Not all landlords need to use a letting agent, but unless you have the time and experience to manage your own portfolio, a letting agent is often useful.
Letting agents can help you find new tenants, manage existing tenants and properties, and do pretty much everything that needs to be done so you can sit back and forget about your investment (mostly). At least that’s how it is supposed to be!
A good letting agent will make your life much easier, but a bad one can cause a lot of headaches, not to mention cost you more money than you probably want to spend. Read on for some tips on how to choose the right letting agent.
What services can landlords get from letting agents?
Before you do anything, decide what exactly you need a letting agent to do.
Finding tenants is a common reason to use a letting agent. Many tenants register with letting agents when they look for a rental property, so if the agent manages your property, you have a steady supply of fresh tenants beating a path to your door.
Letting agents can also collect rent on your behalf, which is handy if you live overseas.
Finally, for landlords who have neither the time nor the desire to manage their properties, letting agents offer a fully managed service. This means they manage tenancies, carry out maintenance, and do everything a landlord is obligated to do. All you have to do is wait for the rent to hit your bank account.
Does using a letting agent mean the landlord is no longer responsible?
The short answer is no.
Letting agents can advise you, but ultimately, as the landlord, you are legally responsible in the eyes of the law. This applies even if you signed up for a service and the letting agent doesn’t actually do anything they were contracted to do.
For example, let’s assume you pay for a fully managed service and then disappear on holiday to the Maldives. The boiler service is due in one of your properties and you assume the letting agent will organise this for you because it says so in the contract!
Time passes and there is a problem with the boiler: it starts leaking CO gas and your tenant ends up seriously ill in hospital. Whose fault is it? You could argue that it is the letting agent, but the tenant has every right to sue you, the landlord. You can counter sue the agent to recover your losses, of course, but that’s a long and expensive tale of woe no landlord wants to end up involved in.
Check the small print on each service
There is no standard service. Some agents include things like property inventories in their managed services whereas others do not. It is very important that you double-check what the letting agent is providing before you sign up.
Research local market rates for letting agents
Letting agents can charge what they like subject to market conditions. In areas where several letting agents jostle for space on the high street, fees are likely to be more competitive, so it is worth shopping around for a better rate. However, be wary of a letting agent that promises a 5* service on a bargain bucket price. They are probably cutting corners to protect their profit margins, and if they do that it could come back to bite you, as we have already touched upon.
Letting agents can no longer charge tenants fees for doing anything and everything, so many are making up the shortfall by charging landlords more. Ask for an itemised list of fees, so you know exactly what to expect if you sign up to their service. This also makes it easier to compare like for like when you decide between agent A and agent B.
Big chain letting agents may charge similar fees to each other and probably won’t be willing to negotiate all that much. However, this doesn’t mean you shouldn’t try! It never hurts to ask for a discount on a letting agent’s fees, especially if you plan on using them to manage a large number of properties.
Ask for recommendations from other landlords
Probably the best way to find a reliable, good value letting agent is to ask other landlords for recommendations. Join landlord groups on Facebook and ask for advice. For example, the LandlordsUK group on Facebook has over 9k followers, so there is bound to be some landlords from your area on there.
Post on Twitter and ask for advice. It is probable that some will be operating in your area. Don’t dismiss recommendations from tenants either. If a letting agent treats a tenant badly, they will most likely do the same to a landlord.
Is the letting agent registered with a regulatory body?
There was a time when the world of letting agents was like the Wild West. It was a lawless place and more than a few landlords (and tenants) were taken advantage of by disreputable agents who thought nothing of charging shady fees and disappearing into the sunset with a landlord’s cash.
In the wake of numerous complaints, the government took action to try and clean up the sector.
Letting agents are now legally required to be a member of one of two redress schemes. These independent bodies can hold a letting agent to account and are there to solve disputes between landlords and agents. If a letting agent is not a member of a redress scheme, their local council can fine them up to £5,000.
The two redress schemes are:
There are also two other redress schemes, which a letting agent may also be a member of. These are:
Safeagent, formerly called the National Approved Letting Scheme, a not-for-profit accreditation scheme for letting agents
Letting agents must be members of the first two and they may also be members of the second two.
Check out a letting agent’s website and/or office to see which redress scheme they are a member of. Membership details should be clearly displayed in the shop or online. It is in your interests to use a letting agent registered to a redress scheme. Membership of a scheme means the agent must abide by a code of conduct, and if they do provide a poor service, you can make an official complaint, free of charge.
It’s wise to verify a letting agent’s membership before you sign up for their services. Some disreputable types will show off their membership badges but are not actually members. If you do come across a letting agent that claims to be a member of one of the above schemes but actually isn’t, get in touch with your local housing department and report them.
Online agents versus high street letting agents
High street agents have been around since the age of the dinosaurs (well, not quite, but you get the idea…). But the world is moving on and online letting agents are now snapping at the heels of their traditional peers.
There really isn’t much difference between the two, apart from the fact an online letting agent doesn’t have a store.
It’s possible to save money if you use an online letting agent like Rent My Home or OpenRent but bear in mind that many online-only letting agents don’t offer a fully managed service, which some landlords will want.
The main benefits are rolling monthly contracts as opposed to a 12-month contract and much cheaper fees. On the downside, you’ll have to conduct your own viewings, and if you hate using online services, an online letting agent isn’t going to float your boat.
Mix and match letting agent services
You can always enjoy the best of both worlds by using an online letting agent’s tenant finder service and then switching to a fully managed service with your local high-street letting agent.
Don’t forget to casually mention the fact that you’re considering using an online letting agent when a high street agent is giving you their sales spiel. It doesn’t do any harm to gently remind them you’re switched on enough to recognise the merits of an online service.
How proactive is the letting agent?
Pay attention to how fast a letting agent returns your call when you are making enquiries about their services. If a letting agent takes forever to get back to you when you are thinking of using them, imagine how slow they’ll be when you have a problem!
You also need a letting agent that will actively look for new tenants, rather than wait for them to stumble into the shop. Check whether your letting agent uses the main property portals like Rightmove and Zoopla. Ask them about their marketing strategies. The longer a property remains empty, the more it will cost you.
Ask potential letting agents the right questions
Find out how the agent plans to manage your money for repairs and such like. Do they provide a monthly account update?
How often will you be charged for repairs and maintenance (if applicable)?
How often will rental payments be transferred to your account?
Find out which money protection scheme the agent uses.
Are they clued up with the latest rules and regulations?
How long is their average void period?
How often do they carry our property checks?
If you have other questions, now is a good time to get some answers, and if you don’t like what you hear, walk away.
Check the letting agent’s T&Cs
Go through the T&Cs before you sign anything. Check what the agent’s fees are and how much notice period you have to give if you want to end your contract (if applicable).
Never sign on the dotted line without carrying out a stringent sanity check on the contract. Take it away and read it at your leisure. No reputable letting agent worth their salt will put pressure on you to sign then and there.
Go through the terms and conditions until you are satisfied with everything on offer. If there is anything in the contract that raises a red flag, ask a legal expert to cast an eye over it.
Do a price comparison
If you have more than one letting agent on your short-list, run a price comparison to see which one offers better value for money. Cost shouldn’t be the only criteria, but it does make a difference at the end of the day. Letting agents typically charge between 10% and 15% of the annual rent for a fully managed service, which will soon add up. This will reduce your rental yield. Make sure you won’t be making a loss at year-end if you do decide to sign up for a letting agent’s services.
Finally, don’t be swayed by a smooth sales pitch. It doesn’t matter how charming your letting agent is if they end up costing you time and money in hidden fees, a lack-lustre service, and conditions hidden away in the small print.
We hope this guide helps you in your search for a great letting agent. Please let us know how you get on.
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