'Double dipping' by letting agents is unwelcome practice
By Simon Thompson
The widespread practice of 'double dipping' by unscrupulous letting agents who charge the tenant and landlord for the same service has been criticised by a leading insurance firm.
Direct Line for Business has conducted research which reveals the extent of the problem including one London agency charging a landlord £670 for a contract extension which involved simply changing the date.
The tenant in the property involved was charged £90 by the agency to carry out the same action.
Letting agents fees for landlords
The insurance firm also found that landlords are charged an average of 11% of the rental income by letting agents though the fees can vary from 5% to 17%.
Direct Line for Business's Jasvinder Gakhal said: “Most letting agents are fair and transparent but a minority are causing an injustice through double dipping activities.”
He added that the survey highlights the importance of landlords considering all of their potential costs when estimating a property's yield which includes agency fees as well as unbudgeted costs such as property repairs and taxes.
The research by the insurance company highlights the need for landlords to consider the range of potential extra charges that may be incurred while renting out a property and the costs for simple tasks vary enormously.
Unexpected costs a landlord may face
For instance, the price for a letting agent to complete an inventory for a property range from £65-£300, property visits can cost between £20 and £100 and charges for checking out a tenant range from £30 to £125.
Mr Gakhal said a landlord could expect expenses of up to 25% of their rental income over the course of a year which will affect the yield calculation.
He also urged landlords to shop around to find the best deal when engaging the services of a letting agency and accepted that most letting agents remove the hassle of renting out a property to tenants.
Rent rises outstrip incomes
Meanwhile, the availability of affordable accommodation is becoming rare according to research by the website spareroom.co.uk.
The firm has compiled data which reveals that rents in the UK have risen by 10% in real terms since 2009 but tenants' budgets have dropped by 0.5% over the same period.
Director of spareroom.co.uk, Matt Hutchinson said: “Affordable rents are becoming scarce and many people are struggling with living costs.”
The firm's research shows that while rents in London have risen by 26% in that five year period, household budgets have grown by only 10%.
Mr Hutchinson says a big part of the problem is the 'chronic shortage of housing' and that more homes need to be built - in the meantime, he added, more people should be encouraged to let their spare bedrooms to help create supply.
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