According to National Landlord Association research almost 60 per cent of private residential landlords employ the services of a letting agent for some, or all, of their property portfolio. Below we offer a guide to choosing the right one.
What Do Letting Agents Do?
Landlords’ needs vary, and so letting agents usually offer three distinct services.
1. The Basic Introductory Service
What? The letting agent finds and vets a tenant and provides the tenancy agreement.
How much? The fee charged for this service is sometimes a one-off fixed fee, or more usually, a percentage of the annual rent – up to around ten per cent, or possibly more for a six-month contract.
2. Letting and Rent Collection
What? As above, but with the addition of monthly rent collection.
How much? You should expect to pay an extra 1-3 per cent on top of the let only fee.
3. Full Management
What? The letting agent finds the tenant, collects rent, arranges maintenance, and takes some steps towards ending the tenancy.
How much? Fees for full management are generally in the region of 5-15 per cent of annual rent.
Bear in mind, however, that if you have a number of properties you should be able to negotiate a better ‘portfolio’ rate.
Why Use A Letting Agent?
Although the price may sound steep, using a letting agent can save you both money and time.
1. It reduces hassle
A good agent will take much of the hassle out of letting property, acting as a buffer between you and the tenant - very useful when a tenant loses their keys in the middle of the night!
2. Knowledge of the market
The experienced agent will know the local market, and, before you buy your property, they can save you from making a bad investment by telling you which property types are in demand and in which areas.
Once you have the property they can advise you on the standard of decoration, furnishing, fixtures and fittings you will need, and will ensure that the property complies with legal safety standards.
3. Financial advantage
Not only can an effective agent sometimes achieve a higher rent than you would by yourself, but they can even help you to secure a mortgage.
According to The Association of Residential Letting Agents (ARLA), knowing that the management of property is in the hands of a professional agent can enhance the creditworthiness of the landlord.
4. A portfolio of tenants
The letting agent should have a selection of professionally-vetted tenants available who may be more likely to pay their rent on time and respect the property. This can help to avoid legal problems and voids.
How To Choose A Letting Agent
1. Trade associations
Specialist solicitor, Tessa Shepperson, who runs the Landlord Law website advises landlords to choose an agent that is registered with the National Approved Letting Scheme (NALS), or one of the professional bodies that support it:
The Association of Residential Letting Agents (ARLA)
The Royal Institution of Chartered Surveyors (RICS)
The National Association of Estate Agents (NAEA)
As well as providing training for members and their staff, agencies that are within these schemes will have a client money protection scheme and professional indemnity insurance.
2. Get local knowledge
Consider joining a landlords association and attending meetings where you can gather opinions from other landlords’ experiences.
3. Research before you sign
But don’t just take other people’s word for it. Ask as many questions as you need to until you’re sure an agent is right for you.
If you just need the basic introductory service you will need to know:
- Do they deal with similar properties to yours?
- Do they advertise with large property portals like FindaProperty.com and Primelocation.com to reach the largest potential number of tenants?
- What kind of properties letting agents typically advertise and how well the properties are presented? If you were a prospective tenant, how impressed would you be?
- Visit their offices as a 'secret shopper' to see how busy they are and how they would handle the enquiries of a prospective tenant.
- Will they allow you to talk to some of their current landlords?
If the agent will also collect the rent and manage the property you will need to be more thorough.
David Lawrenson, professional landlord and author of Successful Property Letting, suggests that you assess the agent’s professionalism by asking the following ten questions.
Ten Questions To Ask When Choosing A Letting Agent
1. How quickly after they receive the tenant’s money will it be in your account? (It should be less than ten working days)
2. How frequently will they inspect the property and will they charge extra for this?
3. What will they look for when they visit?
4. If maintenance work is required, who will they call? Do they have their own maintenance people or will they just get someone out of the phone book?
5. Ask if their maintenance people are members of the appropriate professional bodies (e.g. NICEIC for electricians, IPHE etc for plumbers, Gas Safe Register for gas?) How do they know? Do they check their membership?
6. Will they arrange the annual gas safety check or will they expect you to do that? If they arrange it, will they charge for doing so?
7. Do they have a special telephone number for tenants to call out of normal office hours? Is this available 24-7?
8. How quickly will someone be on site if there is an emergency such as a burst pipe, boiler breakdown or electrical fault? (Should be within 24 hours!)
9. Will they request an estimate for routine works first or will they clear cost of work with you or just go ahead? Do they have a cut off point above which they will request your authorization? If so, what is it?
10. Can they advise what the average cost of a sample of typical maintenance jobs is? (Do the costs look reasonable? Compare their costs with those that you could obtain directly)
They may not have the answers to hand for each question, says David, but if they haven’t got a clue, go elsewhere!
Nikki Sheehan
Review our guide to Letting Agents
