If you are a landlord, undoubtedly, you’ve asked yourself, how do I rent my property? Is it worth me renting independently or should I use agents? Which will maximise my reward and which am I able to do most effectively?
Whether you choose to use a letting agent, property managers or decided to rent it out yourself, this article will help you gain a better understanding. Any avenues you may wish to pursue have their own positives and negatives. This article will assess each one to help you decided which path you may want to take.
The letting agent’s role is simple, their main goal is to find you, suitable tenants. The landlord does not have to worry about vetting and referencing potential tenants. Letting agents conduct viewings sort out initial hurdles to start the tenancy agreements. Letting agent usually charge a fee for the tenant finding service. This fee could be in the form of collecting 2-6 weeks rent or a flat percentage rate. Some letting agents will also charge landlords for other smaller costs such as; referencing fees and if not yet acquired a GSC and EPCs they may do this on your behalf.
When letting agent has found suitable tenants, an AST is signed between the tenants and the landlord. Once tenants move in and the landlord will then be responsible for them. Landlords will have to collect rent, arrange repairs at the property if ever required and if applicable, the renewal of certificates such as GSC, HMO licence and EPCs. Therefore, letting agents are a means to find tenants for the property and making sure they are suitable candidates for the landlord.
Property management agents tend to work slightly and more extensively than letting agents. They find suitable tenants and conducting referencing for the property much like letting agents. Property managers ensure all licencing is up to date and that legislation is met.
However, property managers go further and manage the property once the tenants are in. Property agents ensure that any repairs are done and overseen at the property. Agents are also responsible for ensuring that tenant needs are met and are responsible for collecting rent. In the worst-case scenario, property managers also deal with a tenant eviction. The way agreements work will vary from agency to agency. Some agents take a percentage of the monthly cost as fees, ranging from 5% – 20%. Some agencies choosing instead to guarantee rent instead of covering a fee. There are many options and schemes which a landlord can be a part of, so make sure to check what is on offer.
Some landlords prefer to manage all aspects of their property. Finding tenants, making sure that all regulations met and that tenants are suitable for the property. They manage their deposits, draft up their own contract and manage the day to day of the property, taking up the roles of both the letting and property management agents. This means that landlords tend to maximise the amount of money they can receive from their property and usually dedicate a large portion of their time in managing their properties.
When assessing which route you as a landlord should embark on, you should compare the pros and cons of both sides. Letting agents tend to have a large portfolio of suitable candidate tenants. Therefore find it easier to find potential tenants for the property. However, the landlord will then have to manage the property once the tenants have been found. Landlords may pay quite a large amount for the tenant find service and may also find it difficult to deal with tenants. Landlords will also have to deal with the property on a day to day basis. This includes such things as required repairs and tenant requests.
Property managers tend to be all-encompassing. They manage the property for you and dealing with tenants and problems that might be faced. However, landlords tend to see the property very rarely and have very little knowledge of what is occurring at the property as managing agents tend to cover most, if not all the issues. Some landlords opt to put their property in a no-fee guaranteed rent scheme, others prefer a percentage based contract. Some property management agencies fees may be quite high and some may not pay out during periods where the property is vacant.
Finally, managing the property yourself can mean that a landlord can maximise the potential returns that can be received from the property. It also allows the landlord access to the property on a more regular basis. However, if a landlord has very little experience letting out a property, it may be difficult for you to find suitable tenants for the property. It is important to note that landlords must also comply with any new legislation that may come into place. Not doing so could lead to you facing problems with tenants and potential claims filed against you.
It is also important to mention that managing a property can become a full-time job, especially if you are managing multiple properties yourself and this can become very stressful, especially when facing major problems at once. If you are faced with tenants that are also problematic with their rent and you don’t have rent guarantee insurance in place, you might find yourself out of pocket and property with unsuitable tenants.
There are multiple reasons to choose either letting agents, property managers or to manage the property yourself. None of these ways can be categories as “the best” or the “correct” way of dealing with your property. Landlords will always face the decision on how it is best to manage their property and choose different ways to manage it. The important concept is to pick something that is realistic and suitable to you and your lifestyle, you can find that picking the right method of management for you can allow letting out a property to be both fun and rewarding.