Choosing suitable Letting Agents
Monday 27 February 2017
A question I get asked a lot is ‘how do you choose a good agent? My jovial and perhaps obvious answer is ‘You call Big Red House!’ but in reality it is a very valid and serious question.
The biggest mistake landlords make is choosing an agent based on their fee’s. Have you ever called an agency and asked what their management fee is before you’ve even discussed their service offering? The problem is that it has become a common assumption that all agents are the same, do the same thing and ultimately all charge a monthly percentage based fee! The problem with this approach is that they are not all the same and they most certainly do not do the same thing!
The problem with the letting agency market is that anybody can become an agent without any qualifications whatsoever and without any formal regulation. Many small practices are landlords that have been advised to manage properties for other people due to tax purposes or franchise agents that are only really specialists in advertising and marketing and often fall down badly at the property management stage. Recently a law has come into play that requires all agents and property managers to register with one of three government redress schemes. But this is literally all they need to do!
So how should you choose an agent and what should you be asking them to find out if they are the real deal!
Firstly let’s ask the question, do I need an agent and what do I need them to do? My advice would be to consider instructing an agent if the following applies to you: (not exhaustive)
● You consider yourself a property investor and would rather spend your time building your portfolio than managing it!
● In general you don’t have the time
● You need help finding and vetting tenants
● You live more than over an hour away from your property
● You are not confident about your property management knowledge or the laws governing the private rented sector
● Your property is an HMO or in a selective licence area
● You are quite susceptible to stress and anxiety
Once you’ve made the decision that you need an agent I would suggest doing a small amount of research in the area of your property, before making a decision. It’s fairly quick and easy to take a look on the property portals in and around the area and identify who the active agents are and how quickly they are letting. It’s also worth asking other landlords that you may know if they can recommend anyone. Once you have identified an appropriate list of agents to approach I would suggest you ask the following:
● Are they registered with one of the three recognised redress schemes and if so which one?
● Do they belong to a letting agent association such as ARLA, NALS or UKALA?
● Do they have client money protection in place?
● Do they subscribe to any kind of independent review service such as Trustpilot?
● How much do they charge tenants for applications?
● Describe your property to them and ask what their average lead time is for letting such properties.
● What hours do they operate?
● Do they have an online portal for you to access? This is not essential but very useful.
● What exactly is included in their full management service? Does it include all paperwork, deposit protection and inventories etc?
● How do they collect your rent? Is it on direct debit or standing order. What happens if rent isn’t paid?
● How do they manage your maintenance issues?
● How often will they inspect your property? (If they say every 3 months be careful as you could be accused of breaching the tenant’s right to peaceful enjoyment).
● Test their knowledge; ask them if they can explain what a section 21 notice is and what notice they would use to increase rent? If they can’t tell you then don’t use them for management!
● If it’s an HMO, how many HMO’s do they manage?
● Ask them to send you a copy of their terms of business; this will give you an insight into how quickly they respond to things.
● Do they have properties similar to your on their books?
● Final question which is now relevant, how much do you charge for your services?
Asking these questions will give you much better information enabling you to make a better decision.
This may be a tad controversial but in my experience I would suggest that if you are looking for good property management then avoid the high street franchise agents. In my experience they tend to be all about tenant find and advertising but are generally quite poor in their knowledge about property management law, which is often referred to ‘head office’. Find a well established local Agent that specialises in property management.