The management of any let property may prove a time-consuming and onerous task – even if you are only an occasional or “accidental” landlord. Advertising the letting, selecting of tenants, conducting background checks and taking up references, drawing up the tenancy agreement and conducting inventories, all take considerable effort – and that is before you have even started to manage the need for ongoing repairs and maintenance.
It is hardly surprising, therefore, that many landlords opt to share at least some of that burden by instructing a letting agent to act on their behalf.
If this is an attractive solution to the running of your own buy to let business, what needs to be considered when working with letting agencies?
- your choice of letting agent may be guided by their membership of Safeagent or the professional associations which are party to that scheme;
- in the event of any dispute you might subsequently have with your letting agent, it might also be prudent to choose one that is registered with the Property Ombudsman;
- it is important to have a clear understanding of the extent and scope of services offered by a letting agent;
- one of your principal decisions, for instance, is whether the agent is going to manage all matters relating to tenancies of the property, or whether they are to operate a full management service in which ongoing repairs and maintenance to the property are also handled by them;
- a closer and more detailed examination of the service they offer – and perhaps more importantly, the efficiency of that service – might be obtained by looking at similar properties in your local area for which the letting agents are responsible;
- as the landlord, you have a number of responsibilities for the health and safety of your tenants, so it is important to establish whether the letting agent is also going to ensure compliance with such matters as gas, electrical and fire regulations;
- it is also important to be clear whether you remain responsible for placing any deposit from your tenant with an approved deposit protection scheme, or whether this is to be done by the letting agent on your behalf;
- you might want to consider instructing more than one agent, since many offer a “no let, no fee” arrangement;
- remember, too, that it is the scope of the service offered and the agent’s success in letting your property that is likely to be more important than finding the cheapest fee;
- the more information you are able to provide the letting agent, the better your chances of having the kind of tenant you prefer;
- with respect to those fees, letting agencies typically charge a percentage of the rent you are charging and in return they arrange everything from advertising the letting, finding tenants, taking up references, drawing up the tenancy agreement and conducting inventories;
- fees for a full management service are also likely to be based on a (higher) percentage of the rent you intend to charge.
Five takeaway tips for landlords when choosing a lettings agency
1. Choose a reputable agency
Selecting a reputable letting agency is crucial for effective property management. Look for agencies with a proven track record, positive client feedback, and a good understanding of the local market. Seek feedback from other landlords who have used the agency’s services to gauge their satisfaction level.
Ensure the agency has a good understanding of the rental market in your specific area.
2. Discuss services and fees
Have a clear discussion about the services the agency provides and the associated fees. Understand what services are covered in the management fee and any additional costs you might incur. Clarify the services the agency will provide and the associated fees. Common services include:
- Tenant sourcing: Advertising, conducting viewings, and tenant background checks.
- Tenancy agreement preparation: Drafting and signing the tenancy agreement on your behalf.
- Rent collection: Ensuring rent payments are made on time and handling late payments.
- Property maintenance: Coordinating repairs and maintenance as needed.
Ensure you understand the fee structure, whether it’s a percentage of the rent or a fixed fee, and any additional charges for specific services. It’s essential to have a transparent agreement to avoid any misunderstandings later.
3. Regular updates and reporting
Ensure the agency provides regular updates on the status of your property, including occupancy, maintenance, and financial reports. Transparency is key to a successful landlord-agent relationship.
4. Screening and selection of tenants
Discuss the tenant selection process with the agency. Make sure they conduct thorough background checks, credit assessments, and references to secure reliable tenants for your property. Discuss matters such as your preferred tenant profile (e.g., no pets or smoking).
5. Review the management agreement
Before signing a management agreement, review it carefully to ensure it aligns with your expectations and protects your interests. Discuss the frequency and format of financial reports you’ll receive. Seek legal advice if needed to understand the terms completely.
Next steps
Letting agencies may help to take the strain out of running any buy to let business. Before signing any contract for their services, however, you might want to keep these considerations in mind.
Further reading: Guide to choosing a letting agent.
