Landlords usually have a couple of options when it comes to either finding tenants or managing the properties they rent out to those tenants. They can either take care of everything themselves or they can utilise the services of a letting agent.
For a new buy-to-let investor, choosing which to go for can be a dilemma, especially if they have the means to take of everything themselves but could possibly do with a more experienced head taking care of certain matters.
The Two Options Provided by Letting Agents
Within the letting agent option there are usually another couple of options depending on exactly how much of the burden the landlord wants them to take, with most letting agents offering a two-tiered service.
The first tier is a ‘let only’ service where they take care of finding a tenant for the property. They will identify or advertise for potential tenants, then interview them and check their references. If successful, the letting agent would then take care of the tenancy agreement and secure the deposit and first month’s rent from the tenant, for which their fee is likely to be somewhere around the 10 to 15% mark of the monthly rent. This option can be ideal for new buy-to-let investors who need that experienced head to get them rolling but would then prefer to take full control of the reins thereafter.
The second tier would be a ‘full management’ service, which would be ideal for anyone who might be too busy to be on stand by for any issues your tenants might have, or who doesn’t want the stress and bother of chasing up rent payments or arranging for plumbers to go and fix a broken boiler. When a letting agency takes full management of the process, they take care of everything in the ‘let only’ service but will then remain in charge of maintenance of the property as well as securing the monthly rent payments. This full management service can cost upwards of 15 to 20% of the monthly rent, and is of course an ongoing payment rather than a one-off as it is for the ‘let only’ fee.
When using a letting agency, it’s important that you only use an agent that is registered with one of the professional estate agent organisations such as those listed below.
ARLA (Association of Residential Letting Agents)
NAEA (National Association of Estate Agents)
UKALA (United Kingdom Association of Letting Agents)
The reason for only using an agency registered with one of these national organisations was explained by Ian Potter, Managing Director of ARLA, to the Telegraph newspaper. Mr Potter said:
“There are no restrictions on who becomes a lettings agent, so seeking advice from an agent affiliated to a professional organisation is highly recommended. They are trained, offer client money protection and there is a redress scheme in place if things go wrong.”
Letting agents are certainly worth the money if the time you have to spend on looking after your tenants is severely limited as occasionally they will need you to be there for them which will intrude on your other endeavours. Paying a letting agency to take care of everything for you will repay you in time and reduced stress, so they are certainly worthwhile in many cases.