If you are just starting out as a landlord, with only one or two properties on your hands, it is tempting to try and manage them yourself rather than pay letting agents fees every month – which can be as high as 15% (although most are lower – some as little as 5%). Managing your property yourself sounds easy enough – but it is important to consider whether you can do it effectively, and if it’s really worth it.
Why you should
If you don’t have a letting agent, you need to be willing and able to be on 24 hour call if anything goes wrong. Consider how quickly you can get to your property if something goes wrong. If you don’t live locally, you’ll need there to be someone locally who you trust to check out problems if your tenant calls with an emergency such as a gas leak, or burst pipe. Can you really be sure that you or someone else will always be on hand? Think carefully – what if you’re on holiday? Or you have an emergency of your own to deal with? What if they call when you’re at work, when the kids need to be picked up from school, or when relatives have just arrived for their annual visit? Most landlords can’t be sure of always being there, especially if they have a day job too.
What to look for
If you know that you will need a letting agent, choose carefully. If you are a conscientious, hard-working landlord, you want your letting agency to reflect that. While landlords are increasingly being regulated by local authorities, there is as yet no regulation for letting agents. There are professional associations for letting agents that demand certain standards of their members, such as the Association of Residential Letting Agents, that are often the best choices. Personal recommendation also counts for much, so ask around.
When choosing an agent, don’t look just at their fees. Look at what you get for those fees. Most will offer a cheaper service for those who just want to advertise through the agent, but full management is usually the best option and you can have other services included such as property insurance (although be aware that it may be cheaper to buy separately). Some will offer more than others as part of their full management service. Ask a few and compare. They should be carrying out thorough credit checks on tenants, collect and chase rent, carry out regular maintenance and inspections. Most agents work on a no let, no fee basis, but check they have a good marketing strategy in place is before you sign up – they might not charge you if they don’t let, but you’ll still be out of pocket if you don’t have tenants. Look for an agent with a good track record of letting properties like yours.
Make sure, too, that you like your letting agent and the way they do business. Give yourself the best chance of developing a long-term working relationship that will see you through as you (hopefully!) work on building your portfolio.