Using a Letting Agent

A letting agent charges you for a fee taking on some/all of the aspects of running your property letting business.

Landlords use letting agents for a variety of reasons -

• They don't live locally and managing the property themselves is impractical
• They are inexperienced and are unsure how to go about managing the property themselves
• They simply don't have the time, inclination or want the hassles involved with managing the property themselves.

Obviously the fees charged by the agent will be a factor. The fees tend to come in two different forms - a percentage of the rent as well as fixed costs for performing certain services such as tenant find or tenancy renewal. 10% management fee may sound reasonable but then consider perhaps £200 fee for registering the property, £350 tenant find fee, £100 tenancy renewal fee every 6 months, £100 inventory checking fee and VAT then an initial 6 month let with a renewal and a tenant checking out at the end could cost £1350 + VAT = £1552.50 after VAT on a property earning £500 per month - actually working out at over 25% of the rent received that year.

However, if you choose not to use a letting agent then be prepared to have a lot of time wasted in finding tenants, be prepared to put in the time to find the correct way to deal with the unusual, awkward and complicated situations that will inevitable arise from time to time, and be prepared for the phone calls from tenants asking you to fix the toilet and inconvenient times.

Letting agents can take on many of the aspects of managing the property but it must be remembered that when using a letting agent that the landlord's role changes from being one of managing the property to managing the letting agent. Good agents should be able to manage the property efficiently with little input required from the landlord. A poor agent may be harder work than managing the property itself.

One aspect of using a letting agent that is rarely mentioned is that many tenants have had bad experiences at the hands of letting agents in the past and will only rent directly from landlords. As an example of the extent of this problem, I once advertised a property with a large colour £250 letting agency advert saying "immaculate 2 bed house, sea views ..." with photographs etc in the local newspaper. On the same page I also had a £10 classified advert for the same house that just said "2 bed house". The agency advert received 6 phone calls and the cheap classified advert received over 40 calls before I simply left the phone off the hook.