CHOOSING A LETTING AGENCY - PROPERTY MENTORING FROM LETTINGFOCUS.COM
LettingFocus.com expert David Lawrenson explains how to choose a good letting agent.
A letting agent can not only find a tenant for you they can also manage your property too, which may be particularly useful if you live a long way away or simply don’t have the time.
USING A LETTING AGENT TO FIND A TENANT
If the agent is just finding a tenant for you, you need to make sure that their ad for your property will be uploaded to all the big portals like Rightmove to maximise their marketing and reach the highest number of tenants.
You also need to check that they will be carrying out thorough reference checks. I know many landlords who got tenants from hell from letting agents who did not check out prospective tenants properly.
So you simply MUST check that they are doing this part of their job by asking to see at least some of the references they have obtained and speak to the prospective tenant yourself before any let is agreed.
Check what you are paying the letting agency for. Will they be doing an inventory check when tenants move in or will they even be doing the inventory at all? Is there an extra charge for this service? How good is the inventory they are going to do? Ask to see a sample of one done in the past.
LETTING AGENTS AND CONTRACTS
Check the agent's contract carefully and negotiate on the renewal fees they charge if the tenants decide to stay on.
If the tenants simply move onto a periodic tenancy at the end of the fixed term, there is really very little (if any) work for the agent to do so they should not be charging you extra for this (though many still "try it on" - especially in London.)
USING A LETTING AGENCY FOR MANAGEMENT
Management can consist of simply just collecting the rent and passing it on to you (save the cost and delay by getting the tenant to set up a standing order direct to your bank account) or actually dealing with all repairs and carrying out regular inspections.
So, if you’re going to use an agent for management, you must be clear about what level of service they are going to provide and make sure that you get value for money.
As a rough guide, if the agent just finds the tenant you will have to pay about 4 weeks or 1 months rent plus VAT, though 6 weeks rent is a more common figure in London. But remember, try to avoid renewal fees!
And if they are managing the property for you, you should expect to pay no more than 5% of the rent for this service.
THINGS TO ASK LETTING AGENTS
If the agent is doing the management for you, you can get an idea how good they are by asking them the following questions:
1.How quickly after they receive the tenant’s money will it be in your account? (Should be less than 10 working days)
2.How frequently will they pay visits to inspect the property and will they charge extra for this?
3.What will they look for when they do inspection visits?
4.If maintenance work is required, who will they call? Do they have their own maintenance people or will they just get someone out of the phone book?
5.Ask if their maintenance people are members of the appropriate professional bodies (e.g. NICEIC for electricians, IPHE etc for plumbers, Gas Safe Registered for gas?) How do they know? Do they check their membership? Do they get second opinions?
6.Will they arrange the annual gas safety check or will they expect you to do that? If they arrange it, will they charge for doing so?
7.Do they have a special telephone number for tenants to call for maintenance out of normal office hours? Is this available 24-7?
8.How quickly will someone be on site if there is an emergency such as a burst pipe, boiler breakdown or electrical fault? (Should be within 24 hours!)
9.Will they request an estimate for routine works first or will they clear cost of work with you or just go ahead? Do they have a cut off point above which they will request your authorization? If so, what is it?
10.Can they advise what the average cost of a sample of typical maintenance jobs is? (Do the costs look reasonable? Compare their costs with those that you could obtain directly.)
GET ANSWERS
They may not have the answers to each question or if they do, they won’t necessarily have documented procedures for their staff to follow in each case.
However, from their responses, you’ll be able to assess their degree of professionalism and whether your property is safe in their hands. If they haven’t got a clue, go to another agent or do it yourself.
The sad reality is that there isn’t much money in managing lettings except for at the luxury end of the letting market. In fact, where an agent has a smart office for lettings, it may be being subsidised from the more lucrative property sales side.
Also, since margins are tight and the work admin heavy and a little dull, some letting agents are tempted to cut corners.
GET A GOOD LETTING AGENT
If you get a good letting agent, they can be worth their weight in gold.
Watch out though, as letting agency staff move often, so don’t leave new staff in any doubt about the standard of service you expect!
ABOUT DAVID LAWRENSON AND LETTINGFOCUS
We work in a consultancy role with organisations helping them with their products and services for the private rented sector. But we also offer a limited amount of unbiased consultancy advice for landlords too.
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Copyright 2011 David Lawrenson. This article must not be copied or re-used without the author and copyright owner’s prior permission.
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