply issues an implicit threat: words to the effect of "no fee means no flat"? Shelter chief executive Campbell Robb says it "is vital that tenants ask about fees or charges upfront as, unfortunately, once they get to the point of getting the keys it is very difficult to avoid paying".

He agrees that even when tenants try to clarify the bill upfront, mystery monies still appear. "Many of Shelter's clients point to 'hidden' charges when they are initiating or renewing a tenancy. Often people are unaware what these charges are for, and struggle to pay them on top of a deposit."

Scotland tried to solve this with legislation. The 1988 Housing Act (Scotland) decrees no fees be charged to tenants, but agents have reacted by brazenly ignoring the law. Admittedly, there is a minority legal view that a small amount is justified, but just before signing my rental agreement I politely suggested the mooted charge may be, well, dodgy. My concerns were greeted with sniggers of disbelief.

But exactly what constitutes a reasonable amount? Keeping in mind the fact that an online credit check costs as little as £5, charging an individual tenant £150 seems extortionate. Ian Potter, operations manager of Arla, the Association of Residential Lettings Agents, had this to say: "Fees will vary from region to region and will depend on the specific services offered.

"However, for landlords and tenants, it is important to obtain clear, written information from an agent about which services the fee includes – and whether there are likely to be any further costs. Consumers should always ensure the agents they use are registered with Arla or the National Association of Estate Agents, as they will have to comply with strict codes of practice. This means that, should a landlord or tenant feel the fees were unclear, they can lodge a complaint."

Housing charities have long argued letting agents need tighter regulation. Robb says: "Shelter believes letting agents need to be regulated, so they are more transparent and upfront about charges. We also believe most of these charges should be made to the landlord, not the tenant."

Last month government plans for regulating the private rented sector were published. Housing minister John Healey pointed out more than 3 million families live in private rented housing and, while the majority of tenants say they are happy, many do face problems with their landlord, and should have better help and protection. He said creating "local letting agencies", where councils and good landlords work together to help people find better-quality homes in the private rented sector, would help sideline the "cowboys".

These proposals have no timeline, and there is no mention of sanctions for landlords or letting agents who disobey the new rules, or who fail to register, so I suspect the astronomical fees are with us for some time yet

link 2

Rising rents have hit the headlines recently with landlords accused of cashing in on tenants desperate to secure a property. But it’s not just landlords making a packet from the renting generation – letting agents are exploiting the situation too.

To the uninitiated, lettings agents work like this: A landlord hires a letting agency to either just find a tenant, or fully manage a property and deal with rent, maintenance and any tenant issues.

The first option attracts a charge of about 10 per cent of the annual rent and the full management option 15 per cent. VAT is charged on top.

Extra fees: Letting agents charge landlords and tenants a series of additional charges, which add up to hundreds of pounds

So if a landlord opted for the full management option for a flat attracting a rent of £800 a month they’d pay the agent £1,728 a year including VAT.

But the fees don’t stop there. There are additional charges for contracts, inventories, credit checks, references, checking in and checking out tenants, visits to the property, and registering a deposit. These charges come to hundreds of pounds, some of it charged to the landlord, some to the tenant.

More...First-time buyers with small deposits risk sliding into negative equity

Rent is 'unaffordable' for families in most parts of England

Citizens Advice says the additional charges, which are usually for carrying out tasks that are no more than the routine business of letting and managing a property, often bear little or no relation to the cost of the work involved.

‘Many letting agents routinely rip off tenants by imposing unjustified and excessive charges and providing a poor or non-existent service,’ says Citizens Advice spokesperson Moira Haynes,

‘In some cases letting agents appear to make them up as they go along. These charges can be a huge barrier for people on low and even average incomes who have no housing options other than the private rented sector. They should be banned.’

Under full management, any maintenance jobs are contracted out to tradesmen appointed by the lettings agent and the landlord pays for them separately. Some agents charge for waiting time for tradesmen – so if a plumber chosen by the agent is late, the landlord pays extra.

Once the contract term is up the landlord is charged a renewal fee whether or not the agent has played any part in negotiating a contract renewal. However, letting agents are generally keen to negotiate rent increases, something which bumps up their commission while pushing up rents for hard-pressed tenants.

Agents charge anything from £200 upwards for an Assured Shorthold Tenancy (AST) agreement. However, you can download an AST for free if you search online.

London-based Kinleigh Folkard & Hayward, for example, charges £130 to both the landlord and tenant for a contract, £260 in total.

KFH group lettings director Carol Pawsey says the ARLA-approved document is far more comprehensive than an off-the-shelf document from a legal stationers or one that can be downloaded online.

‘The contract is to protect our client, the landlord, and to ensure he can gain vacant possession at the end of the term and it is therefore vital that it is both comprehensive and includes clear contractual terms,’ she says.

Other KFH charges include £48 for a credit check (credit checking starts at £15 online) and £25 to put the tenant’s deposit in a recognised deposit protection scheme even though one scheme, the Deposit Protection Scheme (DPS), is free to use.

Rival Pedder charges landlords a £200 ‘landlord agreement fee’ upfront and tenants £270 to cover a contract, credit checks and references. An inventory is charged separately, £170 paid by the landlord at the beginning of the tenancy and £90 paid by the tenant at the end.

Citizens Advice is particularly concerned about the lack of regulation in the lettings sector; anyone can set themselves up as a letting agent without any need for professional expertise or experience. However, some join the Association of Residential Letting Agents (ARLA), a voluntary self-regulating body. But ARLA doesn’t cap or monitor what its member organisations charge landlords and tenants for administration.

ARLA operations manager Ian Potter says: ‘As an organisation we cannot dictate to our members what fees they charge as there is legislation which requires free competition in a market. Certain fees were challenged by the OFT and the issue of unfair fees is covered under the Unfair Terms in Consumer Contract Regulation but these do not go as far as setting the level of fees.’

Emily Conrad-Pickles, 29, has had experience of letting agents both as a landlord and a tenant when she let her flat in London to move to Newcastle. Her London agent took just 48 hours to find suitable tenants.

‘The next day, they made an offer and I decided to take them on. For no work whatsoever, the agents took 12 per cent of the first years total rent as their finder’s fee, for basically doing nothing,’ she says. ‘On the plus side, they did organise proper contracts for me but everything else (such as inventories) was an added cost which I went without. I feel a bit of a mug for paying so much money.’

Up in Newcastle, Emily found that despite renting a flat through a letting agent, and paying more for the privilege, the agent has been slow and unprofessional when it comes to dealing with any problems.

‘When you consider that they are probably taking a good 20 per cent of the landlord’s annual income from the property each year, it is an absolute rip off. I really feel sorry for our landlord who is tied into a contract with the agents and wasting his money,’ she says.

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thanks guys. thought so as much. they are trying to rip me off. i paid a £200 deposit already then the bitch mentions it. is that £200 going to be lost now?

someone said i should report them, but i am not entirely sure if its iellgal what they are doing?

Get that £200 back! Just read on a forum by one guy saying that they have no right to ask you for any money without giving you a chance to go through the contract.

Pisses me off that they charge both the landlord and the tenant for the credit check and from what I have just read they dont even actually carry it out!

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The Landlord should be paying a finder's fee if anyone. They will rip you off for administration fees. The credit checks they use cost about £6 each, but we paid about £180 in 'admin' fees in all last year. Unfortunately it's not illegal as far as I'm aware, as they are pretty much completely unregulated and can do and charge whatever they like.

I'd say to walk and find another house, but it looks like you've paid a holding deposit so that makes it tricky.

If you can somehow get the landlord's details, it might be wise to let them know. If I was trying to let a house, I'd be pissed off that the agent was making it difficult and putting off prospective tenants.

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YEah Demitti.

Even if the finders fees are all above board, if they didn't tell you about them before you handed over your deposit you should absolutely demand that money back.

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YEah Demitti.

Even if the finders fees are all above board, if they didn't tell you about them before you handed over your deposit you should absolutely demand that money back.

Arr, this is probably your best bet if they hadn't mentioned this before you paid.

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When I bought my house, the "free" mortgage advisor they provided at Dixons ended up not being free.

Right at the end of all my dealings with them he sprung it on me that there was a £95 admin fee for his services.

To be fair to him, he was an absolutely top bloke, and I believed him when he said it was brand new and even though I'd started before they brought it in, I still had to pay it.

But I still felt robbed. I almost felt like backing out, or threatening to, because of the principle of it. But I was too deep by then to make a fuss over £95.

But the cynical part of me thinks they knew that would be the case and I got fleeced.

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someone told me to speak to ombudsman regarding this worth pursing?

Get that £200 back! Just read on a forum by one guy saying that they have no right to ask you for any money without giving you a chance to go through the contract.

yeah B6Bloke iam thinking just to forget teh whole thing as they just sound effing crooks. i dont mind paying a finders fee but has to be fair £450 is just outrageous. i cant believe its not regulated at all. i feel sorry for those that have been ripped off. cant eblieve they are allowed to get away with this

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I am a landlord and have to pay a finders fee to the agents, which covers credit checks etc. I am not aware of tenants having to do same.

As far as deposits go, the only deposit that you should be asked for is when you rent a property, and the landlord is required to lodge that money in one of the approved deposit protection schemes within a required time frame. By law no agent or landlord can hold your deposit.

I'd go elsewhere if I were you.

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absolute cowboys. i called them and the landlord wants 6 weeks rent up front (instead of four) and wants to charge £925 per week as i have cats (instead of £900) like agreed

luckily i am entitled to my money back now as change in terms so am taking back and never dealing with these idiots again.

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absolute cowboys. i called them and the landlord wants 6 weeks rent up front (instead of four) and wants to charge £925 per week as i have cats (instead of £900) like agreed

luckily i am entitled to my money back now as change in terms so am taking back and never dealing with these idiots again.

£900 a month!! Shit!! An extra £25 for cats would have just been one of the many add ons that you would have found out about later on.

We moved in to a place with pets and the only agreement was that we had to have all the carpets cleaned when leaving, providing a recipet. cost £100 and it was a fair request.

You got off good there, where in UK are you?

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i am in north london hence why its expensive for a two bed flat.

that sounds fair about carpet but the floors here are lamanated! so should not apply.

she called me and has said will do it for the four months agreed under first dropped to £380, then £315 and now she will drop it to a final £300 for the finding fee. so am thinking it over as i really like the place but i am entitled to money back if i pull out tomorrow

have got an appointment with a place tonight so hopefully that will be nicer so my decison is made. they too have told me there is a admin fee of £300. but hopefully i can get them down

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i am in north london hence why its expensive for a two bed flat.

that sounds fair about carpet but the floors here are lamanated! so should not apply.

she called me and has said will do it for the four months agreed under first dropped to £380, then £315 and now she will drop it to a final £300 for the finding fee. so am thinking it over as i really like the place but i am entitled to money back if i pull out tomorrow

have got an appointment with a place tonight so hopefully that will be nicer so my decison is made. they too have told me there is a admin fee of £300. but hopefully i can get them down

find out in advance what other fees you are likely to incur and get them down further! With a property that price how much commision are they losing each month its empty compared to your £300 :winkold:

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i am in north london hence why its expensive for a two bed flat.

that sounds fair about carpet but the floors here are lamanated! so should not apply.

she called me and has said will do it for the four months agreed under first dropped to £380, then £315 and now she will drop it to a final £300 for the finding fee. so am thinking it over as i really like the place but i am entitled to money back if i pull out tomorrow

have got an appointment with a place tonight so hopefully that will be nicer so my decison is made. they too have told me there is a admin fee of £300. but hopefully i can get them down

Beware of additional fees on top of a 'finder's fee'. You'll probably have £100 each credit check fees, and a chunky 'administration fee' as well. They sound like charlatans so unless you're really sold on the place I'd run a mile!

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I used to be a letting agent. We had £50 from the tenants an £200 from the landlords as admin fees. And then we took 8% of rental income. We were quite a small, low-cost business but even the big ones never ever charge more than £200. The landlord pays the majority, as it's them who want people in there paying rent, they'd rather pay £200 to get someone in there than have it empty for a month.

I'd be tempted to report this company, it's completely exploitative.

Remember that the tenants hold the cards in these deals. The letting agents are under pressure from landlords to get people in there. When I moved into my place (although it's only a house share) I was able to get them to waiver all fees and dropped my rent by £20 a month on the basis that I was moving in almost as the last guy moved out, so the room wasn't going to be empty.

Unless it's a property which is in high demand and there's a list of people wanting to move in, then tenants can usually get a fair few perks from the agents - and certainly don't have to pay extortianate fees!

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