Do agents always have to take care of repairs?

[hme]

Hello everyone. Your contributions in these in these forums have been very educational and enlightening.

I have a small and stupid question though. I am planning on starting a lettings agency for students in my University from early next year. I am a complete novice in this field and I have recently noticed that most lettings agents usually take care of repairs to the house etcetera but Im not prepared to take this on. I am looking to just rent houses out to people, as I am only intending on doing this part-time. Please has anyone in the field got any pointers as to how to get round this and whether or not this is a feasible idea at all?

Your responses would be greatly appreciated
Thanks

[Surrey]

Before I say anything else, I'm speaking as a landlord who has had letting agents, and as a former tenant. I don't have any legal experience other than what I've gathered for myself. (Disclaimer over.)

As a simple answer, it all depends what you put in the contract.

Letting agents often offer several different levels of service. The most basic is usually "tenant find" which typically includes tenant application forms, showing tenants round the properties, credit checks, preparing the tenancy agreement for the landlord and perhaps some other bits like inventory preparation and checking (though not necessarily the inventory bit). This usually commands a fee which is a percentage of the total rent due for the period of the let, normally payable at the beginning of the let.
The next level is usually "tenant find plus rent demand and collection", where the agent will collect the rent and pass it on (minus their slice) and remind the tenant when they are late paying, as well as doing the basic stuff. This usually commands a higher percentage, payable monthly as a percentage of the monthly rent.
The highest level is "full management", where the agent does all that as well as managing minor repairs without recourse to the landlord and more major repairs after consulting with the landlord. Again usually an even higher percentage, payable monthly.

Don't forget, your contract as the agent is with the landlord, not with the tenant. So in order to get landlords to use you rather than some other agent to let their property, you have to offer a service that they want to buy, for a price they want to pay. If you are only offering the basic tenant find service you restrict the number of your potential clients as many landlords do want to have rent collection and demand or full management as part of the package they pay the agent for.

You could do worse than contact ARLA to see what they have to say, and to see what you would have to do in order to join them (not a bad idea based on what I've read on the forums) as many landlords wouldn't touch a non-registered agent with a bargepole. (Personally I wouldn't touch any lettings agent ever again, but that's a completely different story...;))

[Paul_f]

Dear God! Who had this bright idea. You can't get full membership of ARLA or NAEA except by exam to show you know what you're doing.

If you can afford the PI Insurance and PL cover in case you cock-up then go ahead.

You won't make any easy money (not that you thought you would) but could lose a fortune in damages!

Would you drive a car North on the Southbound carriageway wearing a blindfold, without a license, and with your hands in cuffs? No? Then get real!

[hme]

Thanks so much, Surrey, That was very enlightening.

So to gain increased credibility with landlords, I need to register with ARLA?

What if my package is fully web-based with direct access to the University Campus and I offer lower percentages? Not tempting enough?

@Paul_f
Do I have to be a member of the ARLA / NAEA to ask questions? I thought I didnt have to join and organisation unless I wanted to.... Ack, Now Im getting confuzzled!

What could go wrong?Please tell me from your experience, i would greatly appreciate your honesty.
Thanks

[Surrey]

Thanks so much, Surrey, That was very enlightening.

So to gain increased credibility with landlords, I need to register with ARLA?

What if my package is fully web-based with direct access to the University Campus and I offer lower percentages? Not tempting enough?

@Paul_f
Do I have to be a member of the ARLA / NAEA to ask questions? I thought I didnt have to join and organisation unless I wanted to.... Ack, Now Im getting confuzzled!

What could go wrong?Please tell me from your experience, i would greatly appreciate your honesty.
Thanks

It's not just a question of registering, you actually need to pass exams in order to be accepted. Membership of ARLA indicates to landlords that you do at least have a basic knowledge of letting and some of the pitfalls and in addition you have support from the organisation in that they can help you with a lot of what you need to know. Do look at their site - I suggest a very thorough look not just a cursory glance.

As for whether lower percentages would be enough to attract landlords, I suspect that if you are relying on lower percentages and you're not an ARLA member you would be more likely to attract the less favourable and more problematic landlord (known as a 'tight-arse' or a 'shark' or a 'slum landlord' in the vernacular) who is looking to make as much money as he can and who is happy to let his house to students - another group with a reputation for being a bit difficult. Do you really know enough to be able to deal with the situation where a landlord isn't fulfilling his statutory duties? Do you realise that if you start offering advice and doing things for the tenants that are not in the best interests of the landlord you could be contravening agency law as well? And how would you deal with a landlord suing you for finding rubbish tenants who don't pay etc because your tenant find service wasn't up to scratch? I haven't even touched on the long list of other things that could go wrong, just browse the threads on here for more information - there are lots of problems, just go and read about them.

It really does look as if you haven't thought this whole idea through thoroughly enough. The law is very complicated (there wouldn't be busy fora like these if that weren't the case) and you could potentially lay yourself open to some VERY EXPENSIVE suits from all quarters and land up in court. Not a pleasant place to be, whoever you are.

So before you fork out lots of money or effort on your web design, think long and carefully, and then think some more.