Personally I prefer to let my properties without using a high street letting agent, I usually market them myself using a much cheaper online letting agent, but about half of landlords do use traditional bricks-and-mortar agents. If you do down this route, choosing a good letting agent is key.
Benefits of choosing a good letting agent
- They can make the process of finding a tenant easier.
- Sometimes (but not always) a high street agent will be able to get more rent.
- Sometimes (but not always) they will find a tenant faster than a landlord.
- Some properties are best marketed via an agent, including top-end flats and houses, which tend to attract tenants who don’t have the time or inclination to trawl through thousands of property ads and prefer to deal with just one or two letting agents who will take them to see several properties in one day.
- Some have contacts with relocation companies who will send corporate clients from Blue Chip companies their way. Corporate lets, where the company takes responsibility for the rent (usually because the employee is relocating) are the Holy Grail for landlords as these are seen as less risky than private lets. However, make sure that the company is legitimate and financially solid (you can find out more about them via an online search at www.companieshouse.gov.uk) before you agree to a corporate let and make sure you are using the correct tenancy agreement.
How to go about choosing a good letting agent
Should you decide to market your property through a letting agent you’ll have no difficulty finding one, there’s at least one agent on virtually every high street, but if you want to find the best tenants at the best price you need to choose carefully.
I’d suggest you invite at least three to value your property, but don’t simply choose the one that says they’ll get you the most rent – agents will usually give you an inflated figure then, a couple of weeks after failing to find tenants for your property they’ll tell you the market has suddenly, inexplicably gone flat and suggest you lower the price. It’s the oldest trick in the book.
Get agents to justify their intended ‘asking price’ by asking them to show you examples of similar properties in the same area that have let for a similar price to the one they’re quoting for your property. If they can’t, they’re talking nonsense.
Also ask agents how they intend to market your property, what sort of tenants they are hoping to attract, how many of that sort of tenant they have registered and how quickly they think they’ll be able to find someone suitable.
Only choose a letting agent you’ll feel comfortable working with; they can be very persuasive, but don’t be cajoled (or bullied) into hiring an agent you don’t like.
Personally, I think it’s best to use a local letting agent, someone who knows the local market. They’ll know what sort of tenant your property is likely to attract, they’re more likely to have plenty of this type of tenant registered with them, and they’ll have a much better idea of how much rent they can achieve than an agent based several miles away.
Try to find a letting agent who is a member of ARLA (the Association of Residential Letting Agents), as at least they have a Code of Practice, but don’t assume this is a mark of quality. Try to get personal recommendations too.
Once you’ve chosen your letting agent, keep tabs on them (it’s not unusual for agents to ‘forget’ about a property they’re supposed to be marketing!) Make regular calls to check how many viewings they’ve done and how many they’ve got lined up – and press them for details. Don’t let them off the hook if they say they’ve done “a few” viewings; ask them for feedback, why the tenants didn’t take the property, what they liked/disliked, whether they thought the price was right. All this will help in your marketing of the property.
Letting agents’ fees
Fees for using a letting agent vary, but they typically charge landlords commission based on the annual rent, which usually starts at around 10% plus VAT just to find a tenant and a total of 12% to 17.5% (+VAT) if you also want them to manage the property during the let. These fees are significantly more for short lets of less than six months.
Agents also charge fees on top of their commission. They charge extra for a tenancy agreement, they charge for registering the tenant’s deposit, they charge for checking in the tenant to the property and they charge for checking them out.
Agents also charge your tenant the GDP of a small country in ‘admin’ fees, and they charge them for referencing and sometimes even for the tenancy agreement that you’ve already paid for.
If you use a letting agent to manage the property, you might also pay over the odds for any maintenance work they arrange on your behalf because agents typically ask contractors to pay them 10% to 20% commission. Suppose the agent arranges an annual gas safety check, for which a gas engineer would normally charge £50, if the agent asks the engineer for 20% commission he’ll charge you £60 and the agent will pocket £10.
You can avoid these fees by letting your property yourself (I’ll show you how later), but if this isn’t practical for you, then remember that letting agents’ prices are pretty much always negotiable….and this is how it works.
Negotiating letting agents’ fees
The letting agent tells you their commission, you laugh like a drain and they instantly knock off 2%.
Sometimes agents will lower their commission even further if you appoint them as sole agent, but if you want to let the property as fast as possible it might be better to have several agents marketing it at the same time.
The only agent I’ve come across that won’t reduce its fees is Foxtons.
Agents also charge renewal fees. They often won’t mention these until they’ve already found you a tenant and they’ve got you over a barrel, but essentially it means they continue to claim commission from you as long as the tenant remains in the property.
Every year the tenant renews their contract, the agent will come knocking on your door for another year’s commission, even if you only hired them to find you a tenant, not to manage the property.
You can negotiate these renewal fees as long as you bring them up before the agent starts marketing your property. I tell the agent that I’ll pay commission for the first year only and get confirmation in writing that this is acceptable before they start to market the property.
The only letting agent I’ve come across that won’t agree to waive its renewal fees is ….Foxtons.
Further reduce your costs by telling the agent you will supply your own tenancy agreement (these are freely available from a number of websites, or use the Government’s model tenancy agreement) and registering the deposit yourself. The only agent I’ve come across that insists that landlords use its own tenancy agreements …I think you’ve guessed.