To use a letting agent or to go it alone?
Anyone letting out a property has a crucial decision to make. Do they handle the let themselves, or find an agent to do some or all of the work for them?
Hiring a letting agent has big advantages. An agent has more purchasing power when it comes to marketing than most individual landlords, so they may find tenants for the property more quickly. They can also handle the negotiations with would-be tenants – from showing them round the property to drawing up contracts – which can otherwise be time consuming and sometimes daunting.
Once the property is let, the agent will still offer valuable services, from collecting rent to handling maintenance (where they may have negotiated discounts from preferred suppliers). That can be a huge benefit if, say, the central heating breaks down on Christmas Day, or a pipe bursts in the middle of the night.
The big downside to letting agents is the cost – possibly as much as 15% of the monthly rent. That cuts into the income tenants earn and may seriously affect the affordability of a buy-to-let mortgage. Anyone considering using a letting agent should do their sums carefully.
Ideally any agent you choose should be part of recognised regulatory body such as ARLA or NALS. This way you can ensure your money is covered under a Client Money Protection (CMP) Scheme. These schemes ensures that should anything untoward happen to clients’ funds then they are reimbursed. Not all agents will be covered by a CMP scheme, those that are will be endorsed as part of the Safe Agent Scheme
What letting agents offer
You may want to use some of the facilities of a letting agent but not others. That’s fine: most agents offer different levels of service, at different prices. The more you ask the agent to do, the more you’ll pay. Service options include:
Finding a tenant
The agent will market your property and show interested tenants around. Once a tenant has made an offer you’re happy with, you takeover.
This is the next option up. The agent not only finds tenants but also takes responsibility for vetting them – by checking references, for example. The agent will also draw up tenancy agreements and other important documentation, and secure deposits. You take over once the tenants move in.
In addition to the letting service, you can also ask the agent to collect rent on your behalf – and to chase arrears.
This is the complete service – in addition to the above services, the agent will manage your property on an ongoing basis, arranging maintenance and acting as the tenant’s contact. You need never get involved in managing your investment, but you’ll pay for the privilege – a fee of 15% of the rent is typical for full management.
Who’s responsible for what?
If you decide you need a letting agent for some or all of these services, make sure you understand how much you’ll pay and for what.
The letting agreement is your contract with the agent, so read it carefully. It should include details of costs in a clear one or two-page summary, and set out the complete range of services that you’re signing up for.
If you’re not signing up to a full management contract, make sure you’ve considered how you’ll provide the services you’re not getting from the agent. You may wish, for example, to line up tradesmen who can respond quickly to emergency maintenance problems.
It makes sense to take independent advice before taking out a buy-to-let mortgage. Our expert mortgage advisers will search thousands of mortgage deals made available to us and pick out the one that’s right for your circumstances.