Speak to any buy to let landlord and you are likely to discover just how much effort goes into running the business:
- from the very starting point of advertising the let;
- finding suitable tenants;
- conducting reference checks;
- collecting deposits and arranging their formal safe keeping;
- drafting, agreeing and signing tenancy agreements;
- drawing up and conducting inventories;
- arranging annual inspections for the safety of gas and electrical installations;
- arranging for ongoing repairs and maintenance throughout the tenancy;
- ensuring that rent is paid on time;
- answering all manner of enquiries from the tenant;
- conducting a further inventory at the end of the tenancy;
- agreeing the terms for the return of any deposit; and then
- starting the whole process over again for the next tenancy.
Little wonder, therefore, that being a landlord may easily become more than a full time job.
If you want some of the pressure to be taken off your shoulders you might consider turning to letting agencies.
The role of the letting agent
Depending on the specific contract of agreement for letting agency services, landlords typically request help on one of two levels.
Probably the most common form of agreement sees the landlord handing over to the letting agent responsibility for every aspect of advertising and selecting tenants and taking up references on suitable candidates. The letting agent is typically then also responsible for drawing up the tenancy agreement, arranging receipt of the deposit, conducting an inventory, collecting the rent and generally maintaining a channel of first communication with the tenant throughout the tenancy; conducting the final inventory and arranging the return of the appropriate share of any deposit originally received.
The task of checking and vetting tenants is already quite onerous and may soon become more difficult still. At the time of writing (November 2014) so-called “right to rent” rule is included in the new Immigration Act and – after a pilot trial scheme in the West Midlands – is scheduled to be rolled out through the rest of the country during 2015.
In a discussion article published by Letting Agent Today in November 2014, it is explained how the Act place a responsibility to check that prospective tenants are not illegal immigrants and in fact have the right to rent permanent accommodation in the UK.
Crucially, it is a responsibility which may be signed over in an agreement in writing between the landlord and the letting agent instructed by him. In future, letting agents may need to check and inspect the original documents identifying not only the prospective tenant but also of any other individual planning to live in the let premises and to keep copies of those documents as a record.
Full service property management
In addition to the responsibility for managing every aspect of your relationship with the tenants, you may also instruct letting agents to take on wider property management responsibilities, including the responsibility for ensuring that the property is adequately and regularly maintained and repairs carried out as and when necessary.
Typically the landlord pays a percentage of the rents collected or a fixed fee to the letting agent for the specific schedule of services offered.
However, there is also ongoing debate about letting agents also charging tenants directly for some of the reference searches and tenancy drafting performed on behalf of the tenant. As described in a discussion aired on the website of the Association of Residential Letting Agents, it is evident that some individuals consider it unfair for tenants to be charged in this way.