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The Great Management Swindle: how letting agents have been ripping off landlords who need tenancy management

For many landlords using OpenRent, especially those who live close to their property, using a traditional management service provided by a high-street letting agent is completely unnecessary.

But some landlords do require a full management service – if they’re strapped for time, or if they live a long way from their rental property.

We’ve taken a deeper look at those traditional high street tenancy management services – and we’re frankly shocked at how little they provide for the price – often up to 20% of your monthly rental amount, every month.

What do they actually provide?

Traditional high street agents often pitch their management service as hassle-free: instead of tenants calling you up when there’s an issue at the property, they call the agent, and the agent (theoretically) gets the issue resolved.

They’ll also help with things like collecting the rent every month (so they can take their fee from it), assisting with the setup of the tenancy, and – to a varying extent – helping close tenancies off.

Past those three things (which OpenRent also offers, for a far lower price) it’s not clear what further value a managing agent adds, other than the handling of maintenance queries from tenants, which is where the catch is.

What’s the catch?

A rental property is, after all, an investment product. A landlord is providing a home for those that need it, but they’re also trying to make a profit. So can turning over up to 20% of your rental income to a managing agent be worth it?

The catch is that while employing a managing agent, you remain responsible for emergency, maintenance, and ongoing costs associated with your rental property.

You’d expect that for that 20%, some of the costs (for example, when a boiler breaks down) would be covered by some kind of insurance product, or the managing agent itself, but no: the landlord remains responsible for those (often expensive) costs, further haemorrhaging your profits.

To rub salt in the wound, a managing agent will be arranging those repairs themselves, and then billing you – meaning you are very likely not going to be getting good value when paying for those repairs.

They’ll also typically be adding their own commission to each of these payments.

To cut a long story short, you can expect to be parting with significantly more of your rental amount than expected, for a service that adds little value. Here at OpenRent, we don’t think that’s fair!

Notable Replies

  1. Avatar for Geoff Geoff says:

    The issue of property management is a very interesting point and has several traps.
    I became a LL in 2011 and at the time thought best to arrange my first property to be managed by a letting agent who stated they would;
    Advertise for a Tenant
    Collect the rent
    Inspect the property on a regular basis
    Check tenant in
    Manage repairs
    What I actually received was;
    A tenant I didn’t have the opportunity to approve.
    Rent that was passed onto me several weeks after it was collected by the agent.
    Repairs that were sanctioned and implemented by the agent without any discussion with me and the first I knew about it was when I received a billed deduction from my rents
    No property inspections.

    When I confronted the Agent and complained I felt that I wasn’t getting good value by using their services and wished them to cease managing my property I was told that for them to stop managing the property the current tenancy would have to be terminated and the tenant would have to be checked out of the property. This would mean I would have to start again finding a new tenant. Very crafty move to deter LL’s terminating agent services.!
    By coincidence the tenant gave notice a few weeks later and moved on their own accord and I was then free to dispense with the Agent .

  2. Agreed 20% is a lot Harry but what’s the minimum? There are lots of lettings agents and they’re all on a scale from bad to good. Also, landlords can vote with their feet! My question to Openrent is: why do you offer a flat fee management charge? I have a two bed rental property-why should I be charged a higher proportion than a six bed HMO for your service? Surely that’s unfair?

  3. Having managed my property for 10 yrs, this time I decided to use an agent. The agent turned up, did a valuation and told me their charges varied from 13% to 22%, depending on level of service. When he emailed me the T&C, I was shocked by how little I got for the cheapest level. For 13%, all he did was advertising, viewings, contract signing and rent collection. For things like inventories, gas EPC, repairs, I would need the premium service at 22%. He admitted himself that I would still have to pay for all repairs. Their brochure stated that they would spend 200 hrs advertising and doing viewings. In the end, I did it all myself via Open Rent. Had 8 viewings in 2 evenings. Must have spent 7-8 hrs in total incl. viewing, checking references via Open Rent, which was painless etc. Tenants have now moved in and assuming they stay 3 years, I have saved myself £12k. We heard in news 2 months ago, someone managed to sue their employer over sex discrimination and was awarded £180k compensation or 1.5 yrs salary. Her job was … estate agent in London…

  4. The only downside to using OpenRent was the realization of how much money I’d wasted on letting agents in the past.

Continue the discussion at community.openrent.co.uk

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This article is not intended to form legal or investment advice. Investments in property are not guaranteed and can decrease in value as well as increase.