As a landlord, using a letting agent is completely optional and a personal preference. Many landlords prefer to take control and handle the entire tenancy process themselves, however the use of a letting agent can make life much easier for many. Finding the right letting agent can be a minefield for those unsure of what they are doing, so it’s very important to know what to look for…
What do letting agents do?
Often, the main driver in taking on a letting agent is a matter of convenience. The great thing about letting agents is that they manage many of the tricky and lengthy aspects of tenancies that a lot of landlords dislike. The services that letting agents provide vary in levels and subsequently fees, depending on how much or how little the landlord would like taking care of.
Tenant-find only: As a basic service, they find tenants for your property and arrange the let, usually including collecting references, doing credit checks and collecting the deposit. You can often pay extra for an inventory and check-in on moving-in-day. The one-off fee for a tenant-find only service would usually be equal to around a month’s rent, or as a percentage of the entire tenancy contact.
Tenant find & rent collection: The next service tier up includes the above, as well as being responsible for collecting the rent payments each month and chasing any late payments. The monthly fee for this will usually be around 8-12% of the monthly rent collected.
Full management: With the top tier service, they can take on full management of your tenancy; managing all aspects of the rental including rent collection, dealing with your tenants queries and problems and arranging any maintenance and repair work. The monthly fee for this will usually be around 10-15% of the monthly rent collected.
Who might need a letting agent?
The perfect candidate is a busy landlord who has many properties to manage and who is struggling to find the spare time to keep tabs on everything – particularly if they don’t live locally to their rentals. On the other end of the spectrum, first-time or inexperienced landlords may opt for a letting agent as a bit of a safety blanket. If they are unaware of unsure of all the relevant regulations and legislation, using a letting agent can prevent getting anything wrong or missing important things that could prove problematic in the long-run.
If you want to be a hands-on landlord and be in full control of the tenancy process and be your tenants first point of call, you may be better off without a letting agent and conducting everything yourself. It would also keep your costs down, as letting agents don’t usually come cheap.
What are the pro’s and con’s of a letting agent?
Being a landlord isn’t easy. You’d hope that you can do everything that is expected of you and are able to keep your tenants happy, but unless you’re perfect, that’s not always the case. If dealing with unhappy tenants and solving their problems is your idea of a nightmare, using a letting agent’s full service will mean you don’t have to directly handle your tenants and their woes – the agent will. If you have student tenancies for example, or a flat in a block of other flats, you can go with letting agents that specialise in this remit. For many, this is a huge weight off their shoulders as there’s a few things that come with the territory that a landlord may not be sure how to handle – such as possibly higher levels of damage and deposit issues with students, or neighbourly disputes in blocks of flats.
There are of course a few cons to a letting agent. Firstly, they can be expensive. This is a big turn-off for many landlords that feel that they can handle the process themselves – which, with plenty of research and walking yourself through the process slowly, can easily be done. Something else very important to remember, is that letting agents are unregulated and there are no statutory standards for the service or fee’s. Do your research and ensure that you’re only going with trusted agents that are going to look after your money, your tenants and your tenants money.
Your letting agent checklist
- Are they a member of a professional standards body, such as The Association of Residential Letting Agents (ARLA), The Royal Institution of Chartered Surveyors (RICS) or The National Association of Estate Agents (NAEA)? If not, it’s probably best to avoid them.
- Are you able to get recommendations and first-hand accounts about possible letting agents from other landlords that you know? If so, it’s obviously worth trusting those with real experience over anything else.
- Check all the details about the tenancy deposit protection scheme that the letting agent will use, if you’re asking them to deal with deposits. If the agent for any reason runs off with the tenancy deposit, you will still be responsible for repaying this, and if they run off with the rent payments, you can’t ask the tenant to pay you again. You need to be able to trust them!
- Read the contract thoroughly and question anything that you are unsure of. Look out for clauses such as being asked to give 6 months or more notice if you wish to cancel the agreement. 3 months is reasonable and recommended. Be aware of clauses which provide the agent to be paid commission on renews of the tenancy with tenants found by them and also look out for charges for when the property is vacant. This is normal and the agent is entitled to a fee in this instance, but it should be less than that charged when a tenant is in place.
- Will your letting agent be arranging checks such as the annual gas safety checks and keeping all of the necessary records? Will they be checking that the property meets all other standards, such as the furniture and fittings complying with the regulations? Double check so that these things do not get missed.
Letting agents can be a huge help to the right landlord and completely worth the money. Do your research, be well informed and check your contracts for a happy and harmonious relationship with your letting agent!