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articles > Getting the Best from Letting Agents
Article > Getting the Best from Letting Agents


Article kindly supplied by Fraser Macdonald

www.property-fit.com

www.lancspropertynetworkers.co.uk


The relationship that landlords have with their letting agents is critical. There are good letting agents, some average agents and many poor agents. Getting the right agent will make the difference between a successful or a stressful investment. But how do you find a good agent, manage that relationship and make it work for you?

Some investors manage their own properties. I do manage a number of my own properties but on the whole I use a letting agent. I don’t want tenants ringing me up at any hour and I don’t want the hassle of having to deal with some tenants on a regular basis. Remember that letting agent’s fees are deductable against tax so they are quite a low cost. Finding a good letting agent can be hard. I have a number of letting agents as I have properties in different areas.

The way that I choose a new letting agent is:

a) Recommendations from other landlords

b) Choose 3 agents in the local area and visit them all in person

c) Check their organisation skills – ask them to do three things. These can be quite small as posting terms & conditions, e-mailing you their contact details and confirming their tenancy deposit scheme. Check that they do this, if they don’t they haven’t noted your request or just haven’t done it – either way this displays poor organisation.

d) Don’t take them at face value – many people can talk a good game but don’t deliver.


When you have appointed a letting agent, check this:

e) Is the rent paid to you on a regular and timely basis?

f) Are regular inspections undertaken (with photos & report) – at least once a year, preferably twice.

g) Is there swift communication of any problems?

h) Are repairs a sensible price? Spot check repair prices with local tradesmen.

i) When vacant – is the property being properly marketed? i.e. is a board up, is it on the internet and is it in the paper?

It is very worthwhile spending some time building a relationship with your letting agent. Be professional, don’t waste their time but make them aware that you expect to be at the top of their priority list and that a good service is needed at all times. Praise them when they do a good job and constructively criticise when a poor job is done. Remember that problems occur and it won’t always be the letting agent’s fault. Having a frank but good rapport with your letting agent helps when there is a problem. You don’t want your letting agent to put off ringing you if there is a problem. If a letting agent is poor then change them but be careful to check the letting agent’s terms and conditions to see if you and you tenant are tied into them.

Most reputable letting agents will be members of ARLA (Association of Residential Letting Agents). This is a useful framework which describes what the agent should be doing and how to resolve disputes. Go to www.arla.co.uk for more information.


Tenancy Contracts & Letting Regulations

Your letting agent should create a number of documents for you. They are:

a) AST – tenancy contract

b) Inventory – list of fixtures and fittings

c) Letting Agency Terms & Conditions

d) Periodic inspection reports

e) Rental statements

f) Gas Safety Certificate (legal requirement)

g) Electrical Certificate (currently optional but recommended)

h) TDS – Tenancy Deposit Scheme notification

i) Energy Performance Certificate - from 1/10/08.

Most tenancy contracts are called ASTs (Assured Shorthold Tenancy agreements). These replaced regulated tenancy agreements in the 1980’s. Regulated tenancy agreements were very restrictive for landlords. The rent was very low and it was almost impossible to get rid of a bad tenant. It was also possible for tenants to pass a regulated tenancy agreement to other family members.

The introduction of ASTs has introduced better rights for landlords. The agreements tend to be 6 or 12 month contracts. Most turn into rolling contracts if they are not replaced with a new contract. This means that at the end of a tenancy agreement the tenant needs to give one month’s notice to end their tenancy, landlords need to give two months notice to end an agreement.

 

What are my responsibilities as a landlord & how to be
a good landlord?

There are legal obligations as a landlord. They are:

a) Annual Gas Safety Certificate

b) Duty of Care to a tenant as a landlord – various legislation.

c) Energy Performance Certificate from 1/10/08.

d) Registration of tenant deposits.

It is also advisable (but not mandatory at present) to have:

e) Electrical Certificate (NICEIC)

 

 

Fit for Purpose?

The condition of your house that you ask your letting agent to market is important. I mainly deal with terraced houses in the NW of England. I have a phrase that I use for the condition of these houses called ‘fit for purpose’. ‘Fit for Purpose’ means that the house is in a good lettable condition. It doesn’t have to be a palace but it needs to be warm, dry and presentable (i.e. no rising damp, no penetrating damp, double glazed, gas central heating and a reasonable kitchen/bathroom and décor). This is also true for city centre apartments. On the whole they need to be furnished to a good standard and normally have a car parking space (if 2 beds or more). Giving your agent the property in the right condition is important to the letting process. If the agent knows you understand the market and are supplying stock to them that will let quickly then they will be more responsive to you. If a house is in a good condition you can pick the tenant you want and the tenant is more likely to look after it if they know that they are getting a house that is properly prepared and looked after.

Increasingly local councils in NW England are introducing Landlord Accreditation Schemes. The houses are inspected and have to meet a minimum standard before the council will allow any of their tenants to live in those houses. These schemes are a really good idea and are long overdue. Landlords and Letting Agents who become part of this scheme get preferential treatment from councils and also have access to home improvement grants. I recommend any landlord becoming part of a landlord accreditation scheme. It does take a while to sort out but if you have a good letting agent, they should be able to help you with it.

I have just undertaken an interesting analysis of my rents. With the introduction of LHA (Local Housing Allowance) replacing Housing Benefit we have now have a good measure as to what the local authority thinks the market rent is, or what they are prepared to pay! After analysing my portfolio, with the help of my letting agents, I worked out that 70% of my properties are under-rented and that my total rents are 8.6% below what the LHA rate would be for those houses. The biggest under-rented property is 31.6% under-rented. I have put all of this data into a spreadsheet and am now discussing every property with each of my letting agents to see how we can increase the rents to try and get nearer to the market rate. Not every property in my portfolio will hit the LHA rate but it is a very interesting exercise to undertake and I have identified a number of properties where there are quick wins for increasing the rent. There are also the downsides of LHA to consider (i.e. the tenants get paid the rent rather than the landlord) but overall LHA can sometimes be used as a tool to get market rents paid. My letting agents are very keen on this idea because if we can generate more rent then they get more commission. We are approaching this in a sensible manner with relation to area/condition/tenant’s ability to pay an increase but in most of not all it will be the local authority paying and not the tenant.

It is also worth investigating other free ways to improve your investment properties. The Government makes the energy industry pay £1.5 Billion per year for energy improvement grants in homes Your letting agent should know local suppliers of energy efficiency grants and should manage the process of applying and implementing free energy efficiency measures for you – these includes loft insulation and cavity wall insulation.

So find a good letting agent, be demanding but fair in what you expect from your agent and don’t delay in changing an agent if they aren’t meeting your expectations. I know landlords who have suffered for years from poor letting agent service only to realise that when they change to a good agent the rent improves and the stress reduces! Property Fit now have a sister company called Verge Lettings based in Manchester – if you need a good Manchester letting agent please contact me.

 

 

 

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