Selecting a Letting Agent
The best way for a Landlord to identify a good local Letting Agent with experience of the local letting market, is by word of mouth. A personal recommendation from a fellow Landlord, The Local Authority or friends who might of received a good service as tenants. Ask around and read feedback and comments online.
A Landlords decision will be based on the Letting Fees, level of service and how well personally a Landlord thinks that they can work alongside the Letting Agent.
When meeting the Agent at the pre-letting appraisal, the Landlord should ensure that they can not only work alongside the Agent but also put themselves in the tenant’s shoes by asking the type of questions that tenants will ask of Letting Agents, such as fees, service level, out of hours contact, the Letting Agents thoughts on maintenance and repairs and their due processes.
All Landlords should look out for the length of time that the Letting Agent or Company has been in existence, but because the Company has been in existence for that length of time, it does not mean to say that they have always let properties. One important factor to remember is that “anybody” can set themselves up as a Letting Agent. You do not want to sign up with a new Company a “fly by night” who is “here today and gone tomorrow”. If the Letting Agent has been in business for in excess of 10 years it is a sign that they are doing a reasonable job and have a sustainable business.
Letting Agents are NOT REGULATED. Unlike Estate Agents who are covered by The Estate Agents Act 1979, Letting Agents remain unregulated and there are various Trade Bodies and Schemes that a Letting Agent can voluntarily affiliate to, the most prominent, respected and heavily regulated Professional Body is ARLA (Association of Residential Letting Agents). ARLA sets out a Code of Conduct for its members to follow, including a complaints and disciplinary procedure. ARLA Members are also required to have Professional Indemnity Insurance in place to protect Landlords and Tenants and also ARLA Members have a Client Money Protection Scheme in place therefore ensuring that any rent, deposit or money paid to them is totally covered. For example, if the Agency closes without Notice or goes bankrupt or into administration. Also, an ARLA Agent is required to ensure that Client’s monies are kept separate from their own and their Client’s Account where all rents and deposits are paid into is audited on an Annual basis by a Chartered Accountant and a report provided to ARLA. This is not to say that non-members of ARLA won’t be equally reputable, it just ensures that in an unknown market place, Landlords are less likely to end up with a rogue Letting Agent.
There are other Trade Bodies that Letting Agents can affiliate too, including The RICS (Royal Institute of Chartered Surveyors) and The National Landlord Association amongst others, but non-regulation of Letting Agents means that most have little power and some are pretty much just a sticker on the window or a badge on a letter head.
There have been calls for tighter regulations of the Letting Industry and Private Landlords. Much has happened recently in The Estate Agency and Lettings market which has long been covered by The Estate Agents Act 1979, but for now Letting Agents primarily remain unregulated and are free to make up their own rules as they go along, if they are not members of a recognised Trade Body.
It is worth Landlords considering the location and opening hours of the Letting Agency Office, extended opening hours and weekend opening hours will obviously be attractive to busy professional tenants or if a Landlord ever needs to discuss something.
During the rental appraisal, a Landlord should gather as much information as possible about the services and knowledge of the Letting Agent. Carefully check as to what is included within the fees as there is no recognised standard of service or standard of charges so it is not always as simple as comparing one against the other on their headline price.
Also, you should consider as mentioned previously the costs associated with Tenants renting the property. Obviously, an Agency that has significant charges for tenants are less likely to attract good tenants rather than others that have more reasonable or lower fees. Some Landlords may go as far as acting as a Mystery Shopper to test the levels of services that they or a tenant can expect, but if Landlords are in any way concerned then it may be a way of putting their minds at rest.
In essence, Landlords should be looking for.
- Letting Offices that are smart and professional with helpful and knowledgeable staff – not only with life experience but also Tenancy Law and Regulations.
- A good Lettings Office location
- Membership of ARLA
- Personal recommendation from respected Letting sources.
Should Landlords Employ the Agent on a Full Management Contract?
Most Letting Agents love having a fully managed contract on a property and will always encourage a Landlord down this route. If the Landlord thinks that the bill for the initial set-up is expensive for ongoing rental management Landlords will be charged between 8% and 15% of the gross rental income which should include a Rent Warranty Policy provided by some Agents free of charge for the first initial 12 months of the tenancy. This for some Landlords can mount up too many hundreds, if not thousands of pounds per year.
What does a Letting Agent do for a Landlord under a Full Management Contract?
As is the case for Let Only, the exact details of what carried out on a Rental Management Contract will vary depending upon which Agent is instructed. However, generally it should include:
- Once the property has been let, the Agent will collect the rent and pay it into the Landlords nominated Bank Account and provide a written statement. At the end of each Tax Year they should provide a Statement of all income and expenditure with the expenditure broken down into commission, VAT and repairs.
- Organising the repair and maintenance of the rental property. The Landlord is obviously responsible for the maintenance costs incurred, it is best to agree at the outset a figure which the Landlord has delegated responsibility to carry out any maintenance work, for example, jobs less than £100.00 including VAT. This allows the Letting Agent to get minor building faults repaired without delay, but also allows the Landlord to retain the option to bring their own Building Contractors in for larger scale maintenance works or at least vet and approve those selected by the Agent before the work is undertaken. A good Agent should always contact their Landlord before arranging any repair. It has become common practice within the Rental Market that some Agencies will charge a repairs arrangement administration charge of anywhere between 5% and 20%. Any prospective Landlord looking to use a Letting Agent, under no circumstances should work with an Agent that carries out this practice. It is an unnecessary expense on the Landlords behalf and to be quite honest, the arrangement of any maintenance works during a tenancy should be included within the Agents commission charge.
- All Tenants enquiries and problems during and outside of Office Hours. This can also include the arrangement of maintenance and repairs, social issues, break-downs, disputes with neighbours, parking issues within the road etc.
- Arranging a Gas Safety Certificate at no additional cost – if required.
- Complete the Annual smoke alarm and carbon monoxide test.
- The Letting Agent should carry out the check-out at the end of the Tenancy and make any deductions from the rental deposit if appropriate. Following an inspection from the Landlord and receiving the Landlords instructions, Letting Agents will be responsible for the organising of any maintenance work to make good any damage caused during the Tenancy which would be deducted from the Deposit. Any additional works that the Landlord wishes to carry out to the property or need to be done as ongoing maintenance will need to be arranged by the Landlord whilst the property is unoccupied. It is worth Landlords noting that very rarely will a Fully Managed Property include the let-only service of getting a new tenant. What some Letting Agents do is offer a reduced Lettings fee for those Landlords with a Fully Managed Agreement.
The principle behind a Full Property Management Contract is exactly that, effectively the Landlord relinquishes the day-to-day responsibility and management of the property to the Agent, who then deals with all aspects of the property management from rent collection through to Tenancy Renewals and re-letting, together with Tenancy Deposit Schemes.
The Agent should merely keep the Landlord informed as to the progress of the tenancy and what actions are necessary, as and when they are necessary or what actions have been taken. Therefore, a Landlord receives the rent in their bank and a paper statement every month.
Certain aspects of the Residential Property Market will inevitably involve some consultation with the Landlord, but once in place a good Letting Agent should inform the Landlord how they have sorted out problems and not keep presenting them to the Landlord with a whole series of questions and dilemma’s. A good Agent will contact the Landlord, ask a few brief questions, provide advise which is normally the answer, to obtain the Landlord’s agreement that they wish to instruct them to proceed on that basis.
Maintenance of Rental Property
Other than problems with the tenants with none payment of rent or dealing with their complaints and requests, the biggest aspect of Residential Property Management is maintenance.
The repair and upkeep of any property is a constant battle dependent upon the age of the property. Obviously if the property is modern there is very little maintenance involved initially, but if the property is a 100-year-old terraced house, there will always be ongoing issues and ongoing maintenance by the virtue of the age of the property. Therefore, what any good Letting Agent should have is a comprehensive contact directory of local trades people that they can call on to sort any issues in property, cheaply and efficiently. This is where having an honest and pro-active Letting Agent is so important. What Landlords do not want is a Letting Agent who is constantly trying to receive additional income. This was mentioned previously and it has become common place in the management of rental property by Agents and this is likely to increase with the possibility of the abolition of tenant’s fees, an arrangement fee for any repairs during the Tenancy is now starting to be charged by most Agencies. This fee can vary dependent upon area and the Agent concerned. 5% being the minimum but as much as 20% in some areas.
Landlords do not want to be paying for Tradesman’s kickbacks to the Letting Agents each time that they have work done. After all, the Agent is employed by the Landlord to do their bidding and this should include finding a local tradesman who can do the cheapest property maintenance job to the highest standard. However, like so much in business, these charges should be disclosed to the Landlord prior to the Tenancy commencing and should be shown on the Agents website and within their offices, but if these charges are not disclosed, Malpractice is not easy for a Landlord to prove. What the Letting Agent should always provide the Landlord with is a receipt for property maintenance work carried out in order that the Landlord can offset it for Tax purposes against any residential property income.
If the Landlord has concerns that the Agent is ‘on the take’ then they should contact the Contractor directly and arrange all future repairs with the contractor cutting out the Letting Agent out of the deal. Ideally the Agent should also produce several alternative maintenance quotes to prove that the one that the Letting Agent eventually accepted was the best, but this is a lengthy and timely process and some repairs are required to be carried out instantly. Also, some trades people will require payment for visiting a property and providing a quotation. In saying that, therefore, this is why it is important for a Landlord to feel that they can trust their Letting Agent straight from instruction.