Landlord Tips: The pros and cons of using a management agent
As a new landlord, deciding whether to manage a property yourself or paying a letting agent to do it can be a big decision.
Relevant factors will include how much time you have to devote to the property, your technical experience or expertise and the cost of management or letting agency fees.
What do you need to consider?
- Do you have the time and patience? If you are going to be a DIY landlord, you need to ensure you have the time and are readily accessible to deal with problems like repairs. If the boiler packs up when you are away on holiday, who is going to sort it out?
- Are you up to speed on the legal side? Landlord and Tenant law is complicated and constantly evolving. You need to ensure you understand the basics of tenancy agreements, deposit legislation etc or be prepared to learn them. Otherwise it could prove costly.
- Do you have the technical know-how and practical skills? Think whether you can unblock a sink or deal with a window that has jammed shut, or have a friendly handyman on call that can.
What are the advantages?
- A letting agent can find you a tenant and deal with the initial tenant screening process including taking up references.
- They can deal with all pre-tenancy issues such as providing the tenancy agreement for you, collecting the deposit and rent in advance or organizing the inventory check-in.
- Letting agents can sort out problems which arise during the tenancy such as chasing a late payer or a tenant who wants to leave early.
- They can help ensure that you comply with necessary regulations and legislation.
- If maintenance is part of your management agreement, they can organize any repairs needed.
What are the disadvantages?
- Most agents will charge you a fixed percentage of the annual rent to find a tenant (a “finder’s fee”) and a higher percentage if going for the full management option. VAT will be charged too.
- There are likely to be additional charges on top for preparing contracts, inventories, credit checks, checking tenants in and out and visits to the property.
- All terms and fees should be clear and transparent but unfortunately, this is not always the case.
- Some landlords complain that many tasks undertaken by letting agents are routine/administrative in nature and bear no relation to what they are actually charged.
- Some landlords have complained of a slow and unprofessional service when using a letting agent, with emails going unanswered and often having to sort out tenancy problems themselves.
What do I need to know?
- If you do decide to use a letting agent, check they are a member of the National Approved Letting Scheme or a recognized professional body such as the Association of Residential Letting Agents (ARLA).
- Decide in advance how much you want the letting agent to do. This could be just finding a tenant to fill your property or asking them to manage the property and deal with issues which arise during the tenancy.
- Check very carefully what the management fees are, what is covered by the agreement and the small print.
- In particular, check how you will be charged if using a full maintenance service and if a renewal fee will be charged once the first contract comes to an end (even if the same tenants stay on).
- Be clear how the management agreement can be terminated and how much notice you need to give the letting agent.
Some clauses in a management agreement may not be enforceable and if you have any concerns, you should seek legal advice.
For more tips on managing your property, you can check out our guides here.