Newspaper article The Evening Standard (London, England)

A Fair Share? Having Found the Tenant Most Agents Charge an Annual "Finders" Fee - but Is This Justified, Asks Jane Barry Homes & Property

Newspaper article The Evening Standard (London, England)

A Fair Share? Having Found the Tenant Most Agents Charge an Annual "Finders" Fee - but Is This Justified, Asks Jane Barry Homes & Property

Article excerpt

Byline: JANE BARRY

PETER Hooper, a company director, was happy to pay a letting agent commission for finding a tenant for his five- bedroom house in Putney. Ten per cent of the yearly rental income on the [pounds sterling]1,500a-week property - [pounds sterling]7,800 - seemed fair. But, a year later, he is not so happy to get another bill for [pounds sterling]7,800, because the tenant is still in place.

Hooper had no idea the agency would charge commission annually for as long as the tenant remains in the property. "I was surprised," he says. "I did have a contract, but my wife signed it and no one read the small print."

In fact, this annual fee is standard practice. Malcolm Harrison of the Association of Residential Letting Agents, confirms: "It's normally in the terms and conditions that you get annual commission."

But is it fair? According to a National Landlords Association spokeswoman: "We get complaints all the time.

[Landlords] think agents don't do very much and charge over the odds."

But, she adds: "It depends on what you've signed. If you agreed to pay annual commission, you must honour it."

Commission can take quite a slice of rental income; at 10 per cent, even a [pounds sterling]325a-week property would attract annual fees of [pounds sterling]1,690. One agent, which charges 11 per cent, has a [pounds sterling]20,000a-week house in Mayfair on its books: this will net it [pounds sterling]114,400 annually.

Agents claim they earn every penny.

Harrison points to the work involved at the beginning and end of tenancies, from sorting out references and the inventory to clearing the deposit when the tenant leaves, which is "even harder because of disputes", he says.

But first the agent has to find the right tenant. "You can spend hours showing tenants a property," Harrison says. "There could be several visits, and then the deal fails. It could be more expensive if agents charged by the hour, because of the time wasted. …

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