Letting agencies can make a property more marketable, but for landlords who prefer to practise alone, there are other options than fully managed service.
Investors in the buy-to-let market have typically had two choices in finding tenants and managing properties. They can either pay a letting agent a large fee, or go it alone.
Letting agents traditionally offer a let-only service, in which they find, interview, and vet tenants, complete paperwork, and take a deposit and first month’s rent, for a fee of about 10% of the rent. Additionally, there is a full management service, which could cost 15% or more. With this, the agent continues to collect the rent, and will deal with the day-to-day running of the property.
Agent’s services can be essential for landlords who live far away from their property, or have a large portfolio to manage. However, for landlords seeking less bother and lower costs, there are other options.
Online letting agency Upad’s services start at £99 (plus VAT), which allows landlords to advertise their properties on websites such as Rightmove, Zoopla, and Prime Location.
“Landlords who use high street agents usually spend half of their profits on the agents’ costs,” says Upad’s Director, James Davis. “We put landlords in contact with tenants and they conduct their own viewings, which enables you to meet the people who will be living in your investment.”1
eMoov, an online estate agency, offer a similar service to high street agents. They will take photos, draw floor plans, and arrange viewings for a set fee of £249 (plus VAT).
Russell Quirk, eMoov’s Director, says: “We typically save property owners 66% on traditional agents’ fees. With void periods, non-payment of rent, and lack of capital appreciation, saving on fees must be a big consideration.”1
There is also the Happy Tenant Company, who have landlords with a combined £500m worth of property around the M25 on their books. They use group buying to negotiate discounts with letting agents.
This service costs from £750 (plus VAT) a year. On a property that earns £300 a week in rent, the Happy Tenant Company analyses that a landlord saves £2,390 on fees over two years.
The company’s founder, media lawyer Jonathan Monjack, explains: “Like many landlords, I was fed up with paying high renewal fees for no extra work just because it’s the industry norm. But I didn’t want to do the property management myself as I didn’t have the time or experience. We bring a lot of business to letting agents and recommended contractors, so they offer discounted rates, which we pass on to landlords.”1
Landlords can often feel like they pay letting agents a lot of money to do very little. However, a trustworthy letting agent who is a registered member of a group such as the UK Association of Letting Agents (UKALA) or the Association of Residential Letting Agents (ARLA), has many benefits.
Agents should be able to guide landlords through the 70 pieces of legislation a landlord needs to comply with, and the complications of local letting markets, as well as practical issues such as out-of-hours services for emergencies.
Managing Director of ARLA, Ian Potter, says: “There are no restrictions on who becomes a letting agent, so seeking advice from an agent affiliated to a professional organisation is highly recommended. They are trained, offer client money protection and there is a redress scheme in place if things go wrong.”1
An agent can also help market the property to the market. Letting agent Aston Chase, for example, turn away landlords whose properties are not in a good condition.
“Demand for one to three bedroom apartments has decreased and properties in secondary locations with poorer decorative finishes are struggling to attract tenants who can now consider more luxurious options at lower prices,” explains Aston Chase’s Adam Phillips.1
Amanda Bastin has managed an investment property in West London for two years, but has now decided to offer it to a letting agency.
“I thought it would be easy to manage as I’m a letting agent myself and I love nearby,” says Bastin. “But getting the property ready for a tenancy, including organising inventory clerks and changing utilities, is very time-consuming.”
She adds: “When items break, you need to be there to let in repair people. It’s massively stressful; and I know what I’m doing.”1
Competition between letting agents has meant a decrease in fees; it is now common to find let-only for only 6%, and just 10% for full management, according to Sarah Rushbrook, Founding Director of property management company Rushbrook & Rathbone.
“There are alternatives to a fully managed service which protect the landlord from legal and financial blunders, but allow him or her to organise their own day-to-day maintenance,” says Rushbrook.
She explains further: “For most landlords who choose to go it alone, this would prove to be a safer option while still giving them control over maintenance expenses.”1