Tenants Fees in Ireland

Tenants Fees

Do you charge your tenants fees or administration fees? That is the question I asked letting agents across Ireland over the last couple of weeks. 

So why did I ask it?

With the rental industry seeing huge demand at the moment most letting agents cannot get enough properties to let out. Most letting agents I’m speaking with on a daily basis are seeing increased costs in running their letting agency both legally and professionally. So with a reduced amount of vacant rental stock to let and increased overheads some letting agents are starting to struggle financially.

 

Letting Agents Survey Results-

Tenants fees survey

 

 

Is it Legal to charge tenants fees in Ireland?

Well if you look at Section 90 of the Property Services (Regulation) Act 2011 it is not-
90.—(1) Subject to subsection (2), any provision (whether express
or implied) in an agreement in respect of the sale or letting of land
whereby the purchaser or tenant, as the case may be, is required to
pay or otherwise bear the cost of the licensee’s fees or expenses in
respect of the sale or letting, as the case may be, shall be void, and
any moneys paid pursuant to such a provision shall be recoverable
as a simple contract debt in a court of competent jurisdiction.

(2) Nothing in subsection (1) shall affect the liability of a person
to pay fees or expenses to a licensee in respect of the acquisition of
any land where the licensee has been retained by the person to
acquire such land and does not also act, in respect of such acquisition,
on behalf of the person from whom the land is acquired.

 

So from reading the relevant sections in the Property Services (Regulation) Act 2011 charging a tenant an administration fee would be illegal.

Property services regulator authority logo

Prospects not Tenants

It however does not state if charging a potential tenant would be illegal i.e a person who views a property but fails to proceed into a lease.

A PSR representative quotes As you may know, the interpretation of the law is a matter for the Courts. I am not aware of any Court action in relation to alleged contraventions of section 90 of the Act so cannot give you references to same. Section 90 refers to tenants (not prospective tenants) and it would be a matter for the Courts to interpret if prospective tenants should have the same rights.”

 

Charging tenants to view a property

You currently show potential tenants a lot of property with only a small percentage converting into becoming a tenant. Depending on your location some tenants may only view one property with you, so why would a tenant pay to view a property? Unless they are desperate I cannot see this ever happening and would see it as a disastrous business decision.

Receiving an Offer

This is an area where I personally feel along with other agents that there is the ability to charge an administration fee. This is how it works in other markets such as in the UK. If at any stage the tenant pulls out or has given misleading or false information about his/her references that the administration fee is charged. However if the tenant proceeds to sign a lease the fee be refunded in full.

Agent’s comments on this

“I think the fee could be refunded to the tenant if he/she takes a property from the agent. If however he/she is looking through various apartments with several agents then the fee should be retained for administration charges”

“In some respects it is a business crime not to charge tenants fees, especially if they walk away for he deal before signing, as can happen. Absolutely the norm in the UK for the tenants to be charged admin/credit check fees. Also very interesting that many tenants coming into Dublin from overseas expect they will be charged? I’m asked the question regularly! Would love to see it become standard industry practice.”

 

Tenants administration fee

Charging Prospects

There is also the argument that by charging a tenant you are double charging the landlord.

Agent’s comments on this

“The landlord is king and pays a fee to find a tenant, charging a tenant could be the difference between an empty property or an occupied property as some tenant may avoid the agency solely because of this if I was the paying landlord I would not be happy and would seek another agency.”

“I feel that we get our fees from the Landlord so there is no reason to charge tenants as well. There are enough charges without adding“

Mid lease expenses

When managing some properties having fees in place will help with the overall costs associated with managing the property. These fees can be avoided however for example where a tenant consistently lodges rent in cash into an office or bank then a charge is incurred. Most banks charge approx .5% on all cash deposits so for the average agent this is 10% of your fee gone on bank charges.

Agent’s comments on this

“The reason we started was because Bank Charges are crazy and tenants even though they are asked to never transfer the funds but bring in the deposits/rents into office. This is causing higher bank charges and we have passed it on as we cannot afford to carry this cost. It is a small cost €30 for them to bare and to this date we have never received a negative comment.”

Check out these blogs on rent collection “costs of lodging rents” & “How to collect rent

“I do have in my lease a 300.00 charge held from the deposit should the tenant break their lease which is very effective. It covers re letting costs as well as PRTB charge etc.”

Tenants membership fee
Membership Fees

Even though the wording of the act states that you cannot pass on any fees to tenants some agencies charge fees. These agents call these fees “membership fees

Agents Comments on this

“We charge this for each tenancy and at the renewal stages also now. It is an administration charge or a membership charge as such. This is only charged to residential tenants. These charges pay for reference checks, changing utilities, bank fees etc all the way to providing a character reference at the end of the tenancy.”

The Results 

Well its clear to see there is a huge appetite from agents to start to charge tenants fees. 69% of letting agents who answered this survey are either planning to or willing to if other agents start to charge.

Analysis

So by charging prospective tenants at any point prior to them actually becoming a tenant is from my understanding the only way to work inside the act. Charging tenants for optional expenses incurred though out the lease term once highlighted within the lease may be the only other option as highlighted with banking fees above.

I am only opening the debate on whether letting agents should charge a fee or not, I am not in a position to legally advise any letting agent. If you are looking to increase your revenue but not looking to charge tenants fees here is a list of 30 free ways to market to landlords

Your Thoughts

What is your thoughts on tenants fees in Ireland. Are you a letting agent, landlord or a tenant who would like to share your opinion and open a discussion on this important subject.

 

Letting agency business model changing in Ireland

With fewer properties on the rental market and more Estate Agents offering a letting service, letting agents will need to diversify to retain previous years’ revenues.

Letting agency business model changing

According to the the latest DAFT report issued on the 11th of February, the availability of Rental property in the capital is at a 6 year low and 4 years nationally. In fact there is only a 1/4 of the amount of properties listed today  that were listed back in 2009 in the capital.

letting-agency-business-model-changing

With the average tenancy in place at 19 months the tenancy churn is not there for agents to make fees more regularly. That is unless an agent gets a property to full management where they can take a fee every month. The Rentview team speak with letting agents on a daily basis. These agents are looking at property and rent management as a way of increasing revenue and being able to forecast revenue month on month. Something that they are not able to do in a let-only model.

Currently there are just over 2000 properties marketed in Dublin and a pool of approx 200 agencies. That’s an average of only 10 units per agency. This does not take into effect the number of ghost units being advertised also (units which are let agreed or marketed with a number of agents) … and they say the Taxi industry is overcrowded!

recession-business-model-changing

So what else are letting agents doing to increase revenue? Well they are being creative and flexible as to what their landlords require. Some are offering complete inventories, midterm inspections, lease renewals. In fact, we even came across a few agents who are offering marketing services, to save the landlord the work of marketing properties on online portals. So as we can see, many are offering bespoke services to suit a landlord rather than just a let-only or a let and manage service.

How is your letting agency standing out from the crowd and keeping solid revenue coming in? Is your letting agency business model changing? You may also be interested on our blog posting finding landlords.

by Andreas Riha

Letting Agents Software

Letting industry challenges

What is the biggest challenge in the letting industry today?

This is a question I ask letting agents regularly, and it seems that winning new instructions is one of the biggest letting industry challenges out there at the moment. With rental properties being in such high demand there has never been a better time to rent property. With the average tenancy term increased and more people renting – it’s simply supply and demand. So what can letting agents do to increase their rental listings?

Where do most of your tenants find your listings at the moment?

Letting industry shop window

letting-industry

The internet is the majority of letting agents’ biggest shop window and a lot of the time it is better than any shop window on the high street. The problem is that many agents neglect their own website thinking that just because it is live it will get them new listings from landlords. However, the internet is a very busy high street and if you’re not managing your website correctly the competition is going to attract the lion’s share.

I mean, you would not open a letting agency and not place a sign over the door or advertise the fact that you are a letting agency, would you? I would not have thought so, but this is what some agencies are doing on the internet. So how can you find out how easy you are to find on the internet for potential landlords, and tenants for that matter? Begin some search engine research today! SEO  or search engine optimization is important for all businesses, including those within the letting industry, who have an online presence nowadays. For more information on SEO, see our blogs below.

letting-industry

Blogs which may interest you on this topic

Find out more about letting agency seo

How to win customers through a Google adwords advertising campaign

by Andreas Riha

 

Rentview are finalists in the Irish Webawards 2012

Finalist for the 2012 Realex Web Awards

The Rentview team are delighted to be a finalist in the Irish Web Awards under category of Best New Web Application. The finals will take place in The Mansion House Dublin on November 1st. Best of luck to all the finalists on the night and we look forward to meeting you all on the night. #webawards12

Lettings Management Industry- a PEST Analysis

Some of you will have read the article last week on business strategy for letting and estate agents in the Lettings Management Industry, which received a good response, so I am continuing in a similar theme this week. Obviously we discussed what strategies agencies can take to the market, but before you get anywhere close to deciding on your strategy towards achieving a competitive advantage, you have to first do some analysis. Analysing the situation you are in as an agency will involve:

  1.  internal analysis (factors unique to the agency like routines, capabilities, strengths and weaknesses) and
  2. external analysis which is where I am going to start today.

lettings-management-industry-PEST-ANALYSIS

So external analysis involves factors outside of the agency’s control and common tools business analysts use are; PEST analysis (political, economic , social and technology factors), Driving forces, Key success factors, Industry Life Cycle and Industry forces. One of the most prominent and more important tool is the PEST analysis, which many of you will be already familiar with. So here we go:

Political: This is where business activity in the industry is restricted due to either laws or interest groups. The first thing that comes to mind is the new property services regulatory authority. In a previous blog, we learned that several Irish agencies had to re-apply for their licences after failing to have the correct information prepared for the body. There is also new regulation set to be brought in next year on the monitoring of monies in client accounts.

Economic: These factors are mainly to do with the purchasing power and spending patterns in the market. The question a company usually asks themselves here is are people willing to spend on the services provided in the industry. In Ireland this, in my opinion, is a ‘no’ to the vast majority of landlords, tenants, home-sellers and any other customers of letting or estate agents. This is down to one simple factor of people not having as much money to spend anymore. The one area I might say the consumer is willing to spend on is the sale of a home, as it may be urgent or important to get the highest price obviously.

lettings-management-industry

What every agency in the Lettings Management Industry wants, a bunch of happy tenants, landlords & homeowners.

Social : Social factors affecting the industry include the population trends, family size, diversity and education. So thanks to Indexmundi.com, I gathered some stats on some of the key trends I think are effecting the industry currently. Things are good and bad, our population is still rising and currently stands at 4.72 Million, up from 4.67 last year. Net Migration rate is down from 4.5 to 1.6 per thousand. This means there is less and less people coming to Ireland. And lastly the birth rate is 15.8/1000 which again is down from 16.5 in 2010. In my opinion, these stats are not good for the industry.

Technological :  Technology is the final piece to this puzzle we have been trying to solve. Currently I would think technology is actually affecting areas of the property services industry such as management, sales and lettings, marketing and customer relations. As we become more and more fond of our devices and technologies, agencies must adapt to suit their market. This may involve having a digital strategy in marketing their services or a C.R.M system to manage their clients.

This analysis applies to the Lettings Management Industry specifically, but it can be applied to any business.

That’s it for this week’s business strategy blog. Thanks for reading!

by Rentview

Property News Round Up

Another week and another bucket load of property news is making it’s way across the internet and into the property services community. Rentview bring you the top stories so far this week.

Property news

Monday 8th of October : The first nugget coming our way on Monday was the interesting news of a large influx in premium properties (worth 1 Million plus) going up for sale on the French property market. According to the Mail Online  the reason for the large increase in properties on the market is the proposed new higher tax of 75% for the wealthy people in France.

Another interesting story on Monday was the the upcoming legal changes on the sale of property in Ireland set to come in from January 2013. The Law society of Ireland chaired by a former exec of the property registration authority accessed the current regulation on the sale of property from 2010.

property-news

Tuesday 9TH October 2012:  Unusual news and quite horrifying for some as there were explosives going off  at a NAMA housing estate. There were two separate incidents, with methane and carbon monoxide causing damage to some of the properties in the estate, but luckily no parties were injured.

Tuesday we also got some good feedback from an interesting photo we posted to our Facebook via broadsheet highlighting a potential rental boom. The pic which was taken from a showing at a three bed property in Ranelagh last week showed a crowd of property-hungry people queuing up to view the cottage. Just the area or is this happening throughout Ireland?

Don’t forget to suggest any other property news or areas you may wish us to cover!

Thanks for reading!

NALS Conference

NALS-conference-2012

As some of you may know, the backbone of the Rentview team are currently over in London to attend the Annual NALS Conference where they are exhibiting our letting agency software to the masses.  The conference is one of the most popular of its kind and our own Andreas has been live tweeting some great nuggets of information throughout the day. So here are the best bits coming from the Annual NALS conference:

  • As expected the Rental sector is set to continue its growth as the new generation cannot afford to become first time buyers in the market
  • The average age of first time buyers in London is four more years (36<40) than that of the rest of the UK
  • What are the leading traits of successful and competent agents in the UK? Highly responsive, customer-focused and ethical
  • Green deal is set to keep utility costs lower for tenants and agents
  • The private rented sector is a whopping 16.5% of housing stock and this is an 84% increase compared to the same time in 2001
  • Students in the UK are being severely affected becoming first time buyers going forward due to the national student debt
  • What’s the one area in the mortgage market that’s growing? Buy-to-let properties, due the growth in the rental sector across the UK
  • Apparently 30% of peoples take home pay is going on rent! And almost 70% of London’s renters expect a rise in rent next year!
  • Increase the marketability of your property through using an interior photo as the cover photo rather than an outside one.

If you are based in the UK what are your thoughts on all this relevant information and if you are an Irish based agency do you see the same happening here? Let us know through our Facebook and or the Twitter page, we appreciate the comments!

by Rentview

Letting agent services

Letting agency Business Model

Rentview Featured on Siliconrepublic.ie

image

OK so a little late sharing this with you, had this in drafts to go be published Friday but Rentview was featured on major Tech news site siliconrepublic.ie  last week. The Irish website featured an article on the new Rentview Tenant Profile service we offer to tenants. The full article including quotes from Rentview co-founder Colin Napper is below, please share this with your friends to help us out:

Irish online rent and property management start-up Rentview has just soft launched a new service for renters so they can build up a a free online tenant profile for landlords and agents.

Rentview itself was co-founded in 2010 as a rent and property management cloud-based platform for estate and letting agencies. The site’s co-founders are Andreas Riha and Colin Napper, both previous owners of a letting agency in Dublin. 

Napper said they soft launched the servicethis week to tie in with students looking for properties, as the new college year kicks off.

image

“The purpose is to allow people to build a profile, upload references and share them with landlords and agents to get rentals more quickly.”

He said the service also includes an inventory app that works on the iPhone and will shortly be working on Android devices.

“The inventory app will allow people to document the condition of a rental property once they have received the rental offer from an agency. This means they can protect their deposit.”

Napper said that via this app people can log photos and they can also speak into their phone to dictate their voice notes and create a report on what the property looked like when they moved in. “They can print that report off and get it signed by the landlord. Then, when they are moving out tenants can do a moving out report.”

He said tenants can make their overall profile private and allow agents and landlords to access it by sharing their URL and a unique password.

According to Napper, rentals in Ireland are up 47pc since 2007, meaning there is strong competition for the right property.

He said the aim is to launch the tenant profile service in other markets over the coming months.


Click the share buttons above the article to help us raise awareness of this super new service for tenants. Thanks guys and this week we are looking to push out some interesting and helpful content to the property community, Cormac.

Why landlords should choose a letting & management agent

Property Management & Lettings Special- Article taken from Irishexaminer.com 

The rental market in Ireland is proving itself to be one that is the antithesis of boom/bust scenario that we have witnessed in the property sales market of the 1990s/2000s. Instead, it’s a market that has been built up solidly and that is continuing to grow but at a modest rate and without any spikes or troughs in values. 

One agent with over 20 years of experience in the Cork city market puts it thus: “We’re finding that there’s good demand for rental properties, particularly for good-quality property. I don’t know if rental values are on the up; they’re remaining steady in an environment of rising demand.”

“The investor is definitely back in the market, we’re noticing,” says another Cork city agent, who says that yields of between 9% and 16% are too good for those who have money to invest to simply ignore.

An entirely new beast

The property market in Munster and elsewhere is simply not the same as it was and today’s average young working adult is living in a world where a stable rental agreement is something that is important, desirable and perfectly normal.

“Back 15-20 years ago, when couples were settling down in their mid-to-late twenties, they were nearly always looking with the option of buying. The idea of renting was something that was not really encountered by people who were out of their student years and out of their initial years of finding their feet in a job.

“The profile of tenants has completely changed. Many would be renting for five years or more before considering buying and many might be married with children.”

Put another way, there has never been a time like the present one to be in the rental market. It’s a market that’s showing a combination of stability and growth that’s hard to find elsewhere.

Today’s tenant is someone interested in a solid long-term relationship with his/her landlord and who expects a good standard of property in move-in condition. Demand is strong for convenient small apartments in central urban areas but the sort of property that is in even more demand is the three and four-bedroom semi-detached houses, which are getting between €800 and €900 per month in Cork and urban areas.

Taking the stress out

In any financial and legal transaction between two parties, it is desirable to have a middle man. Obligations have to be fulfilled and everything needs to be done according to the letter of the law.

And the law is becoming more complicated and involved all the time. In the case of tenancy agreements, there’s a whole raft of elements that simply weren’t there ten years ago, with more coming down the track. There’s the job of ensuring that the property is listed with the PRTB (Private Residential Tenancies Board) for a start. That’s an important one quite apart from the legal requirement, because the board can also act as intermediaries should any dispute arise. When you’re in a well-organised process such as this, there aren’t normally many problems, but the course of life and that of business never runs smoothly and it’s usually a case of the little things accumulating that can add to the burden of the landlord. There’s the BER (Building Energy Rating) certificate – something that can’t be forgotten. The BER system may have come in for criticism in some circles, but it’s generally accepted at this point as an attempt to ensure good energy standards and transparency. Moreover, it’s a legal requirement and another box amongst a growing list of boxes to be ticked.

Rental agents are happy to tick those boxes. That whole side of the business and how it has evolved is something that comes as second nature to them. They are the ones who are up to date with issues such as the property tax and other obligations that are yet to come.

“Today’s tenants do expect fittings and white goods to be included and all in good working order too,” says one agent involved in both rental management and property sales, underlining the importance of the agent in a well-regulated world where the obligations on the landlord are increasing.

The rental agent, on the other hand, is a professional in the business and all of the above are part and parcel of his/her daily professional routine. By using an agent, therefore, you reduce your own stress levels as well as those of everyone else involved; a win-win situation all round.

Access to a rich seam

The other great advantage of using a letting agent for anyone landlord or potential landlord is the access it gives you to a bank of clients.

For someone looking to find their market of potential tenants, there is simply no better way of getting immediate access to such a considerable chunk of that specific target market.

By engaging a letting agent, the market is brought to you on a plate. The Powell agency in Cork city, for example, has a bank of clients/tenants that’s somewhere in the region of 1,500 – a figure that would not be uncommon. It’s the kind of figure that would be difficult to generate by a landlord operating on their own, even with a wealth of computer marketing skills or any kind of marketing skills behind him.

Selecting the right tenant for you

Screening the applicants is a job that’s every bit as important as agreeing the rental amount and how to pay it. If the tenant is the right one – i.e. someone who has a relatively long-term interest in the location and accommodation type of your property – they are naturally motivated to taking good care of your property and of the relationship with his/her landlord.

This vital function is, again, one that is at the fingertips of those who are in the business and who have built up a level of knowledge and expertise that only they can truly provide.

It’s very important that you’re very diligent with regard to checking references.

Powell using global view to maximum effect in growing sector

Powell Property on the South Mall in Cork city is a company involved in all aspects of the property market, from sales to lettings and property management.

This all-round experience, they say, means that they’re in a position to understand the overall dynamics of the market as well as anyone out there and understand what landlord tenants want from a management service, for example: “Traditionally, we noticed that a lot of landlords might have four or five rental properties,” says principal Michael Powell.

“They would have rents coming in on different days. They’d be trawling through bank statements to see what rental income they had, what their expenses were. We cut all that hassle out and we give them a full ledger report on any income and expenditure for the year, and of course our management fees are completely tax-deductible as well. So from the income tax point of view, it’s very beneficial as well for a landlord or an investor to employ an agent.

“We would also send out a renewal notice 31 days before the lease is due to expire,” says Michael, referring to an aspect of property management that not all agents might carry out quite as thoroughly.

This story appeared in the printed version of the Irish Examiner Saturday, August 18, 2012

Infographic: Tenants and Landlords Property Management

Tenants and Landlords Property Management

Welcome to the very first infographic from Rentview. We’re always looking at new ways to provide content for the property management industry and we have started with this analysis on tenants who are currently living in rented accommodation. From our survey of renters in Ireland,  here are some of the interesting facts and figures we discovered :)

tenants and landlords property management

Some quick notes on the figures above for tenants and landlords property management:

  • Firstly the rent collection process from landlords or agents is quite varied, from physically collecting the rent from the tenant to transferring the money via online banking. Standing order, one of the cheapest methods and more efficient for collecting a tenant’s rent placed third in the list of options, which do you think works best?
  • Interestingly a whopping 74% currently do not receive a receipt for their rental payments. I have always requested a receipt from my landlord when paying to ensure there is no possible reason for disagreements over moneys paid throughout the year, and secondly its a great form of reference to apply for credit in the future. What’s your opinion?
  • Our third section is slightly worrying for me, as over 50% of the 100 tenants we surveyed noted difficulties in contacting their property manager or landlord throughout their tenancy. I personally would wonder how any agency is going to consistently maintain there tenant base when they are facing such issues.
  • Finally we questioned the renters of Ireland on their experiences in securing a rent reference after their tenancy, most landlords and agents were happy to give out references promptly to their tenants (44%) while only 24% had difficulty in securing a reference.

Other infographics you might like-

Landlords and property management infographic

The Dublin rental market infographic

by Andreas Riha