Negotiating landlord agreements with rental agents
Discussion
I'm about to become an accidental landlord. It'll be the first time I've ever rented out a property.
I've selected an agent, and they've sent me their contract and T&Cs. As usual, when one side prepares a contract, there are some pretty one-sided obligations and the detail mostly protects the interests of that party (in this case, the letting agent). In my (ex) professional life I had cause to negotiate many contracts with very large values, and a lot of time & cost was chewed up either removing warranty & indemnity clauses, or mirroring them so both sides had similar protection.
My question is: do landlords routinely negotiate the terms in letting agent's contracts, and are these changes typically accepted by the agent (where reasonable)?
As an example, some (paraphrased) clauses in my contract:
"You will keep us reimbursed and indemnified against any [costs] suffered by us when we are acting on your behalf ... For the avoidance of doubt we reserve the right to have work carried out on your behalf and to charge you for that work"
and
"Any other party we instruct ... is done on your behalf. You are the contracting agent and responsible for the payment of that sub-contractors invoices"
I am managing the property myself, but these clauses mean that the agent could charge me for their time conducting viewings, petrol/parking costs, parking fines, and they could even commission work done to the property without my knowledge and expect me to pay.
That doesn't seem at all reasonable to me, and my instinct is to have these terms removed. What do the seasoned landlords do?
I've selected an agent, and they've sent me their contract and T&Cs. As usual, when one side prepares a contract, there are some pretty one-sided obligations and the detail mostly protects the interests of that party (in this case, the letting agent). In my (ex) professional life I had cause to negotiate many contracts with very large values, and a lot of time & cost was chewed up either removing warranty & indemnity clauses, or mirroring them so both sides had similar protection.
My question is: do landlords routinely negotiate the terms in letting agent's contracts, and are these changes typically accepted by the agent (where reasonable)?
As an example, some (paraphrased) clauses in my contract:
"You will keep us reimbursed and indemnified against any [costs] suffered by us when we are acting on your behalf ... For the avoidance of doubt we reserve the right to have work carried out on your behalf and to charge you for that work"
and
"Any other party we instruct ... is done on your behalf. You are the contracting agent and responsible for the payment of that sub-contractors invoices"
I am managing the property myself, but these clauses mean that the agent could charge me for their time conducting viewings, petrol/parking costs, parking fines, and they could even commission work done to the property without my knowledge and expect me to pay.
That doesn't seem at all reasonable to me, and my instinct is to have these terms removed. What do the seasoned landlords do?
If you're managing the property yourself - why do you need an agent? Just for finding tenants?
I think those are fairly standard terms (if the agency is managing the property), and in my opinion not unreasonable. For example, if the tenant has serious problems, it's not unreasonable that the agency can authorise essential work if you don't answer the phone / email for days or weeks.
My agency has a detailed list of "additional" costs - like having to visit the property unexpectedly for some reason etc.
I think those are fairly standard terms (if the agency is managing the property), and in my opinion not unreasonable. For example, if the tenant has serious problems, it's not unreasonable that the agency can authorise essential work if you don't answer the phone / email for days or weeks.
My agency has a detailed list of "additional" costs - like having to visit the property unexpectedly for some reason etc.
I became an accidental landlord 20-odd years ago and decided at the strat that all agents did was to take 8% every month for doing very little.
Given the paucity of decent rental accommodation you shouldn't struggle to get tenants.
If you are reasonably local, it is easier (and cheaper) to find trades to do maintenance and repairs yourself.
Given the paucity of decent rental accommodation you shouldn't struggle to get tenants.
If you are reasonably local, it is easier (and cheaper) to find trades to do maintenance and repairs yourself.
See above...I am managing the property myself. It's local, and I used to live there, I know it inside out and local trades.
The clauses make sense if the agent is managing, but not if they're just finding tenants.
And yes, the agents look like they're not doing much for their 8%...and they've got extra costs for nearly everything they do (I've already negotiated away some of these).
However, the market is at the higher end of the market (6000 sq ft), not sure how I'd go about finding and validating tenants at that level on my own, as a first timer.
The clauses make sense if the agent is managing, but not if they're just finding tenants.
And yes, the agents look like they're not doing much for their 8%...and they've got extra costs for nearly everything they do (I've already negotiated away some of these).
However, the market is at the higher end of the market (6000 sq ft), not sure how I'd go about finding and validating tenants at that level on my own, as a first timer.
If you are only using the letting agent to find a tenant then clauses relating to ongoing services and repairs, etc aren't relevant - can't these be excluded or can a box be ticked that say these do not apply? For tenant finding services, the agents I have used have just used a contract for that service - last one was 7 years ago mind. A % of the first months rent was levied and no reference to anything else.
Perhaps try another agent?
Perhaps try another agent?
I would definitely advise going with the agent the first time around for this part of the process - it gives a layer of safety on both sides and in theory some extra professionalism to the process which could be a good guide for learning how to do it yourself next time.
I wouldn't get bogged down in the finer details of the contract - they are ultimately just covering themselves - it really just comes down to whether you find them reasonable and fair in practise. You haven't that much to lose by trying them out for your first tenants.
I wouldn't get bogged down in the finer details of the contract - they are ultimately just covering themselves - it really just comes down to whether you find them reasonable and fair in practise. You haven't that much to lose by trying them out for your first tenants.
For just finding tenants, I wouldn't sign that either. They need those clauses taken out.
Particularly since, my experience is that letting agents are incompetent, so you don't want to sign something that means you could potentially have to pay for something that they shouldn't do or authorise, but do because they're dumb.
Particularly since, my experience is that letting agents are incompetent, so you don't want to sign something that means you could potentially have to pay for something that they shouldn't do or authorise, but do because they're dumb.
Ok thanks chaps. The agent has an electronic form for the contract that only allows you to sign it - no changes. Obviously they’re trying to bounce people into just accepting their one sided contract by having a constraining service.
I’ll convert it all to a document with tracked changes and send it back with my changes.
I’ll convert it all to a document with tracked changes and send it back with my changes.
PhilboSE said:
Ok thanks chaps. The agent has an electronic form for the contract that only allows you to sign it - no changes. Obviously they’re trying to bounce people into just accepting their one sided contract by having a constraining service.
I’ll convert it all to a document with tracked changes and send it back with my changes.
You just need to tell them you are only wanting a tenant finding service.I’ll convert it all to a document with tracked changes and send it back with my changes.
This is normally a fixed fee service with no ongoing costs or tie-ins.
Ussrcossack said:
Do it yourself
You took the words out of my mouth.I rented a house out in London and after speaking to agents, realised that if the tenant refused to leave, or didn't pay, I'd be the one with the responsibility to get it sorted, and I thought, "why the f
k would I give them 40% and still have no peace of mind?". So I self let.Years later, as a renter, I discovered that the "vetting" process the agency does is utter tosh. They just want their commission and the deal done. They let any bugger in. THAT is what I thought I'd be paying for as a landlord .
As a landlord I did it whilst living in Italy, with a London house. Its that simple if you have at least one person to hand locally that will arrange a trade/help for a reasonable cost. I just could not find ANY value in using an agent. Obviously if you can't or won't contact a plumber or whatever use an agent, otherwise, seriously, do it yourself. They add nothing in my limited experience.
Edited by Griffith4ever on Thursday 30th January 15:47
PhilboSE said:
Ok thanks chaps. The agent has an electronic form for the contract that only allows you to sign it - no changes. Obviously they’re trying to bounce people into just accepting their one sided contract by having a constraining service.
Lol. I remember one supplier trying something similar by putting a bunch of items in a "terms of business" appendix. I marked it up and when they replied that "this section is standard, we can't change them" I asked them to mark up what they wanted to keep in the body of the contract, as I was happy to delete the appendix. I got my amendments
Griffith4ever said:
Years later, as a renter, I discovered that the "vetting" process the agency does is utter tosh. They just want their commission and the deal done. They let any bugger in. THAT is what I thought I'd be paying for as a landlord .
To be fair, my agents - who overall have been awful - do appear to do the vetting quite well. I had a couple of offers on my house. After checks, I was advised not to rent to the couple I chose because they were both self employed, and one had only been so for less than a year - so the agency were not comfortable that they had enough proof of being able to pay the rent.nikaiyo2 said:
Use agents to fully manage or not at all. Dont EVER use an agent to "tenant find," you will get all the tenants that they dont want to deal with .
My experience of using an agent to provide a tenant only service on three BTL apartments suggests otherwise. I do make sure the tenants are properly vetted but I've never once had a problem in the seven or so years I've been letting property.Right, so I've negotiated away most of the stuff that doesn't apply. Agent's excuse was that "it's a standard contract including managed services".
What's left now is the fact that the Agent still wants their commission paying even if the tenant stops paying rent and claims this is "industry standard". Is it?
There's also a bunch of warranties and indemnities they demand from me for their protection, but they refuse to mirror these clauses in my favour. Which means they hold me to a higher standard of veracity than they hold themselves to, which just gets my principles jangling. "You warrant that information you provide is true and indemnify us for all costs etc in the event of it not being true", that sort of thing.
What's left now is the fact that the Agent still wants their commission paying even if the tenant stops paying rent and claims this is "industry standard". Is it?
There's also a bunch of warranties and indemnities they demand from me for their protection, but they refuse to mirror these clauses in my favour. Which means they hold me to a higher standard of veracity than they hold themselves to, which just gets my principles jangling. "You warrant that information you provide is true and indemnify us for all costs etc in the event of it not being true", that sort of thing.
PhilboSE said:
What's left now is the fact that the Agent still wants their commission paying even if the tenant stops paying rent and claims this is "industry standard". Is it?
I just checked mine, and it does appear that I still have to pay them commission even if the tenant stops paying the rent. Mine is managed though, and I suppose "management" of the property would still be taking place even if the tenant was living there rent free (in theory anyway)The term "Accidental Landlord" is an overused term that usually doesn't apply in 90% of cases.
The one term I would put a line through and initial is their renewal fees. You're using a tenant find service, they are only doing the job once and charge 6 to 10% of the annual rent for doing so. Quite why they would want that commission again at the yearly anniversary is still a mystery to me and many try it. Line through it, initial it, and get them to initial it also. That fee also needs VAT adding to it.
Ensure you meet the tenant in person prior to signing them up.
For a first time landlord I would always advise to use an agent to sort the tenancy, just watch and learn because you should be doing it next time.
The one term I would put a line through and initial is their renewal fees. You're using a tenant find service, they are only doing the job once and charge 6 to 10% of the annual rent for doing so. Quite why they would want that commission again at the yearly anniversary is still a mystery to me and many try it. Line through it, initial it, and get them to initial it also. That fee also needs VAT adding to it.
Ensure you meet the tenant in person prior to signing them up.
For a first time landlord I would always advise to use an agent to sort the tenancy, just watch and learn because you should be doing it next time.
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