Finance News

Call for Letting Agent Commission to be Exposed

Em Morley - September 17, 2013

A property maintenance organisation has appeared to go against its fellow firms by blowing the lid on a letting agent scam that is putting landlords out of pocket.

Aspect, the firm in question, decided to expose the practice after being asked to pay Foxtons 20% commission following the completion of work on landlords’ properties. The firm says that this practice, where agents charge landlords for the cost and then additional commission for firms, is something that needs to be exposed.

No protection

Aspect believe that Government proposals to force letting agents to join an Ombudsman Scheme will not go far enough in protecting the public from similar scams. Managing Director of Aspect, Will Davies, said: “Finally, after years of complaining from consumer groups, letting agents may become regulated by a regulated Ombudsman Scheme, but this will only provide a system of redress after things have gone wrong and not clean up an industry that is rapidly deteriorating into a racket.”[1]

Call for Letting Agent Commission to be Exposed

Call for Letting Agent Commission to be Exposed

 

Using Foxtons as an example, Davies said that his company stopped working for them “when they wanted to increase their commission from 15% to 20%.”

Explaining the scam further, Mr Davies stated: “Basically, letting agents can milk their clients by charging them a fee to manage the property and then they take a commission from the maintenance companies they use so their clients end up paying more than they should on top of the charges they are already paying for the service.”[1]

Decision

The managing director of Aspect went on to say that his company grew tired of the practice, which is unbeknown to most landlords. Mr Davies said: “We took a policy decision that we would not do work for any letting agents that wanted to charge a commission, as we knew their clients weren’t aware of this particular scam and we didn’t want to be associated with that.

“The practice is still rife within that market and will not be within the remit of the proposed Ombudsman Scheme. Letting agents handle billions of pounds of other people’s money every year and the industry should be subject to full regulation.”[1]

Charging maintenance firms is a debated issue among agents. Some state it is just a bung, whereas other agents defend it, saying that it generates regular work for firms.

[1] http://old.lettingagenttoday.co.uk/news_features/Letting-agents-maintenance-scam-should-be-exposed-call