A letting agent, sometimes referred to as a property managing agent, will be an integral part of your buy-to-let business. The management of your rental property can literally ‘make or break’ its success.
The good news is, standards have risen during the last 2 decades, and there is plenty of competition within the private rented sector for you to chose from. But with so much choice, how do you determine which agent will be best suited to your needs? Well, I have listed 20 factors for you to consider before contacting an agent and committing to any contracts.
- Consider Using An Online Letting Agent
- Consider A Rent Guarantee Scheme
- Are They Accredited And A Member Of A Professional Body?
- Are They A Member Of An Approved Redress Scheme
- Do They Comply With The Deposit Protection Scheme (DPS)?
- Will They Always Ensure You Are Compliant As A Landlord?
- Try And Assess Their Level Of Customer Service
- What Property Types Do They Cater To?
- What Are Their Opening Hours?
- Do They Have Insurance?
- Do Their Levels Of Service Match Your Needs?
- Are Their Fees Reasonable And Competitive?
- How Much Do They Charge For An Inventory?
- Do They Have Good Local Knowledge?
- How Will They Market Your Buy-To-Let Property?
- How Often Will They Conduct Regular Visits To The Property?
- What Is Their Policy On Repairs And Maintenance?
- Do They Employ A Handyman For Small Jobs?
- When And How Is The Rent Paid To The Landlord?
- What Are Their Notice Periods?
1. Consider Using An Online Letting Agent
If you haven’t done so already, please take the time to consider using an online letting agent. They are not for every landlord, and depending on how much time you have, and how much of the leg work you are prepared to do yourself, you will be surprised by the amount of savings you can make with your investment property management fees.
In my experience I have found that using online letting agents works really well if you live within a reasonable distance to your buy-to-let. That said, there are separate companies appearing who also see the future potential with online letting agents and who have started to provide an ‘add-on’ type service for ad-hoc needs, for example; conducting viewings.
To learn about my experience of using an online letting agent, and to look at the advantages and disadvantages of using them, you can read my article here. The agent I used is currently the largest in the UK and I am more than happy to recommend them.
You may decide that you don’t have the time or maybe feel apprehensive about using an online letting agent, especially if you’re a first time investor and landlord. And that’s absolutely fine and understandable. But if you take the time to look into it, you will have at least covered all the options available to you.
2. Consider A Rent Guarantee Scheme
On signing a rent guarantee scheme, you are unlikely to benefit from the full monetary value of your rental property, but you will have the reassurance that the rent you have agreed to will arrive on time every month.
To give you some perspective, I looked at a rent guarantee scheme a few years ago. Similar properties on the same street were commanding £1,600 per month in rent and I was offered £1,200 per month with the guarantee scheme. A difference of £400 per month.
The amount the guarantee scheme offered me was cash in the bank, whereas the higher rent would have required me to manage the property myself or work with a letting agent. I decided to go with the latter and I used a high street letting agent whose management fees where 8% and I banked £1,472 each month. I also had set up fees at the start of the contract which amounted to approximately £400.
Rent guarantee comes at a price, but for someone who doesn’t have the time or is simply looking for a more reassured approach for their investment, the rent guaranteed scheme can be worth it and is a great option. I know of a couple who recently moved to Spain and have used a rent guarantee scheme to let their old home. They are now enjoy life under the sun with hassle free regular monthly income. Plus, their asset is still available to them, with a notice period, if they ever decide to return to England.
3. Are They Accredited And A Member Of A Professional Body?
Since October 2008 all letting agents have been required to register with an approved scheme. Conditions have been further tightened since October 2014, and since then all letting agents have been legally obligated to be a member of one of three government-approved letting agency schemes. Each scheme defines a code of conduct that must be respected and complied with to protect the rights of consumers.
If the agent does not register, or works contrary to the code of conduct, they will face penalties and failing to comply could lead to prosecution. If you use the services of a letting agent who is not a member of one of the government approved letting agency schemes, you can contact your local authority who can investigate and advise the agency to take the appropriate steps.
4 respected bodies are:
The National Association of Estate Agents (NAEA)
This is the UK’s leading professional body for estate agencies. The agency was established back in 1962 to ensure a high professional standard and uphold good practice in within a UK estate agency. By choosing one of the agents from the National Association of Estate Agents you will be sure to work with experienced and professional agents who have the necessary knowledge and experience.
The Association of Residential Letting Agents (ARLA)
Founded in 1981 the Association of Residential Letting Agents is a professional and regulatory body for letting agents in the UK. This organisation promotes standards of letting agents, and membership can be achieved only by those agents who demonstrate that they have a good knowledge of their profession and who will do the job respecting best management practice and a code of conduct.
Established in 1999 as the National Approved Letting Scheme (NALS) and completed a rebranding campaign as Safe Agent in 2019, they are well respected and recognised by government, consumer groups and industry bodies, whose sole focus is on consumer protection across the UK on a non-for-profit basis.
The Royal Institution of Chartered Surveyors (RICS)
This organisation was founded in 1868 to promote and enforce the highest international standards in the valuation, management and development of real estate and letting agents. The Royal Institution of Chartered Surveyors inspects their members every year or two to make sure they are operating according to a code of conduct.
4. Are They A Member Of An Approved Redress Scheme?
All letting agents and property managers who operate in England are required to be a member of one of the following government approved redress schemes from 1 October 2014:
The introduction of this policy was established to help increase the standards within the private rented sector, and weed out agents who are deemed to provide a substandard service.
Take a moment to check that the letting agent or property manager you are considering using is a member of one of the approved schemes.
5. Do They Comply With The Deposit Protection Scheme (DPS)?
Since 2007 all landlords and letting agents who take a deposit from their tenant(s) on an Assured Shorthold Tenancy agreement, must protect it in a government approved deposit protection scheme within 30 days of receiving it. This provision applies to all landlords and letting agents without exception.
The deposit must be returned to the tenant(s) if they meet the terms of the tenancy agreement, don’t damage the property or any of its contents and pay the rent owed and all bills. Landlords or letting agents must return the deposit within 10 days of the AST ending if there are no disputes between parties.
Any damage caused by the tenant can be claimed by the landlord and any disputes will be adjudicated through the deposit protection scheme.
As a landlord it is important to ensure that your proposed managing agent is compliant with the law in protecting the tenants deposit.
6. Will They Always Ensure You Are Compliant As A Landlord?
Any good agent will instruct and advise you as a landlord to meet all the legal requirements. But bear in mind that some agents may not take the time to ensure you are compliant as a landlord. Yet if something goes wrong, the landlord will almost always be held responsible in the eyes of the law so it is important to make sure you meet all the requirements. The penalties you could receive at a later date will be much higher than the initial costs you will face at the start to make sure you are compliant.
Please note, that although you are hiring a letting agent who will do much of the work for you, letting agents are just intermediaries and you are responsible for any shortcomings and problems that may arise in the process. In taking the time to make sure they are accredited and are a member of a redress scheme, you will be assured that they will likely operate transparently and with care to their clients.
7. Try And Assess Their Level Of Customer Service
You will obviously want to work with a managing agent who is knowledgeable, courteous and prompt in dealing with questions or issues. So before hiring a letting agent, try and establish what their level of customer service is like. Some agencies may put profit ahead of the customer, and you may end up receiving a substandard service.
Ask yourself, how do they greet you on the phone or when you walk into their offices? If you are communicating via email or social media, what is their response time like? Do they answer your questions clearly and in full?
Some agents may have received feedback and online reviews which you can research. But if not, just take the time to ask them any questions you may have regarding your rental property and being a landlord, and this will help you to get a feel for their level of customer service.
8. What Property Types Do They Cater To?
Most letting agents cater to all types of properties. It does not matter to them whether it is a detached house, terraced house, bungalow, apartment, studio or converted flat, as long as the property meets the criteria for the rental market.
However, if your investment property is classed as a House of Multiple Occupation (HMO), whereby individual rooms are let on separate tenancy agreements, you may find that some property agents will not meet your needs. HMO’s require more administration time than single let properties on an ongoing basis, and the letting agent may not have the staff or developed the systems to effectively manage an HMO, so you will need to find a managing agent that does.
9. What Are Their Opening Hours?
Each letting agent determines their opening hours so there are no universal rules around their opening times. Depending on your needs and your preferences, some letting agents are only open during weekly working hours while others are available throughout the week.
It is very important to choose a letting agent that will be available whenever you need it as a landlord, and whenever you believe your tenant(s) will need them. If letting agents are not available at the time a potential tenant who urgently needs a home comes forward, there is a possibility that you will lose a potential customer and if such situations recur frequently, this will certainly have a huge impact on your void periods.
Before hiring a letting agent, inquire if any of the in-agency staff are available on weekends and even in the evenings. It’s good to know that many letting agents work weekends because it’s a great time for potential tenants to view properties.
Sometimes it is necessary to solve problems that arise within the property immediately, and if you are paying a letting agent to handle repairs and maintenance, be sure that your agent is ready to work on weekends and at any time when the need arises to solve problems promptly.
10. Do They Have Insurance?
Any business that provides helpful recommendations and advice can have legal consequences, and letting agents and property managers are no different. A property manager who provides bad advice to a client, whether that be a landlord or tenant, could face a claim.
In addition, property managers will be required to enter a number of properties throughout the year to conduct viewings and inspections so it would be sensible to have insurance cover for accidental damages if they are found liable for any repairs or replacements.
A reputable managing agent should at least have insurance cover for professional indemnity, public liability, employers liability, business interruption, theft of takings and cyber cover for the sensitive data they hold on their clients. This will also help to ensure that any rent collected through them will be covered until it is transferred and paid to the landlord.
If it is unclear as to whether the letting or managing agent has insurance after you have made contact with them, it is definitely worth asking the question.
11. Do Their Levels Of Service Match Your Needs?
Letting agent’s can offer different levels of services depending on your needs. If you only require someone to find tenants for your property, a letting agent can simply just do that. If, in addition to finding the right tenant, you are looking for someone to collect rent, take care of your property, fix repairs and react in the event of a breakdown, letting agents can do that too.
Consider how hands on or hands off you would like to be with your buy-to-let. When I purchased my first rental property, I was working full time and I didn’t consider anything other than a full management service. I felt more comfortable knowing that I had an experienced agent looking after my investment and the needs of my tenants. My fees were obviously higher, but I was very comfortable with that.
Having retired from the Army, and after gaining several years of experience as a landlord, I now have the time and feel comfortable with adopting many of the management tasks myself.
Everyone is in a different position so you just need to take the time to consider which level of service would work best for you.
12. Are Their Fees Reasonable And Competitive?
Landlords have the luxury of choice when it comes to finding a property managing agent. I have never struggled to find an agent and have always found myself in a position where I can pick and choose.
There is plenty of competition which helps to increase the levels of services offered and also helps to keeps fees down.
Decide on the level of service you will require, then contact a minimum of three agents. Each agent will visit and review your property and inform you of the amount of rent your property could potentially command. Their services at this point will be free of charge as they will be competing for your business.
Don’t be tempted to lean towards the agent who offers the highest rental income. There are other important factors you need to consider (listed in this post) before making a decision. You may also find that the cost of their fees will vary. So take the time to look at all your options and consider all factors before making your final decision.
13. How Much Do They Charge For An Inventory?
An important question to ask beforehand so you do not receive any surprises after the fact. And an inventory is something that shouldn’t be overlooked.
In my experience most letting agents use a third party to provide an inventory. I would recommend having an inventory especially if you are letting your property fully furnished. Even without furnishings, it is still worth recording the condition of the boiler and other fixtures with photographic evidence before the tenant occupies their new home.
If you have time, and are able to take clear photographs this is also something you can do easily yourself. OpenRent have a free inventory template which I have used many times myself, and you can download it for free here.
14. Do They Have Good Local Knowledge?
Local lettings agents should know which tenant type will suit which area; down to street level. For example, will the potential tenant be a member of a family with young children requiring good schools, or are they likely to be single working professionals who may prefer to live closer to the town or city with quick access to public transport links, restaurants and gyms.
Local knowledge also includes knowledge of the market and price movements. Talk to each managing agent you contact about the local area and ask if they are aware of any developments or potential changes proposed by the local authority in the near future. You could be surprised about what you may learn.
If you have followed my 7 Steps To Purchasing A Buy To Let Investment property, you will already know the tenant type best suited for your investment, but let the agent do the talking to help reinforce your knowledge and confirm their abilities. After all, you want your property to be occupied with a tenant as soon as possible which means the marketing needs to be directed to the right people from the start.
15. How Will They Market Your Buy-To-Let Property?
Letting agents can advertise your rental property in a variety of ways. They can take a picture of your property and show it to potential tenants who visit the agency. They can publish a photo in a local newspaper, place an advertisement in various other local publications and place a board or sign on the perimeter of the property.
Today of course, the most widespread method is advertising online. A letting agent will take a picture of your property, upload it to various platforms on the internet and write a detailed description to attract potential tenants.
After you have agreed to work with a letting agent, it’s all about advertising so you want to check their abilities beforehand. Have a look at other properties they are marketing both online and offline. Are the photos good quality? Do you think the properties are displayed in the best light? Are the property descriptions appealing with plenty of information?
If you have camera and photographic skills you may consider taking pictures yourself. Most agents would probably agree to this, so ask them for their opinions on which features and angles should be portrayed in the images.
Whether you have decided to use a managing agent to only find tenants, or a full management services, they will be paid from their marketing efforts so this is something that all agents should already be good at.
16. How Often Will They Conduct Regular Visits To The Property?
Letting agents can’t just show up at the door unannounced to check on a property once the tenant has moved in. In addition, they cannot inform the tenant that they will be arriving the next day for an inspection, as this violates the privacy and rights of the tenant. In order to visit the property, the letting agent needs to give written notice to the tenant at least 48 hours in advance of a routine inspection.
Managing agents can enter the property earlier for emergencies including repairs and urgent maintenance, or only if the tenant agrees to it, but agents should give written notices in plenty of time to allow the tenant to prepare for the visit. Ask the agent how frequently they plan to visit the property and ask to confirm that the timeframes will be stipulated in the tenancy agreement.
It is best, at the beginning of a new tenancy, to arrange a visit to the property and conduct an inspection after the first three months. This is a good time period because the tenant will have had a chance to settle and it will also give them the opportunity to ask questions if they haven’t found the time to do so beforehand.
Regular visits are beneficial to all parties which is what makes them so important. Ensure your proposed letting agent is going to take the time to conduct them thoroughly and properly.
17. What Is Their Policy On Repairs And Maintenance?
If you live a long way from the property you are letting, or you simply do not have the time and skills for repairs and maintenance, you could opt for the managing agent to take care of this for you. There are other options of third parties, but I will cover this in a separate article.
So let’s assume that you would like your managing agent to take care of any repairs and general maintenance.
Ask them about their policy. As a minimum they should inform you that all emergencies e.g. lack of heating and hot water, will be dealt with immediately regardless of cost. So if the boiler breaks down, they will arrange for a gas engineer to visit the property within hours. This should be standard as it will have an effect on the well being of the tenant.
For less important issues and minor works, most managing agents will be happy to agree terms with you. For example, you may decide that any repairs under £200 can be made without your approval. So if the shower curtain needs replacing the managing agent will see to it without disturbing you. But if they feel an item of furniture needs replacing, they will have a conversation with you and if agreeable, you will have the choice of sourcing the item yourself or agreeing that the agent supplies it at a fixed fee.
18. Do They Employ A Handyman For Small Jobs?
There are many jobs that require just a few minutes of someones attention. For example, the change of a light bulb or the replacement of batteries in a thermostat. Yes, you may be surprised with the type of small jobs that some tenants will enquire about.
You obviously wouldn’t want to pay the rates of a qualified electrician to change a light bulb or swap out some dead batteries. So a managing agent who has an employee, or an external associate, who provides the services of a handyman can be a great benefit.
Over time the handyman will get to know your property and will likely be the first person to arrive if there are any issues. The tenant(s) will get to know them over time which can help build trust, and they will have greater knowledge on the workings of a property to assist the managing agent in contacting the right people and tradesman for each job.
I wouldn’t class a handyman as crucial, but it could be a determining factor if you are torn between choosing from one of two managing agents.
19. When And How Is The Rent Paid To The Landlord?
You can expect to receive your rent through bank deposits. Your rental business will have overheads and operating costs that you will need to pay, so it’s important that you know when you can expect to receive the rent owed each month.
A property managing agent will determine the best timeframes for their business processes, but you need to now beforehand so that you can plan ahead. If the rent is due by the 1st of each month, and the managing agent transfers the rent to the landlord on the 8th of each month, you may decide to arrange to have your mortgage payment and other bills, paid from your bank account on the 10th of each month.
Rent collection services will also include reminders to the tenant when the rent is due, follow up reminders if the rent is overdue and advice for the landlord on the next steps to take if the tenant has failed to respond to the reminders. You will pay additional fees for a rent collection service, but it is worth every penny in my experience.
On the subject of rent collection, it is also worth asking the managing agent to confirm when they will provide statements. Some agents I have worked with provide a statement a few days before the rent is paid, and others have provided a statement the day after the rent is paid. Strange. Personally I prefer to receive the statement before the rent is received into my bank account so I have some notice beforehand if there are any issues.
20. What Are Their Notice Periods?
Before hiring a letting agent, you should ask them how much notice they require in order for you to terminate the contract if the need arises in the future. If you happen to be dissatisfied with the services of your letting agent or you simply no longer need them because your circumstances have changed, you will need to notify them in advance to terminate the agreement.
Notice periods are generally between 1 and 3 months, and I think 2 months is reasonable for both parties. This is an area you could negotiate with the letting agent, depending on their terms, if you feel the need.
If you don’t give the required notice, you risk breaching your contract and you will have to pay the letting agents fees for the period you have outstanding. Managing agents will easily be able to recover their fees by deducting their costs in advance from the rent they have collected from the tenant.