A landlord with a calculator
A landlord goes through their statement and works out that the management fee is higher than the percentage in their terms. Another notices a renewal fee they were told had been waived. A third finds VAT charged on something they thought was VAT-free. Each one emails, and each email means someone digging through terms of business, fee settings in the lettings software and past statements to work out what went wrong.
Most of the time, the answer is that the fee was set up wrongly months ago and nobody checked.
Why fees go wrong
Lettings fees are rarely simple. Management percentages differ by landlord and service level. Some landlords negotiated a discount, some have a portfolio rate, some moved from let only to fully managed partway through. One-off fees apply for particular events, and some were waived as a goodwill gesture. All of this is entered into the lettings software by hand, often by someone who did not see the negotiation.
Once set, fees repeat every month. An error at set-up becomes an error on every statement until a landlord notices.
| Fee type | Common error |
|---|---|
| Management percentage | Wrong rate, or old rate after a change |
| Portfolio or negotiated discount | Not applied |
| One-off event fees | Charged when waived, or missed |
| VAT | Applied inconsistently |
| Service level change | Old fees continue |
What fee errors cost
Overcharging damages trust quickly, and landlords who find one error start checking everything, which generates more queries. Undercharging is lost income that nobody notices. Both take time to correct, with credit notes, adjusted statements and apologetic emails. Your client money records also have to be put right when money has been taken from a landlord's account incorrectly, which your compliance process will care about.
There is also the question of whose knowledge the fees depend on. The negotiator who agreed a discount to win a portfolio may have left. The accounts person who set up the fees may have assumed the standard rate. Without the terms recorded as rules, nobody can say with confidence what each landlord should be paying, which makes every query slower to answer.
The fee check we build
- Terms as data: each landlord's fee terms, from the signed terms of business and any recorded variations, are recorded as structured rules with effective dates. Existing terms are read from documents and confirmed by a person.
- Statement preview: before statements are issued, the charges your lettings software is about to apply are read through its API or report export.
- Comparison: each charge is compared with what the terms say should apply, including VAT treatment and any waiver or discount.
- Exceptions list: mismatches are listed for your accounts team with the terms clause and the calculated difference, so they can correct the software or confirm the charge.
- Change log: when fee terms change, the new rule and its start date are recorded, so the check applies the right terms to each period.
The check does not change fees by itself. Your team decides what is correct and makes the change in your lettings software.
Statements you can stand behind
Statements go out after the fees have been checked against the terms each landlord actually signed. Set-up errors are caught on the first statement rather than the twelfth. When a landlord does query a fee, the terms, the rule and the calculation are all to hand. Negotiated discounts stop being forgotten when the person who agreed them leaves.
Landlords notice the difference. Statements that are consistently right are one of the quiet reasons landlords stay with an agent for years. When a query does come in, answering it with the exact clause and calculation, on the same day, turns a potential complaint into evidence that the agency is careful with their money.
Could this be your statement run?
- Landlords find fee errors on their statements.
- Negotiated rates and waivers are recorded only in emails.
- Nobody checks fees against terms before statements go out.
- You have had to issue credit notes for fees charged in error.