A landlord can choose between managing their property by themselves or hiring a letting agent to manage the property and its tenants on their behalf.
A letting agent can find the right tenants to move in, complete all the referencing, inspect the property throughout the tenancy, arrange maintenance and more. Note that even with a letting agent, the responsibility and liability of a property always lie with the landlord.
Why use a letting agent?
Landlords who use letting agents typically do so because it makes their lives easier. Letting agents can also be helpful when the property being managed is not located in the same area where the landlord lives. The responsibility of a letting agent is to bring expertise to the table, along with professionalism and efficiency. Many landlords are very busy and don’t really have the time to deal with the queries and issues of all their tenants. A letting agent can handle this and offer expert advice on current legislation whenever it may be needed.
Whether you’re a veteran landlord with a vast portfolio or a fledgeling landlord starting a new career in property, letting agents can provide huge peace of mind and support. If you’re not confident about the legalities and compliance obligations of being a landlord, this can be particularly helpful. Letting the property yourself is always an option, but it may be easier and, ultimately, cheaper to use a letting agent.
In order to manage a property yourself, you will need to be well-versed in the latest regulations for landlords. You will also need to be available for your tenants should they have reason to contact you, as you will need to help them with their problems and queries swiftly. You will also need contacts you can call upon like electricians and plumbers for when problems arise that you can’t fix yourself. A letting agent has the qualifications and the contacts to handle all this for you.
Letting agent services
Depending on the level of involvement you want with managing your property, there are various services that you can leverage through a letting agent. Every letting agent has its own way of doing things, but there are some standard services which will be common amongst most of them. Be aware that the amount you pay your letting agent will depend on the level of service, the type of property you are letting and your geographical location.
One of the fundamental services is tenant-find – the letting agent will do all the work of finding suitable tenants for your property. This process usually involves taking professional photographs of the property, producing floorplans and advertising in places like local newspapers and online property portals. They will also arrange and attend viewings of the property, and can carry out referencing and checks. They will draw up a tenancy agreement for both the tenant and landlord to sign, which will be legally binding, and can even create an inventory of the property in order to take accurate, fair deductions from the security deposit when the tenancy ends.
If this is the only service you choose, a letting agent will help get you a tenant and you will then carry out the ongoing aspects of the tenancy like rent collection, property inspections, maintenance and handling deposit disputes.
In some cases, this service is added onto the tenant-find service. It involves collecting and protecting the security deposit and collecting the rent from the tenant. It also extends to chasing up rent arrears, serving notices and advising on what to do when tenants do not pay the rent. Some agents even offer insurance that guarantees your income in the event that rent payments go into arrears.
This is a broad service whereby the letting agent manages your property completely. They will take on most of the tasks that traditionally fall upon the landlord. This includes sourcing tenants and collecting rent, but also being the point of contact for the tenant throughout the tenancy. The letting agent will organise maintenance, carry out property inspections, create the inventory and handle deposit disputes. This can be very helpful, but bear in mind that it will be the most expensive service you can get, and legal responsibility for the property still lands on your shoulders.
Summary of services
Here is a list of common services that a letting agent can provide for a landlord. You may wish to go with an agent that can tailor their services to meet your specific needs.
- Specialist advice
- Tenant referencing
- Collection and protection of deposits
- Preparing the property
- Arranging and attending viewings
- Negotiating contracts and agreements
- Property inspections
- Arranging maintenance and repairs
- Creating an inventory and managing deposit disputes
- Collection of rent
If some of the above services sound useful to you, be sure to ask potential letting agents which service packages include them.
Choosing a letting agent
If you decide that a letting agent will be the right way for you to proceed, it’s important to choose the right one. A quality letting agent will be a member of a professional standards body such as the Association of Residential Letting Agents (ARLA). They will also offer Client Money Protection (CMP) to cover your losses in the event that they go bankrupt. A good letting agent has expertise in the latest legislation, regulations and laws regarding the private rental sector, and they are legally required to be part of a redress scheme. This is to ensure that if you have a complaint about your agent, it can be furthered to a mediator organisation with the possibility of compensation.
The services you use from a letting agent will depend on the size of your portfolio, your location in relation to your properties and how hands-on you want to be as a landlord. If you are only letting one or two properties, it may be that you only need help finding a tenant. It may also be helpful to use a rent collection service to take that hassle off your shoulders. A fully managed service is likely to be helpful if you own property that is far from where you live or if your portfolio is too large to manage personally.
What is ARLA?
To be eligible for ARLA membership, a letting agent must meet a set of minimum standards. These include:
- Compliance with handling and accounting of clients’ funds.
- Professional indemnity insurance.
- Mandatory ARLA Client Money Protection Bonding Scheme.
- Robust complaints and disciplinary procedures.
It is safest to only consider letting agents with ARLA membership, or an affiliation with a similar body like UKALA or NALS. Membership of these bodies is a reliable endorsement of their quality, because they will have been rigorously assessed to ensure they meet the minimum requirements.
Questions to ask a potential letting agent
In order to establish whether an agent is a good fit for you, ask them the following questions. Their answers may affect your decision:
What kind of tenants would you place in my property?
A good agent will know how to choose the right tenant. They wouldn’t pick students for a family home, for example. They will also carry out checks to ensure tenants can be trusted to pay rent and take care of the property.
Where can I find your fees on your website?
Agents should be very transparent about their fees – they are legally required to display them on their website.
How long does it typically take you to find the right tenant?
They should give a reasonable, realistic answer. If it takes too long, this should be a red flag, but if it’s too short then they may not be as rigorous as you need them to be.
Do you provide the legally-required documents for tenants when they move in?
Remember that the property is ultimately the responsibility of the landlord. A good agent will provide all the necessary documentation – if they fail to do this, it could be you that takes the blame.
What do you do if the tenant falls into arrears or I need to regain possession of my property?
Quality agents will have plans in place to ensure your income keeps coming. They will also have the knowledge and paperwork to regain your property if necessary.
Do you provide regular safety inspections?
The housing health and safety rating system outlines a number of hazards that must be regularly checked to ensure the property is safe and compliant. A good agent will have knowledge and experience of managing this with examples of how they provide inspections. They should always ensure the property is legally fit for human habitation before a tenant moves in.
How often do you visit the property and how do you report back to landlords?
A good letting agent is good with communication. They should keep you up-to-date on the condition of your property as required.
What redress scheme and Client Money Protection Scheme do you operate under?
If an agent has no answer to this question, or they are not on the member list for the scheme they say, they are breaking the law.
The cost of hiring a letting agent
The amount you pay for a letting agent really depends on the services you use and the agent you work with. It is wise to obtain quotes from several agents and compare their records before making a decision. Generally speaking, you can expect to pay the following for their services:
- Tenant-find – this is usually a one-off fee, charged at approximately one month’s rent on the property.
- Rent collection – typically charged as a small percentage of the monthly rent. Expect to pay ~5% of the rent for this service.
- Full management – a larger percentage of the monthly rent will go to the letting agent for this service. Expect to pay something in the region of 15-20% for full property management.
Letting agents offer peace of mind, but you need to weigh that against the cost and give careful consideration to which services you would need. It also pays to do thorough research to find the right agent for you if you choose to work with one. The information in this guide gives you a good framework on which to base your decision-making. You could start by taking a walk down your local high street and enquiring with some local letting agents. Just try not to be lured into making any choices without carrying out all the analysis and checks discussed above.