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sarah ferris

What is standard to pay for a Tenancy finding service

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Hi

 

We are in the process of purchasing a property that is with an agency that has also let out properties in the same new development. They have people already on their books interested in the property to rent so it does make sense to use them. They are wanting 8% of the entire lease term as their finder fee. Is this standard. It seems a lot. Anyone used any other Tenancy finder services and have a good experience and a cheaper cost! We are in Teddington in Middlesex if that helps. 

Thanks for your advice in advance.

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I pay a fixed fee but when I work it as a percentage it comes to 7%. You always need a good agent and by negotiating down are you going to be top of their list when looking for a tenant?

 

I personally would pay as it's a balance against a void and no rent to pay the mortgage for a small amount.


Regards Simon

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Hi Sarah

 

I normally pay between 6% and 8% (depending on the agent I use, and the location of the property) for a Let Only service. I do my own rent collection, and use the DPS to register the deposit.

I'm happy to pay the fee as I simply don't have time to find/show tenants around, but I am able to self manage.

 

If you are going to pay for the entire term of the tenancy agreement, you can try insisting on a 12 month contract, that way you only pay the fee in the 1st year, and then if you are happy with the tenants, you simply let the tenancy turn periodic.

Be careful of agents insisting that you get a 2 or 3 year tenancy, as this simply means more commission for them!

 

Hope that helps

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Sarah,

Any agent worth their salt will tell you that they have people waiting for a property like yours - it's in their interest to do so.

Unless the property is a howler, or you're thinking of charging an unreasonable rent it is very unlikely that you will have problems finding a tenant so the most important thing you can do is due diligence on the agent to see what they are like for tenants and renting.  Just because they have a good sales dept doesn't mean their rental side is as good.  You would be doing yourself a disservice if you did not check several other local agents and this would give you a better feeling for local prevailing rates. If the agent insists on tenancy of more than 12 months - will they give you a refund if the tenants leave early? ;) I doubt it and it is a scam on their part to generate fees.  Don't be afraid to negotiate there will be other agents keen for your business if your own terms are reasonable.  A typical fee is 1 month's rent for the first year (@ 8% as mentioned above)

The fee is important, but more important is the quality of tenant that they find and the care they put in to referencing them as a bad tenant will cost you multiples of the fee.  Remember if an agent feels unfairly treated they may not take the same care with the tenants they put in as they are not managing the property and could use a "fire and forget" approach.  Use an ARLA, RICS or NAEA registered agent who do a proper job rather than a cheap and cheerful agent - if they are good with tenants they will more likely look after you.  Mystery shop the agents as a prospective tenant and see how they treat you - it can be very revealing.  You have spent a lot of money on a property don't cut corners on the final piece of the jigsaw - a good tenant can stay for years which us your end game.

Good luck

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Hi Guys, I'm learning so much on this forum!  You seem to all be seeing agents ask for 6 - 8% of the rent for the entire length of the contract?  Does this mean the initial 6 months or for the whole duration they stay there?  If it is then what is the difference between this and a fully managed service charging structure?

 

I've not used this before but am considering it and think my agent and others in my area charge a flat fee of between £325 and £400.  I thought 10% for a fully managed service is normal so would just go with that instead.  I've negotiated less than that with mine now that I have a growing portfolio which helps lever your negotiations.


Kish

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Kish

Most good agents are looking to charge a fee that they feel covers their costs and their expertise in finding as setting you, the landlord, up with a good tenant in situ who will hopefully stay for a good length of time.  If an agent is charging much less than these fees they may well be cutting corners or there could be other bolt-on charges which add to the final bill  £325 - £400 sounds very cheap but may be because of strong competition.  The adage if you pay peanuts - you only get monkeys frequently comes into play and if your agent is not taking care who they find for you the extra cost could be multiples of the the savings you achieved at the start of the tenancy,

 

As mentioned above, careful selection of your agent is well worth the homework and paying the going rate for a good agent is very worth the investment

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Hi Tim, i agree with all your points. I did the research up front and spoke to several agents. I've been using a couple for 8 years now and settled on my current one because they gave the best service and thankfully i've had very good tenants without any issues. I could have gone with cheaper ones but this seemed to be a good balance of price and service. Other people i know have paid similar amounts so it must mean there are regional variations to consider. Im a very active landlord so make sure my agency only have to call me once to sort out any issues. I'm sure they know this and so are happy that they don't have a rouge landlord to deal with either.

One of my properties is on a fully managed package for 7.5% including vat and I've had no complaints to date.


Kish

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Apologies I just checked and the package is 7.8% not 7.5% as I mentioned earlier.  I should have mentioned that I didn't start out with that rate but its something I have been able to get after building a good relationship with my team as I like to think of them now.  : )


Kish

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