Choosing a Lettings Agency
Many good estate agents offer a rotten property management service. The reason for this is that they dabble in the lettings market and do not have enough properties on their books to justify investing in the specialist systems and staff necessary to run an efficient operation. When choosing a managing agent it is essential to choose a firm that specialises in the lettings market.
Compile a shortlist of firms by looking for those with the biggest advertisement in the local paper. You might also consider registering with each firm as a prospective tenant in order to test out the level of service that they offer. On this basis you should select a shortlist of two or three firms to invite to see your property.
The valulation appointment itself will be very similar to the estate agent's appointment. The agent should start by talking to you about your needs and priorities and then give you his opinion on what rent he believes he can achieve for the property. A good agent should be prepared to justify his recommended rent by showing particulars of similar properties that have been let or are currently available in the immediate area. The agent will then move on to their selling presentation. Here are some questions that you might ask at this stage:
- How long have you been established?
- Are you a member of the Association of Residential Letting Agents?
- How many properties do you have under management?
- Do you work full time in the lettings market?
- How many staff work for the lettings department?
- How will you go about finding a tenant?
- How many tenants do you have for my property at the moment?
- How do you go about referencing a tenant?
- Do you offer an insurance scheme that guarantees rent if the tenant defaults?
- Which major local companies do you act for?
- Do you have a separate property management department?
- Is your property management system computerised?
- Do you offer an inventory service?
- How often will you visit the property?
- Can you provide me with a statement of account that is in a format that is acceptable to the Inland Revenue?
- Why should I instruct you rather than your competitors?
Instructing a Lettings Agent
Most lettings agents are prepared to work on a multiple agency basis. However, if the agents are competing with each other to earn a fee there is danger that you will be put under pressure to accept the first tenant for the property rather than the best tenant that is available. It is usually best therefore to instruct just one agent on a sole agency basis. If they don't find a tenant within a reasonable time you can always sack them and instruct another.
Negotiating a Fee
For many years managing agents charged 15% for a full management service 12%% for rental collection and 10% for let only. However, today there is a huge variation in the fee charged by different firms.
It is not always easy to make direct comparison because the fees charged by different firms are calculated on a different basis. Some firms charge a set-up fee for preparing the contract. Some charge for preparing an inventory. Some charge a mark-up on the cost of all repairs that are required. Some charge a fee if the tenant renews the agreement. The best way to ensure that you are comparing like for like is to ask each agent for a written quote or summary.
However, you need to be very cautious about choosing a lettings agent on the basis of fees alone. A tenancy that goes wrong can cost thousands of pounds in repairs, lost rent and legal fees and paying a few pounds per month extra to retain a reputable lettings agent could prove to be an excellent investment.
