Friday, January 7, 2011

Is it worth having tenants pay a letting fee?

Should you go with a company that charges a letting fee to tenants?

Some companies charge tenants a weeks rent as letting fee, plus 3 weeks bond, plus first rent. Others, like ours, don't ask tenants for a letting fee, but instead get four weeks bond and first rent. From the tenants point of view, it is the same upfront cost. From the landlords point of view, it makes a big difference to how secure their property is. One week extra bond can make a big difference between rectifying any damage or rent arrears, and being out of pocket. Ask your property manager how much bond they charge, and why. Four weeks is the legal maximum - why ask for any less?

We also find better, more financially savy tenants choose to avoid letting fees whereever possible, and they don't mind paying a higher bond because they know they will get it all back at the end of the tenancy as they don't cause damage and they pay their rent on time. Which would you prefer - financially savy, clean, responsible tenants, or the other sort?

Another thing to consider is 'what is in it for the property management company?'. Surely there is the temptation to maximise income by choosing short-term tenants, because they will get their fee again and again and again. Good for the company, not so good for you. Each vacancy costs you money, particularly if you need to sort out issues from bad tenants too.

In our opinion, the best way to get great tenants quickly is to avoid charging them letting fees.

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