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The Home Cloud Tide of Change
The Sunday Times
In his article in The Sunday Times on 21st June journalist Graham Norwood drew attention to the tide of change that is beginning to erode the long established opportunity that letting agents have had to charge confusing and sometimes exorbitant fees for managing the properties under their control.
Townley versus Foxtons
The specific case being brought by King’s College law lecturer and part time landlord Chris Townley against Foxtons claiming compensation for “inflated costs for work” has highlighted just how high an agent’s mark-up can be on routine maintenance work as well as how difficult it is to understand the exact fee structure that agents charge.
The Townley versus Foxtons dispute arises from Foxton’s bill for £616 for fitting an outdoor light at his property to satisfy a tenant’s request. He was told that the contractors charged £412.50 and that the balance of £203.50 (49%) was commission to Foxtons. As a result Townley reviewed previous bills and is seeking compensation of £14,000. He is not alone – a class action is being brought by the London law firm Leigh Day on behalf of about 100 other Foxtons landlords. Some analysts calculate that the ultimate cost to Foxtons could be as high as £42million.
Foxtons rejects all such claims on the basis that its charging policy is clearly set out in its terms and conditions and that approvals are obtained from landlords before work commences.
A New Approach
The Sunday Times article cited the views of Henry Sherwood of The Buying Agents and Tom Jewell of The Home Cloud who each put forward their comments of why it doesn’t have to be this way and what they are doing about it.
Sherwood locates properties for purchasers who then let out their new investments. He charges a 1.5% fee but says that clients can’t believe the cost the letting agent then charges for marketing and letting the property often up to 20% when all the hidden extras are included. He is looking at alternatives, is not keen on most online options which often don’t offer full service property management and instead prefers “flat fee” services.
The Home Cloud
The Home Cloud is just such a flat fee agency and as Managing Director Tom Jewell (pictured above) told journalist Graham Norwood he mistrusts agencies that charge landlords and/or tenants “a few percent for this and a few per cent for that. The current system, by accident or design, prevents tenants and landlords knowing what they get in return for their fee. A flat rate is more transparent.”
The Home Cloud’s fees to Landlords are clearly set out in its website thehomecloud.xenacia.com and range from a flat 6% (plus a once only charge of £75) for its “finding a tenant” service; 8% (plus £100) for its “find a tenant and collect the rent” service and 10% (plus £100) for “finding a tenant, collecting the rent and fully managing the property”.
On a fully managed property bringing in an annual rent of £26,000 The Home Cloud Charge for finding a tenant, collecting the rent and fully managing the property would be £2,600 per annum plus the once off £100 set up fee. This compares to the charge of £4,150 that Henry Sherwood tells The Sunday Times is the “typical” charge for a property bringing in that rental value. Over 3 years The Home Cloud charge of £7,800 would be nearly 40% cheaper than Sherwood’s typical charge of £12,450 over the same period.
Following up The Sunday Times article Jewell said “The principle behind The Home Cloud is to change the way people buy, sell, let and rent property by tackling all of the things that make the industry unpopular
So we don’t hide our fees or make them complicated or hit clients with sneaky extras. We pass the savings we make by not having a fancy high street presence onto our clients and at the same time we don’t tie them into long contracts or leave them in the dark with progress. We certainly don’t make promises that we can’t keep.
Instead we are totally transparent – one simple fee covers everything and each landlord has their own on-line account so that they can see everything our hardworking, dedicated teams are doing all of the time – we provide regular updates that give complete peace of mind and enable them to speak to us through the portal, telephone, text or email, whichever they prefer.
We are passionate about what we do and what we want to achieve within the industry.”
The Home Cloud is leading a new, fairer, honest approach to selling and letting properties – to find out more contact Tom Jewell at Tom@thehomecloud.xenacia.com or call 0118 327 1991.