Landlords warned about commission charges

AFS Team·6 February 2014·4 min read
Landlords warned about commission charges
With growing numbers of 'accidental landlords' and professional landlords having their portfolios run by letting agents comes a warning that they must be vigilant about the charges they are having to pay.

The urge for caution comes from property maintenance firm Aspect which says that some unscrupulous letting agents are boosting their bills by adding to the property's maintenance costs and not making clear why they have done so. This is, the firm says, a potential issue for the Office of Fair Trading (OFT).

Landlords and agent commission charges

Essentially, landlords are facing commission charges for the agents to look after their property and then being hit with a commission charge for any maintenance work that is carried out.

Will Davies of Aspect explained: “Some agents are milking their clients because they charge a fee for managing the property and then charge an additional commission from the maintenance companies which means that the landlord is having to pay more than they should. They are being charged for a service they are already paying for.”

Most landlords have no idea that this is going on and agents are meant to spell out in their 'Terms of Business' what they are allowed to charge for. Mr Davies says that if a letting agent does detail the 'extras' it can charge, they are usually 'tucked away' in the small print.

Mr Davies says the practice is a breach of industry codes and they also potentially break the proposed OFT guidelines.

He also points out even though many agents are members of the Association of Residential Letting Agents (ARLA) this is not an indication that the extra charging will not be taking place.

Letting agent commission warning

Mr Davies added that lots of letting agents were members of ombudsman schemes but these are only used after something has gone wrong and a complaint is made.

He said: “Agents should be up front about the extra charges.”

Aspect no longer works with agents who charge a commission because, Mr Davies says, the landlord was probably unaware that they were paying extra for a service they were already paying for.

Mr Davies' views are backed-up by Joanna Hamilton, a director of London-based letting agency Featherstone Leigh, who now tells landlords that the firm doesn't charge extra commissions.

She added: “This has historically been a nice little earner for our competitors but the industry needs to move away from this and treat consumers fairly.”

Landlords, Ms Hamilton explained, want letting agents to look after their best interests and it was a 'shame' that some agents believed the bonus was a legitimate charge to make to their clients.