RRA raises the cost of getting property management wrong
The latest insight from property management specialist, Rushbrook & Rathbone, suggests that the relatively modest cost of professional property management could help landlords avoid thousands of pounds in potential penalties and compliance failures as the rental sector becomes increasingly regulated under the Renters’ Rights Act.
Rushbrook & Rathbone analysed the average cost of a typical fully managed property service against a range of potential financial penalties and compliance risks faced by landlords operating within the private rented sector.
Based on the current average monthly rent across England of £1,434, a typical 5% monthly management fee would equate to an estimated annual cost of £860.
However, the potential financial consequences of failing to comply with tenancy regulations can be substantially higher.
For example, landlords who fail to correctly protect a tenant deposit can face compensation claims of up to three times the deposit value, equivalent to an estimated £4,964 based on the average rental deposit.
Under the Renters’ Rights Act, landlords who fail to provide tenants with the required information at the start of a tenancy could face fines of up to £7,000 per tenancy.
Other breaches can carry even larger financial penalties. Operating an HMO without the correct licence, breaching HMO licence conditions, failing to comply with improvement notices, illegal eviction offences, and serious electrical or gas safety failures can all result in substantial fines of up to £40,000.
Landlords may also face rent repayment orders, civil penalties for right-to-rent failures (£20,000), EPC breaches (£5,000), smoke and carbon monoxide alarm non-compliance (£5,000), as well as legal costs and delays associated with invalid possession proceedings.
Rushbrook & Rathbone believes that whilst many landlords are capable of managing their own properties successfully, the increasingly complex regulatory landscape means that professional management is becoming less of a convenience and more of a form of operational and financial protection.
Sarah Rushbrook, Founder of Rushbrook & Rathbone, commented:
“Many landlords understandably focus on management fees as a cost, particularly at a time when profit margins across the sector are under increasing pressure.
However, the reality is that the cost of getting things wrong can very quickly outweigh the annual cost of professional management support.
Property management today is about far more than simply collecting rent or arranging the occasional repair. Landlords are now operating within an increasingly complex regulatory environment where there are significant legal, financial and compliance obligations attached to managing a tenancy correctly.
For many landlords, particularly those balancing property alongside other work or responsibilities, having an experienced managing agent provides structure, oversight and accountability.
Importantly, a good agent is not only there to help prevent problems from arising, but also to support landlords if issues do occur and ensure that the correct processes, documentation and procedures are followed throughout the tenancy.
As the Renters’ Rights Act continues to reshape the sector, we expect professional management to become increasingly important for landlords looking to protect both their properties and their long-term investment.”
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