by Mark Johnston
Figures from the council of mortgage lenders (CML) show that buy to let mortgages approved between April and July 2011 is worth around £3.5 billion.
In the last 2 years average rents have risen by more than £50 a month. With no signs of would be buyers finding it easier to get reasonable mortgage deals rents are likely to carry on rising.
LSL’s estate agency managing director David Newnes said that he expected further rent rises in the coming months. David Brown, commercial director for the same company also added “red hot demand for properties is driving rents up at their fastest monthly pace”.
With all this it is no wonder the buy to let landlords are currently firmly in the driving seat, with demand for property allowing them to push rents ever higher. However it is not just landlords who are making a packet from the ever increasing rental generation, letting agents are exploiting the situation too.
Basically letting agents work like this: a landlord hires a letting agent to either just find them a suitable tenant for their property, which has a charge of approximately 10% of the annual rent, or they hire them to fully manage their property, which means dealing with rents, maintenance and any other tenant related issues that may arise. This option is usually charged at 15% of the annual rental income; both also have VAT added on top.
Although the fees do not just stop there, many agencies then have additional charges for contracts, inventories, credit checks, visits to the property and registering a deposit. These charges can come to hundreds of pounds and some are covered by the landlord whilst others are covered by the potential tenants.
The citizen advice bureau say that these additional charges often bear little or no relation to the cost of the work involved. These charges can be a huge barrier for people on low and average incomes who have no other housing option than the private rented sector.
Agents charge anything from £200 upwards for an Assured Shorthold Tenancy (AST) agreement, even though they can be downloaded free from the internet. A credit check can cost from £48, these start from £15 on the internet and agents often charge at least £25 to place a tenants deposit in a recognised deposit protection scheme, the deposit protection scheme (DPS) is free to use.
Many people are particularly concerned about the lack of regulation in the letting sector, anyone can set themselves up as a letting agent without any expertise or experience. Some agents however do belong to the association of residential letting agents (ARLA) which is a voluntary self-regulating body. It does not cap or monitor what its members charge landlords or tenants for administration.
Shelter director Graeme Brown said “times are hard enough for many people right now and the last thing they need is to be fleeced by unscrupulous letting agencies in their search for a home”.
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