It's a question every landlord has probably asked themselves at some point. Do I really want to knock on people's doors (or sends the pesky email) asking for rent? Being a landlord involves plenty of tedious admin, and it can test your people skills to the limit. But what if you could have someone do all the dirty work on your behalf, allowing you to sit back and reap the benefits of monthly rental income?
Finding tenants to occupy your properties, investigating their credit, chasing them down when their rent is late and handling any disputes; these are all the services that letting agents can provide. All you have to do is approve the tenant's application.
Of course, such services require a fee, and there are downsides to not having a direct relationship with tenants. It's up to you to decide whether the benefits of employing a letting agent outweigh the potential disadvantages. To help you make your decision, we've provided a rundown of the pros and cons of hiring letting agents.
Con: Services come at a price
Letting agents aren’t henchmen. They're not going to run around performing errands because you say so. They're trained professionals with in-depth knowledge of the property market, assuming you've hired from a legitimate agency. Letting agents’ services could cost anywhere between 5 and 15 per cent of the rental fee, depending on what services they provide.
Ask your letting agent for a list detailing all services and charges, so you know exactly what it is you're paying for. If they work for a professional body they should have no problem providing such details.
Pro: Expert knowledge
Letting agents know the property market, and they know the legislation governing property rental. They can advise you on fulfilling your role as a landlord and your obligations to the tenant, and they can help you obtain a higher rental income than you might have had without their inside knowledge.
Con: Read the fine print
According to the Telegraph, many landlords have been bamboozled by complicated terms and conditions agreements, and found themselves losing out on income due to hidden charges. For example, in some cases, landlords have unknowingly signed contracts containing a clause that required them to pay fees so long as their tenant remained on the property. Under such terms, a landlord could have to pay fees to a letting agent even after selling the property and breaking off all ties with the tenant.
Don't let yourself be caught out by such schemes. Read the fine print, and do your research on the letting agency you're seeking to employ.
Pro: Rigorous Screening Procedures
Letting agents can manage the entire process of advertising the property and attracting tenants. Once potential tenants are found, your letting agent will perform all the necessary check-ups and obtain the paperwork needed to ensure that your tenant is reliable and has a healthy credit record.
Con: Relying on a Middleman
A middleman operating between you and your tenant can have draw-backs. Issues between you and the tenant will take longer to resolve when messages have to be relayed between an agent.
Pro: Relying on a Middleman
On the other hand, there is a degree of separation between you and the tenant that removes you from involvement in tiresome disputes. Furthermore, an objective third-party that can provide advice regarding the real estate market and your responsibilities as a landlord.
Making a Decision
Ultimately it comes down to whether you're willing to pay what's needed to obtain the services of a reputable agency, and to do the research necessary to ensure the agency caters to your needs. According to My Deposits Northern Ireland, it helps to ensure that your letting agent is part one of the following registered professional bodies: The UK Association of Letting Agents (UKALA), The Property Ombudsman, Association of Residential Lettings Agents, National Approved Lettings Scheme (NALS) and the Royal Institution of Chartered Surveyors (RCIS).
If you prefer being more hands-on in the running of your real estate business then perhaps a letting agent may not be for you, but as the business grows you may find yourself in over your head without the proper guidance.
Still unsure as to whether hiring a letting agent is the right choice for you? Don't hesitate to contact us at Tepilo for advice on the residential letting market and all your real estate investment needs.