Whether you invest your hard-earned cash into a property with the view to rent it out, or whether you find yourself in the position of an accidental landlord through property inheritance or similar, one of the questions you may be asking yourself is whether or not you should use a letting agent.
A letting agent takes on some or all of the management of letting your property. Using a letting agent can be the perfect solution if you’re a little unsure of your management abilities as a landlord or strapped for time. However, they do come at a cost.
It’s important to know exactly what you could be buying into when deciding whether or not to use a letting agent. Here is some guidance to help you find the right solution for you.
What does a letting agent do?
Most letting agents offer different levels of service, all coming at slightly different costs. There are three main tiers of service commonly offered.
Usually, the most basic service available is finding tenants. Finding the right tenants is step one in enjoying a successful tenancy. However, it can be difficult to get right. You need a comprehensive referencing process in place with the experience behind you to know which tenants are going to be right for you and your property.
A letting agent can take photos of your property, create the floor plan and inventory and advertise your property, coordinating and running viewings alongside this. Once a prospective tenant has been found, they will organise referencing and Right to Rent checks, set up the tenancy agreements and arrange the date for the tenant to move in.
The next level of service is rent collection. Some agencies consider this to be part of the above tenant-finding service, but others consider it as something separate. With this service, a letting agent will collect the rent and handle any and all legal requirements associated with this such as storing deposits in an approved tenancy deposit scheme.
It can be difficult to know the best way to approach the situation when a tenant is late with rent. Using a letting agent can be beneficial as they can chase up payments, serve notices and advise you on the best course of action if a tenant simply isn’t paying their rent. You may even be able to find a letting agent who offers insurance to protect your income in the case of rent arrears.
Full property management
Lastly, letting agents offer a full property management service. Of course, this is the most expensive service, often costing around 15-20% of the monthly rent you charge on your property or properties.
This service often includes all aspects of finding tenants and collecting rent, along with being the main point of contact with your tenants, organising maintenance and inspections and handling disputes. Essentially, a landlord can sit back and focus on other things when utilising a full property management service with a letting agent.
Other services that letting agents can provide are ensuring your property is free of safety hazards and meets all legislation, checking out tenants and checking in new tenants and dealing with vital certificates and documents that a landlord must have in place by law, such as Gas Safety Certificates, Energy Performance Certificates and the like.
Advantages of using a letting agent
If you have the money to spare, there are many advantages to using a letting agent, including:
- Ensuring you receive your rent and approaching these situations in the right way
- Finding the most suitable tenants
- Handling maintenance and repairs
- Ensuring you comply with regulations
- Saving you time
- Acting as the middleman
The various management services of a letting agent take a load off your mind if you’re a busy landlord with multiple properties or a new landlord with a fear of slipping up and making mistakes.
Disadvantages of using a letting agent
Of course, with anything, there are both pros and cons. There are a few reasons why using a letting agent may not be right for you. These include:
- They can be costly
- Repairs can come with an additional cost
- You hand over your control as a landlord
- Little to no contact with your tenants
If you’re the type of landlord who wants to build a rapport with your tenants and will sleep better at night knowing the situation with your buy-to-let properties, using a letting agent may not be worth the money for you.
Whether or not you should use a letting agent will depend on your individual circumstances and the kind of landlord you want to be and the kind of service you want to provide. Arguably their biggest pull is the peace of mind that they can provide, knowing your tenants are in the capable hands of experts. This can help reduce the risk of things going wrong in your tenancy. Remember, you will still want to ensure that you are covered with landlord insurance, whether you decide to use a letting agent or not.
The most common reason why people decide not to use a letting agent is arguably the cost. Not all landlords will feel that they are worth the investment, and that’s okay. If you do decide to use a letting agent, always ensure you make an informed decision and choose an agency that you can trust.
You may be interested in: 5 Crucial Tips to Hire the Right Tenant for Your Rental Property