Letting agents – some landlords avoid them, some couldn’t do their job without them.
It’s a personal preference and depends on the way that each individual landlord chooses to operate.
The great thing about letting agents is that they manage many of the tricky and lengthy aspects of tenancies that a lot of landlords dislike. However, finding the right letting agent can be a minefield for those unsure of what they are doing, so this handy guide from CIA Landlord Insurance may be helpful in laying out the basics.
Who would benefit from a letting agent?
Landlords that would benefit from a letting agent are those who have many properties to manage and are struggling to find the time to keep all their balls in the air, so to speak. Many landlords also don’t live close to their rentals, so may look to a more local letting agent to keep tabs on their tenancies.
They can also work well for first-time or inexperienced landlords, who may opt for a letting agent for some security and support. This is particularly helpful for keeping on top of all the relevant regulations and legislation and preventing anything going drastically wrong or getting missed.
Many landlords however prefer to take full control and handle the in’s and out’s of the tenancy process themselves. In this instance, a letting agent is rendered fairly useless and would mostly be a waste of money and resources, as letting agents do not come cheap.
What do letting agents actually do?
The level of services that letting agents charge is a more complicated one than may initially meet the eye. Do you want a ‘let-only’ or ‘tenant-find’ service, for example, or a more comprehensive fully managed service for your property?
The two main categories of service that you can expect the typical letting agent to provide are ‘let-only’ and a full management service. The first, a ‘let-only’ service, entails the letting agent taking responsibility for things such as providing a rental assessment so that you have a good idea of how much rent you can realistically charge, conducting viewings of the property on your behalf and performing the tenant referencing.
You may also expect a letting agent’s ‘let-only’ service to provide a tenancy agreement, credit check the prospective tenant and take the tenant’s first payment, in addition to setting up any direct debits.
A full management service – in addition to incorporating the elements above – will typically also take responsibility for the day-to-day management of the property off your hands. This means that in the event of the tenant locking themselves out or the boiler ceasing to work, for example, the letting agent will arrange for one of its approved contractors to do the work.
How much do letting agents charge?
The ‘going rate’ can differ greatly depending on location and even the size of your property, making it difficult to simply presume that the fee will be near whatever ‘guideline’ level you may have come across for your local area or the country as a whole. Many letting agents are open to negotiation when it comes to fees, so you may be able to get a much better deal if you are prepared to haggle. Request pricing from two or three letting agents in your locality, and take negotiations from there.
For a ‘let-only’ service, if you hire a small independent letting agent, you may be lucky enough to only end up paying about £200. It’s more likely however that you will be charged the equivalent of about two to four weeks’ rent for such a service, which may add at least another couple of hundred pounds to that price.
A full management service will typically be a 12-month deal with fees starting at about 7% and rising to as much as 15% among some letting agents in London. Any prices lower than this should probably be avoided as the standard of service may not be up to scratch.
So, should I use a letting agent?
In today’s digital age where information is easily available about ways to conduct many of a letting agent’s traditional duties yourself, a ‘DIY’ approach is attractive to many. With plenty of research and walking yourself through the process slowly, handling the process yourself can easily be done. It’s also important to remember that letting agents are unregulated and there are no statutory standards for the service or fee’s, so if you do go ahead it is vital that you do your research and only go with trusted agents that are going to look after your money, your tenants and your tenants money.
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Being a landlord isn’t easy. Doing all of your own property management may be extremely difficult, depending on your level of experience, number and size of your property/s and the nature of your tenants. You’d hope that you can do everything that is expected of you and keep your tenants happy but that’s not always going to be the case. If dealing with unhappy tenants is your idea of a nightmare, using a letting agents full service will mean you don’t have to directly handle them – your agent will.
Only you as a landlord can ultimately make such a decision in accordance with your own circumstances and requirements, but by keeping yourself well-informed on the matter of what letting agents charge, you can maximise your chances of making the best possible choice.