EA fees under new rental rule

[bkatb1987]

We are exploring renting our house for a max of 6 months. We engaged with an estate agency and their fees for letting are charged on a 12 month basis despite our ask to seek out a tenants for a max of 6 months only. So in our case, its 5% of annual rent, on top of 5% management fee. Is this the standard? At the beginning they had just mentioned 5 & 5 but only now it is stipulated on the contract. EA based in Dublin.

 

[Greenbook]

I'd be very careful here.

The fact that they are talking about 12 months for fees may mean that they will issue a 12 month 'renewable' lease. These are a disaster for landlords, you in particular, as the tenant will be in for 6 years. Agents love these type of leases and bizarrely they are still being used under the new rules even though they are a complete disaster for landlords.

Even a 6 month fixed lease won't work for you. You need to grant a Part 4 lease and then make 100% sure that you issue the NoT within the time limits and make sure that it is 100% perfect and correct. Otherwise, you will be quite a while getting the property back even if you need it for your own use. Keep in mind also that even with a correctly issued NoT, the tenant may still overhold. This is becoming increasingly common.

As to EA management fees, 10% of the monthly rent sounds right.

 

[Villaines]

I know there are EAs that manage for 6% plus VAT. No upfront fee. And they get nothing if the tenant doesn't pay each month. But that's on the basis of an ongoing rental.

The "management" tends to be that they take the calls, but if there's a problem, they inevitably call you, saying they've had their maintenance people (third party contractors) out to the house and they can fix the small issue of the broken handle on the toilet but their maintenance people expect it will cost FIVE HUNDRED EURO., which then gets deducted off the rent the EA sends you at the end of the month.

You are therefore faced with the unenviable position of saying actually no I think it should be cheaper and want it cheaper, so they say ok, well, here's the number for the tenant, fix it yourself, please confirm when it's fixed. So you're basically held over a barrel on the maintenance cost - and my experience is that the landlord agrees to the expensive maintenance to avoid the hassle, generally because they pay tax, usc and prsi at that higher rate so the government pays 52.4% of the maintenance cost.

 

[Premos]

We are exploring renting our house for a max of 6 months.

If it's your house, I would be very concerned of the cost of putting back your house the way you want it after the rental. Between your initial cost (clearing, storage), the EA costs and the after costs, are you sure it is worth it? From experience, the wear and tears is high in rentals.

 

[Bronte]

Personally I’d see no benefit to a 6 month rental. Only massive downsides.

If I were an EA, I wouldn’t take on your 6 month rental, and certainly not for 5% unless you’re renting the Taj Mahal.

 

[Bronte]

The "management" tends to be that they take the calls, but if there's a problem, they inevitably call you, saying they've had their maintenance people (third party contractors) out to the house and they can fix the small issue of the broken handle on the toilet but their maintenance people expect it will cost FIVE HUNDRED EURO., which then gets deducted off the rent the EA sends you at the end of the month.

I used to think like this. This is my first year hiring an agent. Super professional. The relief in not having to handle stuff. So far I don’t consider the call out charges etc exorbitant. The agents people are very good in who they send out. My contact told my tenant if it was his fault the kitchen sink drain was blocked by him putting down food he’d be charged, needless to say he solved the problem himself. When I met him he proudly to,do me about this, omitting that my agent was going to charge him.

 

[Villaines]

This is my first year hiring an agent. Super professional.

Yes, like everything, there are good and bad, and sometimes if you pay peanuts you get monkeys. One thing I would say is that it's not super easy to fire the agent if they collect the rent, you have the issue of opening yourself up to the tenant. This particular agent was local and a smaller owner-managed business, which I thought would help. It was not a complete disaster (rent was nearly always paid within reasonable limits (a few days here or there, and the tenants did not overhold (though I gave them them the required (very long) notice period).

My agent did a pre-termination review, and told me everything looked fine for a property after 4 years of letting, when I entered the house, the place was pretty filthy, and the tenants agreed that I could deduct cleaning and repairs from the deposit, but yes, that agent had a different interpretation of the standards to which property should be kept.

There was very much a "you have to expect wear and tear" and "the property will not be in the same condition when you get it back", at the outset and regardless of how you interpret that, cleaning the grease out of ovens and off kitchen cabinets (amongst many other things) is a bit manky - one of the tenants told me (on the day they were supposed to have left but were in bed when I arrived at the property) that he had stopped cooking in the kitchen because of the state of it, and that he would be more selective about who he would move in with in the future.

By that stage my engagement with the agents was already ending, but essentially they didn't undertake the pre-termination review properly, there were matters to be addressed that clearly should have been at the tenants' expense and should have been repaired before I took back possession (e.g. broken panes of glass), they were not managed so I then had to rectify the issues at considerable inconvenience, even though I did pass on some of the monetary cost to the tenants via a deduction from the deposit - really it should all have been sorted for me before I re-entered - the agent had time to do all that but made no effort - I tried to not be too pernickety and not to overburden the agent but my kindness was taken for weakness!

 

[Premos]

the place was pretty filthy, and the tenants agreed that I could deduct cleaning

That's generally difficult anyway if you don't intend to use a cleaning company.
Wear and tear is also difficult because, apart if it's clearly smashed, most of the things could be wear and tear. There's a difference between the wear and tear when one is careful and the wear and tear when one isn't.

 

[Greenbook]

The "management" tends to be that they take the calls, but if there's a problem, they inevitably call you, saying they've had their maintenance people (third party contractors) out to the house and they can fix the small issue of the broken handle on the toilet but their maintenance people expect it will cost FIVE HUNDRED EURO., which then gets deducted off the rent the EA sends you at the end of the month.

That happens as well - a stitch up between the management company and their maintainence guys and you get charged a fortune for small matters, plus everything time they inspect they find a list of things which need doing. But it's only landlords who are greedy and dishonest.

 

[JamieB_]

I stopped using agents in 2013. I had engaged a well known agent and in 3 years had 2 tenants. The agent was great at collecting the rent. Thats about it. One month I got a bill for €1200 for a new oven. Only 6 weeks before that I had a new oven put into my own house at a cost of €320. I asked the agent why it cost €1200 for an oven and they just said that was what their installer charged them. The same for a hoover. €250 when the one I had bought for my own house cost €80 and was a very good hoover. Then of course when the first tenant left after 9 months and I had to replace the washing machine. This time I told them up front that they better not rip me off on the washing machine and they got one in for a reasonable price. They charged me another finders fee as well as rent collection for the new tenant. A new sofa cost me €1000. That tenant moved out and I took back control of the apartment. When I got into it I saw that the washing machine door was bent like someone had been standing on it and would not close properly, so i had to buy another new one. The sofa was definitely not 2 months old and was something at least 10 years old with broken legs even though the agent insisted a new sofa was put in. I asked for a proper invoice with the name and model of the sofa because i knew they wouldnt know the name model of a second hand sofa but if it was a new on should be on an invoice and they couldnt supply that. They just said that the supplier didnt give that much info.

I found out later from someone I know who worked for an agent years ago that they just collect the rent and find tenants. After that you are on your own. All they will do is take calls and outsource what needs to be done without checking if they are getting value for money from them. So if you are using an agent make sue you instruct them to run EVERYTHING by you and watch them closely.

Oh, and I nearly forgot. The walls had had pictures hung up all over the place with hilty nails, so when the nails are taken out half the plaster and even the block comes out with it. They had to be taken out and the walls repaired and repainted. When I asked how much of the deposit they kept for this they said none, that it was just wear and tear so they gave the tenant back their full deposit. That was 2013. I suspect its near impossible to to deny wear and tear on that sort thing nowadays too.