For many landlords, a letting agent is an absolute necessity. While some property owners choose to find manage their affairs themselves, a very sizeable proportion still choose to entrust their properties to an agency.
There are several important factors that you should consider when choosing a letting agent. Your final choice will of course depend on your individual situation – but here are some top tips to help you find the right agent.
1. Work out what you need
There are, broadly, three types of services offered by letting agents. Before choosing an agent, you need to consider how comprehensive a service you require, and how much you are willing to pay for it.
The most comprehensive type of service, generally referred to as ‘full management’, sees the agent take on virtually all the work of finding a suitable tenant, drawing up contracts, collecting rent (and paying it to you), and dealing with problems like maintenance. This is the most expensive type of deal.
Alternatively, you might ask an agent to simply find a suitable tenant and collect your rent. This should be cheaper than full management.
Finally, you might choose a simple tenant finding service, in which the agent simply finds a suitable tenant and draws up a contract, and then leaves you to collect the rent and arrange things like maintenance.
2. Understand the fees
Agents’ fees tend to operate in one of two ways: a fixed fee, or a proportion of rent.
Generally, full management and tenant finding services are charged on a percentage basis. You can normally expect to pay around 10 per cent of the rent for a full management service – although at the time of writing one of the country’s largest agencies was charging 17 per cent plus VAT.
Alternatively, you might pay a flat fee. This is particularly common for simple tenant finding services. Fees for these services can vary wildly from agent to agent.
3. Use a trade association
Trade associations are amongst the most important and effective ways of making sure that you choose an agent that is reputable and fair. Membership of a trade association generally requires the agent to sign up (and adhere) to a code of conduct that governs the way they deal with tenants and landlords. There are three main trade associations to which letting agents might sign up: the Association of Residential Letting Agents (ARLA), the National Association of Estate Agents (NAEA), and the Royal Institution of Chartered Surveyors.
4. Ask around
A personal recommendation is often the most reliable form of endorsement. If you know other landlords in your area, ask them which agencies they would recommend – and which they would not. Alternatively, if you don’t know any local landlords, you may find that there is a landlord association near you who can give you advice.
5. Understand guaranteed rents
‘Guaranteed rent’ deals can seem enticing. Indeed, the option can seem like something of a no-brainer – why would you not want guaranteed rent, even when your property is empty, for up to five years?
While the prospect of guaranteed rent can be an exciting one, you should understand that the amount you receive every month will almost certainly be below the market rate. Of course, once you have factored in the money you are saving in void periods and admin work, you may find that you are actually benefiting – but you need to make that judgement yourself.
6. Remember maintenance
If you want to find an agency that will also take care of property maintenance for you, you need to consider a few extra factors. To begin with, you should understand the fees for maintenance work; are they included in your management fees, or are they an extra cost? Similarly, you should consider whether the agency will guarantee that they will only use tradespeople who belong to the relevant trade associations or guilds. This can help to guarantee high standards of work.
7. Think about multiple agents
If you enter into a deal in which you pay a percentage of the rent to your agency, it is likely that you will only be paying when the property is full. If this is the case, you should consider finding multiple agents to market your property. By using more than one agency, you can help to minimise void periods.