Lettings Agency Fees, Liverpool and Wirral
Saturday 27th March 2021
Letting Agents' Fees Liverpool and Wirral - A Minefield
Choosing your letting agent, whether in Liverpool, Wirral or elsewhere, will determine the success or otherwise of your buy-to-let property investment. As with any business the higher the costs, the lower the profit. Letting agents' fees represent a cost to your business which can have a dramatic impact on your net returns.
The range of letting agents' fees is huge, even for the same or similar service. Some agencies have expensive offices, franchise fees, business rates, branded cars, glossy magazines, whilst others work from home with little or none of that overhead which clearly has to be paid for, mainly in the form of high letting agency fees to landlords.
The tenant fee ban has hit many high street lettings agents. As a result, some have passed on the loss of revenue to landlords. I recently did a simple exercise of comparing lettings agents' fees in Liverpool in 2018, before the tenant fee ban, and today. I did this in 2020, but the data is still valid.
Letting Agency A raised fees substantially. Below is just a few examples and also in most cases, other agencies did the same and in some cases even higher percentage increases.
Tenant Sourcing £300 (2018), £470 (2020) an increase of 57%.
Full Management 15% (2018), 18% (2020) an increase of 20%.
Tenancy Renewal £45 (2018), £220 (2020) an increase of 388%.
So, Letting Agency A sources a tenant on a 6 month AST. Assuming the tenant only stays for 6 months, as he/she/they have the option to terminate, then the landlord/agency revenue ratio looks like this assuming a rent of £600 pcm, a total of £3,600.
Tenant Sourcing £470
Monthly Fee 18% £648
Check-in tenant £100
Check-out tenant £120
Check detectors £46
Deposit registration £20
Total Costs £1,404
Net Rent £2,196 to landlord.
Percentage Margin of Letting Agent 39% of the gross rent. Ratio 39/61
The effect of reducing the management fee by 8%, as an example, would add £288 or £48 pcm to the landlord's account.
This is for illustrative purposes and in my experience tenants remain for much longer, for many years in most cases. But the point remains. Higher letting agents' fees impact a landlord's net return.
The tenant fee ban did not impact Tuna Fish as we never charged them. We cut our cloth accordingly and to this day explains why our letting agency fees are some of the lowest in Liverpool and Wirral.
As Warren Buffet famously said, "Price is what you pay, value is what you get." High fees, do not necessarily translate into a better service, but what they do translate into is higher costs and less money in a landlord's pocket every month. Additionally, dig deeper than the headline fees. In many cases the headline figures are off-putting enough, so imagine some of the others.
As ever, shop around.
Lettings Agency Fees Liverpool and Wirral