This guide provides details of potential areas that you need to look at to use a Letting agent.
The Letting Industry has had one hundred and twenty-seven new laws in the last five years. Landlords are finding it increasingly difficult to keep up with the ever-changing rules. The government are making consistent new regulations.
Letting a property to a reliable tenant is the most important part of letting. But it can be time consuming. The increasing complexity of legislation. Potential hefty fines for non-compliance. This can bring about huge amount of stress.
There are more restrictions in the current climate including Health and Safety measures. These have introduced to protect all parties involved. Landlords will soon have to be party to a Property Redress Scheme. If they use a letting agent, they may not be required.
Landlords.
If you are a landlord and you are short on time or do not live near your rental property. The benefits of using a letting agent can quite outweigh the actual costs. A good local agent who knows the area will be able to rent out your property more efficiently. This might give you more rent and saving you time and hassle.
Please do not hesitate to read our article on rent guarantee here. This tells you about taking a guarantor when talking to a letting agent which is critical. You need to pick the right agent and have certain considerations of yourself. Spend some time on your research. It is important that you take time as a landlord to decide on picking the right letting agent.
We have tried to outline some guidance here. This is to help you get the right letting agent for you. Try and identify somebody that meets your requirements. It is important that you carry out your own due diligence. You need to make sure if something does go wrong you are potentially covered.
Is using a letting agent the right path or direction for you?
The lettings market has now become complex. The ever-mounting paperwork involved for landlords. We understand that it can take up to 75 pieces of paper for tenants to move in. There are various documents that they must sign.
You may want to consider using a letting agent if you do not have the following: –
- Spare time in which to deal with all the paperwork.
- You prefer not to deal with tenants queries you would rather have an intermediary between you that you can refer to.
- The rental property is a different area from where you live.
- You’re a new landlord and not familiar with the private rented sector legislation
- You don’t want the stress and would rather have peace of mind if something went wrong
If you did want to manage the property yourself you might want to consider these:-
You really want to keep your costs down to maximise your returns but are you creating yourself an
Issue that could cost you more money at a later date with the ever increasing legislation.
Want to be a hands on landlord and have time to deal with tenants and queries and any problems that may crop up during the tenancy.
Living in the same area.
You have a reliable network of professionals such as plumbers, electricians that you can rely on who will go round immediately.
Are an experienced landlord and keep abreast of all the regulations bearing in mind the 125 different rules in the last five years.
Need to consider both avenues and what you are particularly looking for.
What should I be asking letting agents when thinking about using one?
You have decided that you want to use a letting agent. The next thing is to identify the best agent that meets your requirements. It is always best to research the market and draw up a shortlist before making a final selection. Look at Google reviews. Do not hesitate to read these through. A company called All Agents you can also read about letting agents. These are the sort of things you might wish to consider:-
What are you looking for from your service? There are three types:-
- a) Tenant find only
This is where the agent only finds a tenant for you. Moves them into the property. Deals with the initial paperwork of the tenancy agreement. Any guarantors or reference and then leaves you to deal with them. It is unlikely that they would carry out an inventory for this type of service. Which is a record of what the property was like when the tenants first moved in. You would then have to deal with the registration of the deposit. All the paperwork and with the tenant once they have moved in.
- b) Rent collection only service
The agent will also besides the above collect the rent from your tenants monthly. They chase any late payments. The day-to-day management is up to yourself. The agent would inform your tenant to contact you direct if there are any works that are required. This can give you peace of mind. It ensures that your tenants rent is not only paid on time but that they are chasing it if it is late. If it is not received at all they will also be dealing with it. This could give you peace of mind. You do not have to deal with a tenant that is late.
- c) Fully managed service
The letting agent will take care of everything for you from start to finish. So you don’t have to worry about finding tenants or collecting the rent and any day to day issues. Obviously they may report to you any issues if you need and they can bespoke the service to what you want.
It is important that you work out what is the price of your time dealing with your property. If you don’t have the time to manage your property or don’t live near it. Then outsourcing the property to a letting agent makes commercial sense. You don’t want to be in a situation where you get a phone call right at the end of the day. Where you are a hundred miles away. Have to try and attend the property late at night. It is something that you need to think about.
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Do not choose an agent just because they are the cheapest.
Do ask about fees. Check what agents are offering. You should never be influenced solely on price. It is so important picking the right letting agent.
Letting agents fees vary across the country and in different areas. Check what the agents are offering including whether they charge. Make sure they do not charge on anything such as renewals etc. Do they charge a setup fee? You will find often that some agents have some form of add-ons. They like to charge for different things. Not all agents are the same. Sometimes it can be said that you do pay for what you get. Make sure thus that if you do enter into a fully managed service that you are not being charged any extras.
Check that the agent complies with the legal requirements such as membership of a Property Redress Scheme, Client money protection and Deposit Protection.
It is vital that you carry out your due diligence to make sure that your letting agent adheres to the law. In September 2019 London Trading Standards claimed that almost half of letting agents were breaking the law. It is important that you check that your letting agent is part of a property Redress Scheme membership. This has been mandatory since 2014. Landlords should make sure that their agent is member of one of the current schemes. This covers you in the event of a tenant’s complaint as they can go through the property redress scheme and get an award against them.
Client money protection
Has been mandatory since April 2020. Landlords should make sure that their agent is a member of this. It is often known as CMP. Letting agents must ensure that their CMP membership is in their offices and on their website. It is important that they also have professional indemnity insurance. A separate bank account where their money is held.
Tenancy Deposit Protection
Law requires all landlords and agents to put the tenants deposit into a Government approved tenancy scheme. It is often the case that landlords are still not aware that they must put the deposit into a scheme. If you do not put the deposit into a scheme you can be fined up to three times the amount. It is important that your agent does this. You can even have problems trying to get the tenant out. It is important that they deal with all aspects of the law.
There are different schemes where the deposits can be held, and they are normally split into two types thereafter. The insurance scheme where it holds the money, but it is backed by an insurance product. The other scheme which is custodial scheme. I.e. the money is deposited with the scheme involved.
It is important that you are aware of what scheme they are in and that they comply with the law.
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Find out how the agent deals with the compliance that you will need to be involved in. There are various amounts of legislation within the private rented sector.
A reputable agent should be fully up to speed with all the latest legislation. This includes Homes (Fitness for Human Habitation) Act that came in in March this year. The Energy efficiency standards for EPCs and capital gains tax changes. Since the pandemic has taken place you will find that the Government has listed out a huge amount of additional requirements for agents when dealing with tenants. Make sure that they are aware of the legislation and that they have policies that include it. You don’t wish to choose an agent and then find out that you are on the wrong side of a claim from a tenant. You may find that some reputable agents have a monthly newsletter that updates you on everything that is going on.
What marketing strategies will the agent be using to find new tenants and market your rental property?
Check that your agent has a proactive attitude towards marketing rental properties and that they have a number of strategies to find a tenant. Do they have a good prominent presence on the internet and know the local market.
Marketing for letting agents has changed dramatically over the years so that almost 95% of people now look on the internet to take a property.
Letting agents often rely heavily on word of mouth for their reputation and don’t hesitate to look through their website to see if they give you information on what they do.
Some letting agents will have special cameras and marketing procedures such as 3D cameras together with plans and exceptional photographs. There are always agents that are one step ahead of the market and they may even have tenants on their books already want to see your property. It is important that you understand their marketing procedures and how they let your property for you.
Does your agent know the local market?
It always makes sense to choose a letting agent that is located in the same area of your rental property or at the very least in the same town. Proximity to good schools and transport links that the local agent will know about can help with tenants.
A local agent is more likely to have a reliable network of contractors and deal with any maintenance issues promptly.
See what their local knowledge is.
You should always find out how the agent will manage your relationship in future. Do you wish to call him or email them? If you have not opted for the fully managed service, you need to give him instructions of what you need from him in future. Do you wish him to carry out works up to a certain amount especially if there is an emergency rather than worrying you about it?
Once you have chosen a letting agent, check the paperwork.
Why is this? You should always make it clear with your management agreement specifying and laying out what the agent has agreed to do for you.
Check the contract carefully and always read the small print before signing it.
Make sure that the letting agent provides you with copies of any tenancy agreements that you need.
It is important that you do your due diligence with your agent especially if you were looking to let the property long term. You want an agent who understands what your requirements are and whether it is income, looking after your property and/or what communication you want in future.
We hope you find the above article useful and if you need a landlord insurance quote and/or professional indemnity then don’t hesitate to contact us.
