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Renewal Fees and what the latest is. 11/03/2010

In this difficult economic climate, it is not unexpected that Landlords and Tenants alike are looking to take any opportunity to reduce their outgoings or to grasp any opportunity to recover monies they have already paid.

The bank charges issue has been well publicised and it rightly overshadowed the OFT case against Foxtons which had been running for some time. The case in question has been loosely termed 'Unfair Renewal Fees', and as a result, Landlords and consumer forums across the country have taken note.

Firstly we should state that we are not affiliated to Foxtons, nor have we been privvy to the details of the case. Our comments come as an observation on the reported details and represent only our opinion on the matter.

That said, there is a fair amount of transparency to the case. Our reason for commenting on this issue is as a result of a number of communications received from Landlords asking when we are going to be refunding our renewal fees.

Lettings is a litigious business. The expertise of Letting Agents is more about how to set-up and manage a tenancy correctly to minimise the chances of things going wrong, rather than how quickly we can find someone. In addition, and perhaps more importantly, it is knowing what to do when things do go wrong.

The problem for letting agents at the moment is that customers want to perceive the value of what they are paying for. Experience may be one thing, but Landlords want something material for their money and agents have had to start catering to this requirement or face going out of business. This is particularly evident at the moment as lots of new agents with no experience at all are quite happy to charge fees that simply cant cover costs.

The renewal fee issue, is the best example of the above. Contrary to popular belief it really only applies to a find only service. Usually this involves carrying out a market appraisal, advertising the property, locating a prospective tenant, carrying out checks to ensure the tenant is suitable and then ensuring the relevant documentation is in place and that the initial monies have been collected. The fee for this may be a % or it may be a flat fee. Once upon a time it would have been a % of the passing rental for the duration that the tenant remained in the property. In some cases the tenants would only remain for six months in which case the agent would likely fail to cover the costs, twelve months would normally mean the agent had earned a good sum and any period over that and the agent was doing well. In most cases the under six month and over twelve month tenancies balanced out.

The problem was that if a letting agent failed to communicate their fees correctly to a Landlord and with most Landlords not reading their terms fully, when a find only tenancy came up for a renewal, the Landlords were entirely unaware that they were about to get a renewal charge. Unaware and mostly angry about it. They felt understandably that no new work had been done by the letting agent and yet they were now expected to pay another fee. In London these fees could be extremely high.

The fact is that the initial set-up required that the Landlord pay a % of the rent as a fee to the Letting agent for as long as the tenant remained in the property. The original fixed term was irrelevant in these calculations, much to the confusion of the landlords. While our opinion is that the Letting Agent has done nothing wrong, they clearly failed to manage expectations at the beginning of the agreement.

Regal are committed to providing a service that meets with our Landlord's approval and our letting offices in Maidstone, Medway, Rochester and Rainham have not charged renewal commissions since 2003. Our find only service attracts a flat fee commission payment at the commencement after which no further charge needs to be paid.

However, and this is an important distinction, if Regal are requested to agree and draw up renewal documentation there is a charge for the associated work. This is termed a memorandum of agreement fee and relates to the work involved with the agreement. It is not a renewal commission fee.

Letting agents in Maidstone 11/03/2010

When Regal first opened lettings in Maidstone, there was little in the way of competition. There were probably no more than five agents of which most of them had been there for over twenty years. While long serving agents are a good thing, they can also become a little stagnant with their offerings and the fees are rarely competitive. In the ten years we have been in the area things have changed enormously and we are proud to be the instrument of those changes.

While lettings in Maidstone was a more established business than similar letting agents in Medway, there were still areas that Regal were quick to improve and innovate on. Our philosophy was that Lettings should be considered a business in it's own right and not one trading off the back of a sales department. However, we also felt that Lettings should not be a business at the exclusion of sales or financial services, without which there would be no Lettings industry. Our initial impact on the market was quite a statement. For the first time colour adverts became a weekly minimum in the local papers. We appeared in the main estate agent portals and we offered investment advice to the thousands of landlords out there looking for sound investment advice. Surveyors came to value our honest approach to pricing and we were not led by Landlords over what exorbitant rentals they wanted to achieve. Equal window space was given to Lettings and whole teams were created around professionally trained lettings staff and not as is often the case simply getting sales staff to do extra work. Regal quickly became the Lettings agent for local and national developers to approach when trying to market their developments to investor Landlords and within a matter of years we became known as the agent which would achieve the best rental, with the best tenants as quickly as possible.

Here in 2010 we feel our legacy continues. There are now over twenty letting agents dealing with the Maidstone area. Advertising and service standards have increased and letting agent charges have dropped. This can be a bad thing, but what is important is that lettings in Maidstone is now a choice based industry and Landlords can move on if they feel they have not received the service excellence they were expecting.

Another marketing idea- Bluewater 12/02/2010

Our long standing Landlords will know that Regal is always looking for new ways to advertise our services.

With our expansion into offering Lettings in Dartford, Gravesend and even some lettings in Ebbsfleet, when we were approached to be the sole letting agent advertising in Bluewater we thought it could be a good way of getting out name out there.

Look out for our adverts on the 30 Plasma screen televisions around the Bluewater complex.

Focus on Rochester 12/02/2010

Rochester Lettings has now been open for just over two years and we thought it time to talk about how things have gone so far.

We secured our premises on High Street, Rochester some four years ago and had to wait to start the refurbishment. But we feel that the results were worth it. Landlords from Strood, Rochester, St Mary's Island have all commented that the office makes quite a statement with 84 properties in our extensive windows, real wood and slate tiled flooring, glass and bronze sculpted desks and buffalo hide guest chairs.

Of course the image is all rather superficial and it is the lettings services that Rochester and Strood needed. There are a number of letting agents in rochester which were in existence prior to our arrival. But Regal brought a well known Medway brand to the area, offering a corporate service but with packages tailor made to Landlord's requirements.

We have always prided ourselves on offering something different to the other agents out there. Not gimmicks, but simply a personable, innovative and current service, which lives up to the initial sales pitch.

This approach has seen us take the Rocheste market by storm. We consistently have double the stock available of our nearest competitors and a very quick turn around of properties.

If you are looking for letting agents in Rochester, Strood, Chatham or St Mary's Island, please pop in and see us.

The dangers of following the percentages 09/02/2010

Regal have been Letting around Maidstone and Medway for more than ten years and have good experience dealing with the rest of Kent.

While we try to remain competitive with our fees, we are conscious that you get what you pay for. The service standards and accountability we offer do not come cheap, or more accurately, cheap, when compared to some of the small independents out there. However, we try to ensure that we are aware of our main competitor's fee structures to ensure we are offering something a little different to entice new clients.

We were a little caught out then with the advent of a new type of fee structure which seems to draw in Landlords despite offering poor value for money in many circumstances. It seems that these agents have realised that often all a Landlord wants to hear is the actual percentage charge. Indeed when we answer the phone to potential landlords the immediate question is mostly "what percentage do you charge for your services". While we try to make sure our fees are not discussed until we have visited the premises in question, in some cases we have to reveal them, without the chance to explain in detail how they are worked out.

In the past these were considered reasonable and we would discuss the relative merits of using Regal, but in the last six months we have begun to hear of agents offering just 6% fully managed. To a Landlord this must sound like wonderful news and to any good agent it sounds worryingly like providing services at a loss. We did some research and soon realised that the low management fee was not the great deal it seemed to be. In fact, the agents were simply charging a substantial fee up front and collecting a lower monthly amount. In a number of cases this meant that Landlords were paying more on the cut price monthly fee overall. To add insult, most Landlords don't realise that once a Letting Agent has received all their monies, there is little incentive for them to continue to provide good service, or more importantly to become involved chasing in rent arrears. Those agents relying on their monthly fees realise that the moment the rent stops, they are no longer being paid, this is a huge incentive to recover the arrears, what then is the incentive for the supposed cut price agent who has already had most of their money up front?

There is nothing new about tactics such as these. What is different is the Landlord's willingness to look and act on the headline percentage figures, rather than to spend some time working out whether the deal really is as good as it sounds.

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