Research from a free-to-list residential student lettings platform has recently highlighted the extent to which thousands of letting agents across the UK’s high street are profiting from increasing rents.
StudentTenant.com say in the report that the high street agents’ “antiquated model charging a high commission to let a property, (the key deterrent for a number of landlords in the first place) is still allowing them to pocket thousands for no extra work.”
Over the last year, average property rental costs have gone up to £901 per month, a 3% increase in 12 months and therefore also higher than the current rate of inflation.
Whilst England’s North East has an average rent of £530 per month, London’s cheapest borough, Croydon, shows an impressive median of £1,170 monthly. The most expensive borough in the UK is Lambeth where the average rental cost per month is now £2,874.
This rise in rental returns means letting agents have seen an increase in earning, too. The research by StudentTenant estimates the “typical rental agency fee at 12.7% of the total value of each 12-month assured short-hold tenancy agreement and which means that the standard fee across the UK is more than £1,300.”
Danielle Cullen, Managing Director of StudentTenant.com, says, “It’s really hard to justify the amount that a typical high street letting agent charges in the first place, let alone above inflation increases in most parts of the country.”
There’s a significant shortage of good rental stock which means higher rents and yields, which can be great news for landlords, but not so great for tenants.”
“But when much of that gain is eroded by greedy agents taking a fatter and fatter chunk of it, 12.7% of what would otherwise be the landlord’s income in effect, then buy-to-let investors might want to think twice about resorting to an old fashioned high street based rental firm”