The estate and lettings agent sector has been under the spotlight in recent months. The Office of Fair Trading (OFT) has recently concluded an investigation into some of the practices of these firms, and many are unhappy with its findings.
Dissatisfaction is traditionally high among customers of estate and lettings agents and this is in no small part to do with the service levels. As things currently stand, no professional qualification is required; you could set up as an agent tomorrow with no prior experience. Many had hoped that the recent OFT report would result in more regulation, but this has not materialised.
So, with so many people so dissatisfied with lettings agents, do you really need their services as a professional landlord?
On a basic level, the role of a lettings agent is to find suitable tenants for your properties. This can be a time-consuming task for landlords, involving writing and placing adverts, arranging viewings, collecting references and conducting credit checks. Aside from saving you time, lettings agents are beneficial in this area because they should also be able to recommend a suitable rental price, which requires sound knowledge of the market. They may also arrange for your tenant’s deposit to be lodged with a deposit protection scheme.
Depending on your arrangement with an agent, their involvement may continue after the contracts (which they will have drafted and provided) are signed. The agent may collect rent on your behalf, and may take charge of maintenance and other property management tasks. These extras will, of course, come at a price.
The growth of online property listing websites like Rightmove, FindAProperty and Gumtree have all made the job of both the lettings agent and the private landlord easier. According to some surveys, around 80 percent of renters now do all of their house-hunting online, and agents can quickly attract potential tenants with a well presented listing.
Of course, there is nothing to stop you cutting out the middleman and creating your own listing without the help of an agent. These services are easy to use, and will often be enough to secure a tenant; frequently you will not need to place adverts or listings anywhere else.
If you are considering the DIY option, have a good look at some of the existing listings on these sites for similar properties. The successful ads tend to be those that do not rely on hyperbole, but that give a clear, concise, honest description of the property. Clear photographs are also a must.
Today there is very little preventing you finding your own tenants. Online listings services are easy to use, and a single listing is often enough to find you a tenant.
But you should remember that there is significantly more to it than simply finding tenants. If you choose not to use an agent you may not be able to credit check potential tenants, which could well cause problems further down the line. Similarly, you will have to have tenancy agreements drafted. This can be expensive – but a poorly written agreement can be even more costly in the long run.
Lettings agents are also particularly helpful when you don’t live near to your investment property. Once your tenants are installed in the property, it makes sense to have someone on hand to deal with any management issues.
On the other hand, you should consider agency fees. The amount you pay your lettings agent will depend on the range of services they are providing. Often, an agent will charge a flat rate to secure a tenant. If you also ask them to fulfil a property management role, they will normally charge a percentage of the rent.
Ultimately you need to decide whether the agency fee outweighs the benefits. If you had intended to fulfil the property management role yourself, it may make sense to also find your own tenants. On the other hand, if you intend to have an agent manage your property, it would seem sensible to bring them in from the beginning of the process – to find and vet your tenants.
If you choose to enlist the services of a lettings agent, it is vital that you find a reputable firm. The OFT report has highlighted the lack of regulation in the sector and, as a result, it is all too easy to be sucked in by cowboy agents.
You may wish to consider talking to your local Association of Residential Letting Agents (ARLA). ARLA is the best-known professional association for lettings agents, and their members are required to sign up to a code of conduct on which they are periodically tested. Membership of ARLA, or its rival the UK Association of Letting Agents, is as close as you can currently get to a professional seal of approval.
Finally, it is important to remember that the quality of your property is paramount. Even the world’s best agent will not be able to secure a good price or reliable tenants if the property is not up to scratch. If you think yours needs some work, you may also wish to read our article on cheap ways to upgrade your rental property.
Do you need a buy-to-let mortgage?
Check out our business finance solutions.
Find a letting agent:
Do you need a letting agent in Leeds/a>?
Keep up to date with Simply Business. Subscribe to our monthly newsletter and follow us on social media.Subscribe to our newsletter
99 Gresham Street
29 St Katherine's Street
© Copyright 2019 Simply Business. All Rights Reserved. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London, EC2V 7NG.