If you use a letting agent, then you’re probably charged a ridiculous fee every time your tenant renews. This can range from 6% – 12% of the annual rental income. Winkworth currently advertises a 9.6% fee for the 1st renewal and 8.4% for the 2nd (what a generous reduction!). From my experience, this has meant paying over 1 month’s rent every time a tenant has renewed. This translates into serious erosion of your profits. Needless to say, these letting agent fees for landlords are extremely unpopular.
What are letting agent renewal fees?
Since the 1st of June 2019, nearly all tenant fees were banned but this hasn’t stopped letting agents ripping off landlords. Landlord renewal fees are an admin fee letting agents charge for the renewal of a tenancy with your current tenant. Landlords are paying a letting agent to email a tenancy agreement with new dates for tenants to sign (close to no effort).
How landlords can stop paying renewal fees
I wish I’d thought of this several years ago when I was still using a letting agent. It’s this simple: make sure your letting agent doesn’t renew the tenancy and stipulate that you’re happy for the tenancy to become a statutory periodic tenancy. This just means it becomes a rolling month-to-month contract and therefore no renewal fee applies. It’s rarely the tenant reaching out for the renewal anyway, it’s always the letting agent pushing because of the fee. Moreover, your tenant might like the flexibility of a periodic tenancy. If your tenant doesn’t know you then they *might* be wary of moving onto a rolling contract. This is another good reason to do the property management yourself so you can alleviate any concerns.
Two more ways to stop paying
There are two other ways you can stop paying letting agent renewal fees as a landlord:
- Choose a letting agent that doesn’t charge a tenancy renewal fee. Although the majority do charge a fee, not all letting agents do, but I’ve found these agents generally charge a larger “set up fee” so often you pay more in the first year.
- Use an online letting agent such as OpentRent.
Letting agent renewal fees are a rip-off fee for landlords. Letting agents can no longer rip-off tenants so they concentrate their efforts on landlords. The days of the high-street letting agent are numbered after too many years of terrible service and shady practices. Do what you can and accelerate their demise by not paying these ridiculous fees.
Foxtons’ unfair landlord fees are banned: