What Level of Service Do You Need From Your Letting Agent?
Buy to let was a very popular way to invest in the property market during the nineties and early 2000s. After the difficulties of 2020, and the pandemic, there are now signs that once again investing in property to rent is a good idea.
Which magazine recently reported that over 30% of current landlords are looking to expand their portfolios and invest further, Additionally, nearly 70 percent of landlords are feeling very positive about the coming year.
Mortgage rates are low and attractive, and yet rents are rising fast. These are perfect conditions for anyone who is looking to let out their existing property or become a new landlord.
How do you let your property out and become a landlord?
There are two main options for letting out property, and they are either to do it privately or through a letting agent.
If you choose to let your property out privately, then you will have to take responsibility for everything. This means that you will need to market the property yourself, make sure that it is clean, carry out repairs, and be available for tenants when there are issues.
You will effectively have to juggle your own life and career with managing your rental property. For someone who is looking to make some capital from a single buy to let property, this may become more trouble than it is worth.
Another alternative is to use a professional letting agent.
Why would you need a letting agent?
In some ways, a letting agent’s job is very comparable to that of a real estate agent. The main difference is that one is finding temporary tenants for rental properties, and the other is finding a purchaser for a property up for sale.
A letting agent’s job is unlike a real estate agent’s job in one way though. Where a real estate agent is unlikely to care who they sell a home to, the letting agent needs to take much more care.
Part of a letting agent’s role is to not only find tenants but to vet them for suitability too. Many landlords can attest to having the tenants from hell, and hundreds of unhappy neighbours have stories about them too.
Letting agents will make sure that the tenant is credit-worthy, pays the deposit before getting the keys, and obtains references from employers and previous landlords.
What do letting agents do?
Apart from finding and vetting tenants, they will also market and show your property to individuals enquiring about it.
There are many do’s and don’ts when marketing your property, and this is one reason that using letting agents is a good idea. Letting agents will inspect the property, recommend a rental price, photograph the home, and then advertise it.
After that, they can handle showings and take the process further by carrying out checks, securing the deposit, and handing over the keys.
Once a tenant is living in the property, the letting agent will then act as an intermediary between the former and yourself. Depending on the level of service that you – the landlord – pays for, the letting agent may also carry out other services.
These services can include maintenance, taking care of breakdowns in appliances, and other repairs, leaving you free of worry.
The three main services of letting agents
If you choose to engage the service of a letting agent then you normally have three levels of service.
The first one is finding and letting a property
As you have already read, a letting agent’s job is to find good, reliable tenants who will pay the rent every month.
Once they have carried out these tasks, listed an inventory for the property, and got tenancy agreements signed, their job is finished.
You pay them a one-off fee for this most basic of letting agent’s roles, and you probably won’t contact them again until your tenants leave.
The second service that letting agents can give is handling the rent
This next level of service includes all of the above, plus they will collect the rent as it is due. They will also be responsible for chasing late payments, and ensuring that no problems occur over this.
For this level of service, there may be an initial set-up fee for finding the tenant and then a monthly fee set as a percentage of the rent.
The third level of service is full management
The top-level of service provided by a letting agent means that you can have as little interaction with your clients as possible.
The letting agent will find your tenant, vet them, handle all the rent, and then they will ensure everything goes smoothly for the term of the tenancy. This means taking care of all aspects of maintenance and repair to the property and its contents.
When it comes to the end of the contract, the letting agent will inspect the property. They can employ an end-of-tenancy cleaning company such as Crown Cleaners to make sure the property is spotless for the next tenants.
Tenants will all tell you that one of the most critical points when viewing rental property is cleanliness. Cutting corners on cleaning will make it harder to rent to new tenants.
What levels of service do you need?
Your first consideration when choosing which level of service to go with will be the cost. The second thing to consider is whether you are capable of handling all the aspects of being a landlord yourself.
If you have a full-time career, and renting a buy to let property is a side investment, then it would make sense to use a letting agent. This means you don’t need to have any worry about visiting the home and hiring plumbers or electricians.
However, if you are on a tight budget then you may need to choose a lower level of service.
According to Simply Business, letting agents’ fees can range from 12 to 20 percent of the monthly rent and perhaps even more in London. This means that you will lose a considerable amount of your monthly rent.
Can they help you to have a smooth end of tenancy transition?
Sometimes landlords and tenants have a perfectly smooth 12 months without any issues, only for it to go wrong when it comes time to move out.
In the UK, it is standard to hand over a security deposit when renting a property. Not surprisingly, tenants generally want to see that money returned when the tenancy ends.
Deposits are held in a government scheme and must be handed back within ten days of both parties agreeing on the sum to hand back. However, disputes can and do happen.
One of the main areas for disputes at the end of a rental term is to do with cleanliness. Therefore having a letting agent can be a big help as they can employ cleaning services, perform end-of-tenancy inspections, and help everything run smoother.
Summary
If you are time-poor and happy to lose a percentage of your monthly rent, then the full management service would perhaps be the best option for you.
If you have time and perhaps contacts for carrying out repairs then the second option might suit you. This gives the extra security of knowing that the rent will be collected without you having to get involved.
For true hands-on landlords, then the first option of simply finding and vetting tenants is the best service.
Poor communication is one of the biggest reasons for disputes between tenants and landlords. A good letting agent can be the conduit between you and your tenants. Engaging a good letting agent could be key to you getting your foot in the rental market and becoming a landlord.
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