Renting Scam 4 – Men in Suits

When you visit an agent try not to be carried away with their stylish office, this is not necessarily a sign of probity. In the previous articles I talked about the importance of accountability, & the signs of a normal transaction – the 3 Ps of Property might be said to be Presence, Premises, Phone. Well – the reverse applies also – beware a triumph of Presentation. By now you may well be thinking – what can possibly be wrong with a reputable firm, an expensive office in a prime location, & a fine company car to chauffer me around the very finest properties? The answer is requires a little thought & understanding of the business model that supports this sales strategy.

 

An agent’s life is a difficult one, they sit between Landlord & Tenant with nothing to survive on but their wit, blamed by both for the failing of the other, & very often reviled for no reason of their making. You could be forgiven for thinking that an Agent’s role is to sell property to tenants – in fact that is of secondary consideration. In the London market there is a surfeit of both tenants & agents, & the 1st objective of any agent will be to convince landlords that they are best served registering their properties with that particular agency. This means promising a higher rent than anyone else can achieve – generally promising “Company Lets”. The more luxurious the office, car, & suit, the more believable the promise of premium rents.

 

The same luxurious office, car, & suit works to impress a prospective tenant of the value of the flats that they have on their books, but now the business model is slightly different. The competition is other agents, & the idea is to keep the prospective tenant viewing your flats, to keep their choice to one of your landlords – any one. The ideal way of achieving this is to drive them around from flat to flat & not let them out of the car flat or office until a tenancy agreement has been signed. They don’t care which flat you sign for – but they do care that you sign for one of them!

 

So what’s the Scam? Well – there is nothing actually illegal, but you do need to beware that you don’t end up paying far more than you need have. Your chauffer come property consultant is on commission, & this means that it is in his/her interest to see you spend as much money as possible. Agents charge Landlords from 10+% for finding a tenant to 17% for a fully managed letting (I’ve included the VAT as it isn’t an output for residential letting) – & a big chunk of that will go to the negotiator, so they will be trying to negotiate a managed letting, & also a longer contract than you might have thought of, locking you into the higher rent that they have sold you on. Don’t kid yourself – that commission is coming straight out of your rent!

 

It’s not a scam in the sense of fraud, but nevertheless I know of a tenant who ended up spending £3000 to buy himself out of a 24 month contract that he should never have been signed up for by a reputable agent. At Pimlico Flats we offer 6 month contracts & allow the tenant to stay as long as they wish – we know that they will want to stay with us voluntarily, so we don’t need to contract tenants to longer lettings.