Does the lettings industry need price reform?

With developments in technology allowing some agents to offer landlords a near ‘virtual’ service in return for a much lower lettings fee, Sarah Rushbrook, Managing Director of Rushbrook & Rathbone, has questioned what is being sacrificed within this service package in order to offer such low rates and has the industry reached a point where pricing structures need to be re-evaluated?

Sarah comments:

“Fees will naturally vary from region to region and will depend on the specific services offered, but when a service valued at 15% is being down valued to 5%, larger agencies are being challenged to compete, and yet if they do, the outlays could put them out of business. So where are these savings coming from?”

Some companies argue that advances in technology, such as the use of online portals, has made the process much quicker and cost effective, with less man power required.

Sarah says:

“In this instance, web-hosting fees and other such costs then become applicable and these technologies still have to be supported. What happens when something goes wrong and a landlord requires an individual to not only talk to, but to come and fix the problem?”

Whilst developments in the market and the way agents and management companies work are essential for progression and improvement, traditional agents would argue that their methods have been tried and tested, and they work. Perhaps comparisons need to be drawn between what a traditional agent/property manager offers versus a low cost alternative.

Sarah continues:

“Where are the savings coming from? The point of using an agent is to provide a third party, but my concern is that those who are able to offer such a cut-price service have perhaps not yet reached the level of demand which will put their practices to the test.”

Sarah questions whether the market may eventually move towards a fixed pricing structure as opposed to a percentage, yet this would see those with smaller properties worse off than those with larger ones.

She said:

“Landlords can’t expect to pay a little and get a lot so it is important for landlords and tenants to obtain clear written information about what their service fee includes and whether they are likely to incur any additional charges further down the line. Similarly, the greater the transparency, the less likely the agent will encounter future repercussions.”