Margins matter when you’re a landlord and keeping an eye on your costs as well as your income is an essential part of any successful business strategy.

But what about savings that cost you more later on? Just as buying cheap taps or appliances inevitably means paying for replacements or repairs before too long, cheap letting fees can equally backfire.

Cheap fees are never sold as coming with a reduction in service or protection, and many of the hidden costs of bargain rates only reveal themselves when it’s too late. The usual areas are:

• Inadequate tenancy setup
  
  
• Flawed rental contracts
  
  
• Small print surprises
  
  
• Lax legal compliance

• Substandard communication
  
  

Your choice of letting agent affects you and your property’s legal and financial well-being, so read on for tips on spotting these rental red flags before you make any decisions.

INADEQUATE TENANCY SETUP

Unfortunately, cheap letting fees can involve corner cutting from before a tenancy even begins, with far-reaching consequences that dwarf the supposed savings. Here are some things to watch out for.

• Credit and ID checks aren’t enough. It’s vital to get work and salary confirmation, a landlord reference (preferably followed up by phone), and 3+ months of bank statements to scan.

• A two-page written inventory with no photography or video to corroborate the text won’t have the length and detail you need to stand a chance of winning a dispute.
  
• Off-the-shelf template tenancy agreements that aren’t tailored to the specifics of your property invite multiple problems later on – more details on that in the next section.

Tip: Take a look at the tips in our Rigorous Referencing blog and ask every agent to explain their tenancy setup process and timelines to see if it has any holes that may leave you vulnerable.

FLAWED RENTAL CONTRACTS

The tenancy agreement for your rental property needs to be legally watertight and finely tuned to your property, but cheap  letting fees can come with generic templates, with typical shortfalls including:

• Failure to clarify that tenants are responsible for defrosting the fridge, replacing cooker hood filters, and any costs from clearing drains from pouring fat and oil down them.
  
  
• No specific clauses around expected maintenance by tenants of outdoor areas like gardens and terraces, from mowing lawns to jet-washing patios and decking.
  
  
• A lack of necessary extra clauses for tenants with children or pets around what constitutes wear and tear, like scuffs, and what counts as damage, like chew marks or crayon drawings.

Tip: Ask each agent you speak to for an example of their standard tenancy agreement and how they tailor them. A correctly drafted contract could save you thousands of pounds if you hit a dispute.

SMALL PRINT SURPRISES

Many landlords get caught off guard when their cheap letting fees turn out to exclude services they thought were standard or come with additional costs for providing them. The common culprits are:

• Maintenance & repairs: We lose count of how often we hear agents charging extra on top of their management fee if they need to arrange maintenance or repairs!
  
  
• Mid-tenancy inspections: Imagine employing an agent to manage your property and then finding out you need to pay them more money to check up on it.
  
  
• Income and performance reviews: You’d think that managing your property would include tips on maintaining and improving its profitability, but that’s sadly not always the case.
  
  

Tip: Scrutinise agency agreements in detail. If they’re built on the illusion of cheap fees while quietly shifting responsibility to you or adding extra costs, you’re not saving — you’re subsidising.

LAX LEGAL COMPLIANCE

You don’t need us to tell you how much lettings law has changed, or that the whole point of a managing agent is to take the complexities of staying legally compliant entirely off your hands.

Sadly, that’s not always the case, and some of the tales we hear from landlords switching to us include:

• Protecting a deposit late, or indeed not at all. This leaves you at risk of repayment orders of up to three months of the deposit amount, not to mention problems regaining possession.
  
  
• Failing to supply safety certificates to a tenant before the tenancy starts. This exposes you to fines of £6,000 per certificate and a block on serving notice.

• Not addressing repairs when they’re reported and allowing homes to deteriorate and fall short of legal living standards – more on the repercussions of that in the next section.

Tip: Check agents’ websites for membership of a client money protection scheme – no badge means they’re already liable for a fine, so if they’re not protecting themselves, how does that bode for you?

⁠SUBSTANDARD COMMUNICATION

We really enjoy updating our landlord clients and keeping them in the loop, but it never fails to amaze us how some agents seem to specialise in avoiding contact.

• We’ve met plenty of landlords who had no idea their tenant was reporting problems to the managing agent and getting absolutely no response.
  
  
• When faced with being ignored, tenants are more likely to leave sooner than they might have, creating more costs for the landlord in finding replacements.
  
  
• When repairs are ignored, they get worse and cost more to fix, and guess who pays for that – perhaps with that extra maintenance supplement based on a percentage of the bill.

Tip: Get each agent’s service standards in writing for staying in touch and responding to problems. If they fall short of their written ps, you’ll have more leverage to get out of your contract.

Does your rental property deserve better?

You’re right to question the value you get from letting and managing agents, and that emphasis should be focused on the value, confidence and protection each agent provides

We’d love to show you how we keep your best interests at heart, so if you own a rental property in send us a DM to arrange a meeting to discuss treating your business right.