There’s nothing more important than picking the right investment in the first place, but maintaining and managing it properly comes a close second.
Picking the right person to look after your investment can be a chore. In this article though, we’ll make it easier by giving you a checklist to follow – and by the end, you’ll feel confident that you’ve made the best choice you possibly could.
(We have our own letting agent, Property Hub Lets. But don’t worry: this isn’t going to be a thinly veiled sales pitch! You should follow these steps whether you’re thinking of working with us or anyone else.)
Your first job is to decide what you want to use a letting agent for…if anything.
There are two broad types of letting agent service:
As you’d expect, a Let Only service is cheaper (although perhaps becoming less so once the agent can’t charge fees to the tenant too). You can probably expect to pay in the range of 5-8% of the annual rent.
A Fully Managed service could cost you anything from 8-15% of the annual rent.
Or you could pay 0% and do it all yourself. This isn’t really free, because your own time has a value – but if you’d actually enjoy the process of being hands-on, and you have enough flexibility to do it, it’d be crazy to pay someone else.
Letting agents are about as popular as… actually, it’s impossible to find an appropriate simile because letting agents are less popular than anything else in the modern world.
That’s because the sector is largely unregulated, so anyone can set up shop and start collecting fees without any kind of experience, knowledge or scruples – and they frequently do. This makes it exceptionally important to do your due diligence when you’re choosing who to work with.
Here are five steps you can follow to draw up your shortlist:
Some good questions to ask letting agents you’re considering working with are:
These should be extremely basic questions for them to answer, so any reluctance or uncertainty isn’t a good sign.
You can decide for yourself what answers you deem acceptable and what your “dealbreakers” are, but the way they answer should tell you a lot.
Choosing the right letting agent in the first place is more than half the battle, but there’s also a lot you can do to control the quality of your relationship with them.
The best investors we work with at Property Hub Lets manage to strike that difficult balance between being responsive and leaving us to get on with it.
Responsiveness is essential: appointing a letting agent doesn’t mean you can go live on a remote island and never answer the phone or check your emails again. (Unless you specifically tell them this will be the case, and give them clear authorisation to take every decision on your behalf.)
A good agent will bring you potential solutions rather than problems – but they’ll still need you to approve those solutions. For example, they shouldn’t say:
” The tenant has called up and said the heating’s not working. What do you want to do?
Instead, a better answer would be:
” The tenant has called up and said the heating’s not working. I got our engineer to take a look, and he says it needs a new part that will cost £300. I can get that fitted tomorrow for you. Is that OK?
If you’re slow to respond, it puts the agent in a very difficult position: they’ve got an angry tenant and nothing they can do about it. And your tenant might become an ex-tenant if they get fed up with things not getting fixed, leaving you with no rent coming in.
On the other hand, it’s critical to leave the agent to get on with their job. If you’re the kind of person who wants to get five different quotes for the smallest job and go through an applicant’s bank statement line-by-line, you really shouldn’t be using a letting agent in the first place.
It’s not an easy balance to strike, but if you can land somewhere in the sweet spot it will allow your letting agent to get on with what they do best while you focus on things you find more productive and enjoyable.
You might have been charmed in the interview, then let down by the actual service. The agent might have taken on too much, and let standards slip. Or you might have cut some corners and made a poor choice.
It happens. The bad news is that under the agent’s Terms and Conditions, you’re normally tied to them until the tenant they found moves out. In the grand scheme of things that’s unlikely to be too long, so it’s easiest to just put up with them until the tenant moves out and you can try again.
If they’re doing such a shocking job that they’re putting your property at risk, you can attempt to bring the agreement to an end. Legal action is likely to be too expensive, but you can put in an official complaint then escalate it to the Ombudsman if you’re not happy with the response. You could even offer to pay them off by giving them some of their future fees upfront in exchange for walking away.
For the most part though, any experience won’t be too awful or go on for too long to be intolerable. Just grimace and bear it until you’re in a position to switch, and make a better choice next time.
If being hands-off sounds like the way forward for you, keep an eye on our education pages for more information. You’ll hear more tips about how to work with letting agents, plus lots of other ideas to help you invest in property around a busy work and family life.
(We also have our own letting agency – Property Hub Lets – which operates in most major cities in England.)
Alternatively, if you want to have a go at doing it yourself, you can check out our book, How To Be A Landlord to learn absolutely you need to know.