It's that time of year again - your tenancy is coming to an end and you're looking to renew. But when you receive the proposed rent from your letting agent, it's shockingly low - 20% to 30% lower than what you were expecting. What gives?
Well, as it turns out, there are several reasons why letting agents frequently get renewal rents wrong - and none of them are good.
Firstly, laziness. Some agents simply can't be bothered to do the research required to accurately assess the current market value of your property. They'd rather take a stab in the dark and hope for the best.
Secondly, overconfidence. Many agents think they know what the market will pay, without actually doing any research to back it up. This is a dangerous assumption to make in a fast-moving and unpredictable market.
Thirdly, outdated assumptions. Just because you let your property for a certain amount a year ago, doesn't mean the market value has remained the same. In a rising market, you could be missing out on significant rental income if you don't keep up with the times.
Fourthly, time constraints. The person responsible for renewals may be incentivized to renew quickly and in large numbers, without having the time to do the proper research required to assess the market value accurately.
And finally, greed. Some agents may just want to keep their fees high and think that by proposing a lower rent, they can still make a profit while giving the landlord a "good deal". But in reality, this is negligent and can result in the landlord missing out on thousands of pounds of rental income.
So what should letting agents be doing instead? Firstly, they should be using the online tools available to them to assess the market value of your property accurately. They should also be checking the tenant's payment record and visiting the property to make sure everything is in order.
This full research approach means that letting agents can see what other agents are asking and provide comparables so a proper current market valuation can be provided, leading to proper advice being given to clients. And while some clients may choose to keep good existing tenants and not push for a market rent, it's the letting agent's responsibility to provide the information for the landlord to make an informed decision - not to take the easy route.
So if you're facing a renewal with your letting agent, make sure you push for a proper market valuation based on accurate research. Don't let laziness, overconfidence, or greed cost you thousands of pounds in lost rental income.
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