How much do you think you pay your letting agent? it may be quite a bit more than you think. On top of monthly management fees and set-up fees/annual fees, a lot of agents are topping up their fees from contractor commissions.
This underhand practice is rife amongst letting agents. A well-known national agent stated in their terms to landlords that they add 8% to contractor work. In their terms of business to contractors it stated 25% added to all contractor jobs.
If over a year you pay £500 for certificates, inventories, repairs etc, assume about £125 of that was agent commission. If the monthly management fee on average is £16% and the rent is £800 PCM you should be paying £128 per month management fee or £1536 per year. Add £10.42 contractor commission and it is now £138.42 per month management fee or £1661.04 per year. So basically the management fee is really 17.5% and not 16% and you are paying an extra £125.04 per year in contractor commission on top of the agent management fee.
Before you instruct an agent ask for a written breakdown of all fees and charges, especially contractor markups.
Ask for details of all contractors who do any work for you including certificates, inventories, repairs, etc so that you can mystery shop them to see what they charge versus what the letting agent charges you.
Rockett Home Rentals never add anything to contractor jobs and will happily supply details of any contractors we use. This transparency means that you the landlord can verify that the fee we charge you, is the fee we are charged and there is no profit gained.
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