Letting Agents Make a Secret Profit

A large proportion of Letting Agents are duping landlords. They are doing so by making a secret profit.

What is a secret profit?

A secret profit in the letting industry is where an agent adds money on top of a maintenance job. The agent pays the contractor on behalf of the landlord(as part of their management service) and then pockets the extra money.

Here is an example:

An annual gas safety certificate costs £60 including vat.

The letting agent charges the landlord £90 including vat for the gas safety certificate. They have bumped the price up by £30. The contractor has been paid £60. The agent has pocketed £30!

In most circumstances, the landlord is none the wiser. It is a very sharp and in our view dishonest practice. In the 11 and half years Findahome Online Lettings have been operating we have never made a secret profit, nor ever will.

What's wrong with letting agents make a secret profit? Why do they do it? What can a landlord do to avoid it?

Letting agents should not charge their landlords any more for services than the cost. Landlords are paying the agent on a monthly basis to manage their properties. Some landlords will have multiple properties. Agents are making enough from this. Surely a fully managed letting service should include organising an annual gas check?!

The tenant application fee ban in 2019 has affected letting agents’ incomes considerably. An average tenant application fee was around £200. In London and the South East tenants were paying in the region of £500. With letting agents incomes down many have looked for other ways to generate revenue. We are seeing more and more agents make a secret profit.

Any letting agent making a secret profit should declare it in their terms and conditions. Landlords must ensure that they read and understand the terms and conditions before instructing a letting agent. Prior to engaging with a letting agent, we would advise asking the agent if they make a secret profit. They will give you the facts you need if they are honest and transparent. We would advise any landlords who suspect their agent is making a secret profit to contact contractors directly. Contractors are not keen on this practice either. They get exactly the same money for doing the job. They may lose money long term too. A landlord will not want to use them if they are too expensive. With the money added on by the letting agent, the contractor may not look good value!

Finally, it is easily done if you are a landlord and wish to swap letting agents. We offer a FREE swap-over service. For more information on our letting services, please contact our Managing Director and Head of Lettings, Tom Williams on 01782 318067. Or call in and see us at 80 Victoria Road, Fenton, Stoke-on-Trent, ST4 2JX.