Administration Fees
Charge the tenant administration fees (no deposit taken)
This option is really only available if your deposits are quite low up to say £300 - and you have a number of properties, I would suggest 20 or more. Otherwise, other may be preferable.
It is perfectly normal for landlords and agents to charge administration costs. The costs these would cover are production of the tenancy agreement; tenant vetting checks, guarantor checks, criminal record declarations, employer references, bank references etc. A little check on the Internet showed that a reasonable amount is around £180.
10 properties based on an average of one tenant per year will produce the landlord with £1800.00 per annum, if you charged each tenant £180.00 when they take the tenancy. This money is non refundable as they are pre tenancy fees. The tenant is going to be willing and able to pay, because they won’t have a deposit to pay, so their initial outlay has been reduced from £600-£700 down to around £480.
In addition to the fees, on a £300-£400 property, the landlord might well get an extra £20.00 per month additional rent, again this increase may be possible because the initial outlay the tenant needs to find has been greatly reduced by the lack of need for a deposit.
Lets now add that into the pot. £20.00 x 12 = £240.00 x 10 properties = £2400.00.
This gives a total in the pot of an approximate £4200.00 additional income to the landlord. The question now is, do you lose £4200.00 in a year as a result of disputed deposits over 10 properties? Very rarely is a deposit not returned to a tenant, let alone disputed. Remember when considering this option you can’t include any amounts over the deposit the tenant owes you because you should only compare like for like. For example I
am sure out of those 10 properties, one tenant may well owe you £600-£700.00 in rent loss and damage, however for this calculation you can only consider the £300.00 deposit because the other you would have to claim for separately in any event.
