At a very base level, there is a lot of administration involved in creating a tenancy, so, to a degree, an administration fee might be fair. There are also actual costs involved in creating a tenancy. Obtaining references costs money, Money Laundering procedure costs money, Right to Rent checks cost money. It costs money to conduct a check-in as part of an inventory, and it also costs to print anything associated with the preceding, unless this is all done online or digitally, but even if it is digital it costs money to be digital. And phone calls and emails, they cost money too.
What doesn’t cost money is creating a tenancy agreement. Sure we’ve had to pay for a tenancy agreement template, or even gone to the additional expense of creating a bespoke tenancy agreement, but divided over numerous tenancies that cost is minimal. Pence.
We’re sure that many agencies will square their excessive fees not with actual physical pounds and pence cost, but with human capital cost: time. But surely time is what the client is paying the agent for, that and expertise.
We’re equally as sure that many agencies just see their administration fees as a separate income stream, in addition to the letting fees paid by landlords, and perhaps the mark-up on inventories, check-ins and check-outs.
When we set up Proper Local we thought long and hard about tenant administration fees, but what took the time was not how much can we charge? But, how little can we charge?
And the answer to that was £50 per applicant, plus the cost of the check-in (without a mark-up of course).
To give you an idea how that compares to another agent in Canary Wharf, who will remain nameless, let’s look at an example. All figures shown include VAT:
Two bedroom furnished apartment with two occupants, the initial contract is for one year, but the same tenants renew for a second year:
Administration Fee: £600.00
Renewal Fee: £108.00
End of tenancy check out: £156.00
Administration Fee: £100.00
Renewal Fee: £0.00
Start of tenancy check in: £126.00
A difference of £638, or £319 per applicant.
So, comparatively, we are not only cheaper, but much, much cheaper. And we’ll go one stage further, we believe what we charge is not only fair, but comparatively accurate with what it actually costs us to administrate a tenancy.
And, for those that are interested, this is exactly the same process that we went through when we set the fees payable by our landlords. Not how much can we charge? But, how little can we charge?
What we are not is a charity. We are a business, and we are unashamed to say we are in business to make a profit. We just want to make that profit fairly.