Not all landlords feel the need to use a letting agent, preferring to handle all aspects of the letting and management of their property and tenancy themselves. But for some landlords a letting agent is a must – to save time, reduce effort and stress, and provide them with expertise and peace of mind.
A good letting agent can be worth its weight in gold for landlords who do not want the hassle of taking care of their properties and tenants; for those who live a distance away from their property; and for those who are inexperienced in letting and need a helping hand with the practicalities and legal complexities. Or all of the above!
However, the quality of service delivered by letting agents varies drastically and – unless you choose your agent carefully – you cannot assume that you will receive a high quality, trustworthy service that protects your interests at all times.
Beware – letting agents remain unregulated!
Shockingly, despite the plethora or regulations surrounding residential letting, letting agents themselves remain unregulated, which means that anyone can set up as a letting agent, with no experience, qualifications or understanding of the lettings process, law or lettings market in which they are operating. With rental demand continuing to grow – and the sales market continuing to struggle – many inexperienced agents are branching into lettings to keep their businesses going.
Landlords therefore need to take great care when choosing a letting agent. Every landlord knows the importance of vetting tenants carefully before letting their property to them; just as crucial – but often overlooked – is vetting the agent to whom you are entrusting your investment.
Choosing a letting agent can be a minefield for landlords and it is often tempting to simply go for the one offering the lowest fees. Particularly in the current market – in which agents are crying out for more properties and are therefore slashing their fees to attract landlords. Some will also resort to over-inflating rental valuations simply to gain instructions from landlords.
This means that the uniformed landlord is at risk of choosing an agent for the wrong reasons – i.e very low fees or an inaccurate rental valuation – which could put their investment in jeopardy.
Unfortunately, choosing the wrong agent can have dire consequences for landlords, including huge legal expenses, loss of rent, long void periods, loss of tenant’s deposit and penalties for not complying with legislation. Not so mention a great deal of stress!
By contrast, the right letting agent can maximise your chances of enjoying a trouble-free and profitable investment, and give you the confidence of knowing that everything is being looked after legally and reliably on your behalf.
So, how do you choose the right letting agent?
Take a little time to do your homework on any letting agent you are considering entrusting your property to. The following are the most important points to consider:
Professional membership and client money protection
With no formal regulation of letting agents – and the government having confirmed it has no plans to introduce any during this parliament – the only way to protect yourself from unscrupulous or incompetent letting agents is to use an agent that is a member of a professional organisation such as the Association of Residential Letting Agents (ARLA). That way you can be sure they will be qualified to give trustworthy advice; hold professional indemnity insurance; have a minimum of two years lettings experience; and above all, comply with strict rules on holding deposits and rent safely on your behalf.
There has been a lot of coverage in the media over the years about agents without client money protection schemes in place. A frightening number have either gone bust or disappeared with their clients’ money, leaving many hundreds of landlords and tenants badly out of pocket, with no means of redress. The new SAFEagent scheme has been set up to make the public aware of the importance of only using an agent that protects its clients’ money. Whilst client money protection is an absolute must, landlords should be aware that being a member of SAFEagent does not necessarily mean that the agent is qualified, experienced or competent to let and manage property. Nor does it demonstrate that they have a thorough understanding of the complex legislation surrounding letting.
Reputation and experience
Look for a well known, well established agent with a good reputation – they will not have achieved their good name by default. Make sure they have been letting for many years so you know they are experienced and knowledgeable, with the right systems and procedures in place to deliver a professional service to their clients. Don’t hesitate to seek recommendations from other landlord clients. Look particularly at whether the letting agent has landlords who have been with them for many years – that in itself speaks volumes. Also consider whether they have strong relationships with large local employers who are often a key source of tenants.
Although many agents do both sales and lettings, it makes sense to choose an agent that specialises in lettings only, so you know that their sole focus is letting and property management, with no distractions. They should also be independent and completely impartial; never take the advice of an agent who is also selling you a property or who may have a vested interest in whether you buy a specific property or not. It is crucial to be able to trust the advice you are given, particularly at the start of your investment. The value of specialist knowledge should not be underestimated; nor should the damage that inaccurate advice can inflict on a landlords’ investment. Trustworthy advice on the local market, rental values, how to present your property, where to invest and in which property type are all fundamental. Be wary of letting agents who exaggerate the rental value of a property simply to win an instruction; this could cause you to lose out on rental income whilst your property remains vacant because it is too highly priced.
Calibre of staff
With letting and property management being a service delivered by people, the staff of the letting agent will play a key role in the service you receive. Find out whether they are qualified, with a thorough knowledge of the lettings process and the local market. Does the letting agent invest in its staff and do they undergo thorough training? Have a significant number of the staff been with the letting agent a long time or are they mainly new to the business? These are all important indicators of whether or not you are likely to receive a good quality service from professional, well-trained, experienced people. It is also important that they are friendly, enthusiastic and happy to help; after all you may be working with them for some time!
Marketing and online presence
Look closely at the letting agent’s office, website, company literature and the way in which they market themselves and their landlords’ properties. All of these should make a positive impression and look professional. With tenants now mainly looking for rented properties online (more than 80% of our tenant enquiries at Leaders come from the internet), the agent should have a strong online presence. Use Google to search for the agent and check out which property portals and websites – in addition to their own – your property would appear on if you were to instruct them. Consider also the agent’s presence in the local newspaper.
Make sure the agent has the resources in place to carry out rigorous checks on all prospective tenants, including a careful interview process, checking their ID, credit history, previous address details; salary details; an employer’s reference, and previous landlord’s reference, if applicable.
Check that the agent’s Tenancy Agreements comply with the Housing Act (or contract law if it is a company let and/or a let with a rental value of over £100,000) and with the Office of Fair Trading recommendations. An experienced agent will incorporate clauses to cover any potential problem areas that have been encountered in the past to protect the landlords’ interests, for example when renting to a tenant with a pet.
Your chosen agent should have an in-house, locally based property management department with experienced property managers and property inspectors dedicated to looking after your property and tenant throughout the tenancy. They should have arrangements in place to deal with emergencies out of standard office hours and should have access to a wide range of fully vetted professional and reasonably priced local contractors who you can be confident will carry out any necessary work at your property to a high standard. The staff who draw up the inventory and schedule of condition and carry out mid-tenancy inspections and the check out at the end of the tenancy should be thoroughly trained and competent.
With the plethora of regulation relating to residential letting that landlords must abide by – and ongoing updates and changes – it is vital that your letting agent stays up to date with legislation affecting residential letting, and keeps you informed at all times. Your chosen agent must have the resources in place to stay ahead of legislative changes – and the appropriate procedures in place to incorporate these changes into their letting and management practice in good time – in order to protect your interests and the safety of your tenants. As a landlord, it is you that is liable for the actions or inactions of your letting agent. Should they break the law, you could face hefty fines and even imprisonment, so you need to be able to completely trust them to know the law and let your property legally and safely!
Each agent has their own scale of charges, usually based on a percentage of the annual rent. But be warned, the cheapest option is not always the best; you get what you pay for in terms of service and discounted fees should always be treated with caution. When making comparisons between agents, ask for a list of all charges, what they relate to, and the total amount payable for your specific tenancy. Make sure you are comparing like for like and that there are no hidden charges.
Prompt payment of rent
Your rent should be paid to you promptly (within 48 hours) so that you – rather than your letting agent – can benefit from any interest on it. Your agent should have robust, legally compliant procedures in place to ensure that any late rent payments from your tenant are chased up appropriately and the relevant legal notices served at the correct time to protect your interests.
If you are satisfied that your chosen agent ticks all the boxes described above you can be confident of receiving the type of service that all landlords deserve and letting agents should strive for. It is well worth the time and effort to carry out these checks, not only to avoid the sub-standard agents taking advantage of an unregulated industry, but to find one with whom you can enjoy a good, long-term working relationship.
Landlords should not underestimate the importance of the relationship between themselves and their letting agent, which will ideally be a long-term one if their investment is to enjoy maximum success.
As highlighted above, when you choose a letting agent to let and look after your property, you rely on them to take care of a number of critical issues, including ensuring your tenants’ safety in the property; legal compliance; care and maintenance of the property; protection of yours and your and tenants’ rights; smooth-running of the tenancy; and reliable provision of accurate, up-to-date and impartial advice on the many aspects of letting.
With all this in mind, you need to be 100% certain that your chosen agent is qualified and experienced, and knows everything there is to know about lettings.
Of course landlords will naturally want to keep their costs down and will be looking for a competitive fee. However, when choosing a letting agent, you should never base your decision on price alone, but also bear in mind that you could be working with your chosen agent for many years to come. You should choose a firm you can trust to deliver a consistently good service and high level of expertise to help you make the most of your investment over the long-term.
Some agents who offer very low fees to attract landlords claim they are able to do so because they have low overheads. However, it is clear that these fee levels are not sustainable – if they attract more landlords through low fees their client base will grow and their overheads will inevitably increase. They will then be forced to either put their fees up or drop their service level, neither of which will be good news for their landlords.
To deliver a consistently high standard of letting and property management service, a letting agent must have well trained, qualified staff; tried and tested systems and procedures which keep them up to date and able to comply with legislation; excellent marketing exposure for their clients; organised client accounting and experienced property managers. It is self-evident that all this is not achievable on low overheads whilst still maintaining a high level of service for all clients on a long-term basis.
By taking note of the criteria outlined above, you will be able to choose a letting agent for the right reasons and be confident in your choice for the success of both the immediate and long-term future of your investment.