How to decide if you need a letting agent
Kate Faulkner breaks down what you need to consider when deciding if you need a letting agent or if you want to do it all yourself.
When you own a property, it’s often tempting to save money by carrying out all the work yourself, from letting it to new tenants, through to managing and organising re‑letting.
But is it a good idea to let the property yourself? Should you use a professional? And, if you don’t, what do you need to do to make sure you know how to comply with the law?
I think the answer is really down to four main considerations.
1. Got the time?
To begin with, the most important point is whether you actually have the time to let and manage a property yourself and, of course, the time to sort problems out if things go awry.
2. Enjoy the hands-on approach?
Secondly, there’s also the question of whether you want to tackle it alone or not! Some landlords I meet actually love the fact they choose their own tenant, enjoy popping round to sort out a problem, and really get a kick out of helping someone put a decent roof over their head.
So if that sounds like you, then it’s definitely worth having a try at letting a property yourself. On the other hand, if your aim is to let it yourself just to save money, be aware that this may not be the best reason for doing so. It will take up an extraordinary amount of your time, especially in the initial stages, and means you’ll be at the beck and call of the tenant. And all the time you’ll be conscious that the most likely moment for a tenant to have a blocked drain or for their heating to fail is probably going to be one that is most inconvenient for you!
3. Do you live nearby?
If you do decide to ‘go it alone’, the third consideration is that you’ll really need to live nearby, ideally within an hour of the let property. If you live further away, then it can be a tough job, firstly to know whether the repair a tenant requests is actually needed and, secondly, to have local tradespeople ‘on the ground’ that you can trust – all of which is difficult to manage from afar.
4. Up to date with the law?
And the fourth thought – the hardest part of managing yourself – is to keep up to date with all the changes to rules and regulations. I do this for a living and find it tough myself!
Just in the last 12 months, for instance, landlords now have to display any fees to rent on adverts. Plus, the immigration checks landlords need to make on tenants have changed several times from all landlords being obliged to do it, to now only being compulsory in the West Midlands for a trial period. So if you don’t have properties in this area, then you’ll need to keep up to date with the results of the trial, be aware of when it will be implemented across the UK, and also stay informed of any post-trial changes.
If you go it alone
A critical step if you do ‘go it alone’ is to talk to your local authority about any landlord accreditation schemes and also join one of the landlords associations, such as the Residential Lettings Association or National Landlord Association.
In London, for example, you can sign up to the ‘London Rental Standard’, while in Scotland you’ll have to have a licence – the https://rentingscotland.org/ website is a useful resource you should check regularly for updates. In Wales, interestingly, from April 2015, the rules are changing too and you’ll have to be licensed and attend a day’s course to legally let your property.
Don’t forget too that if you like your holidays, or if you fall sick, then you’ll need to appoint someone the tenants can turn to for help while you’re away; a call about leaking taps while you’re lounging on a beach probably isn’t something you want to deal with.
How much is a letting agent?
If this doesn’t sound like the sort of ‘landlord life’ you’d like, then a good quality letting agent can take the strain. From a financial point of view, it normally costs around £1,000 to have your property fully managed throughout the year, depending on your rental and the size of the property. This may seem a lot, and you may prefer that money in your back pocket, but remember that the fee is tax deductible, so that the real cost is a lot less, especially if you’re a higher-rate tax payer.
What letting agents offer
Good letting agents have to do a lot for their money. If you use a self-regulated agent, such as RICs, NALs or ARLA, they will have trained their staff, abide by a code of conduct and have an effective, independent, third party, free complaints service to resort to if you aren’t happy. They will market your property to tenants, carry out all the viewings, recommend the right tenant, organise the tenant referencing, including worrying about new immigration checks, check the tenant in, carry out an inventory and make periodic checks.
They’ll always be on the end of the phone to organise maintenance and repairs; and they’ll remind your tenant to advise them well in advance if they’re looking to leave the property, so that you know in good time if your property needs re‑letting.
The really good agents may also save you hassle and money by offering specialist services, from deals for specialist mortgages, tax advisors through to ensuring any works they organise are undertaken by trained professionals who offer a warranty for their work.
The best thing, though, I think agents offer is peace of mind, for two main reasons. Firstly, to keep up with the legal rules and regulations at both national and local level takes a lot of time. And it’s not just the time it costs you to keep up with them, it’s often also the interpretation of the rules which is tricky, as they aren’t always easy to follow. A great example of this is the grey area of ‘electrical checks’. A good agent will abide by rules and advice given at their training sessions from high quality professionals such as NALs, ARLA and RICs members, and where tweaks are required following court cases, they have huge legal minds working on this for you.
The second way agents offer peace of mind and can give you a ‘hassle-free’ service is by dealing with the tenant on your behalf. A single bad tenant can not only take hours to deal with each week, but can also be stressful to deal with: they may not be paying their rent, or perhaps are refusing to admit to damage that they clearly caused. Or worse still, they may be complaining about damp while not accepting that this might be being caused by their own choice of lifestyle. Sometimes conflict and negotiation are easier and less stressful when carried out by a third party.
So whether you use an agent or not, keeping up to date with the rules and regulations and making sure your tenant is well looked after are ‘must-dos’. It really is down to whether you’re able, or prefer, to do this yourself, or whether you want to enjoy your life free of tenancy worries, and so outsource the legal responsibilities and communication to someone else.