The dilemma facing many landlords is whether to use the services of a letting agency to manage their properties or to do it themselves. There are many advantages when it comes to employing a professional letting agent, particularly in Wales since the new landlord legislation was introduced last year.
Most landlords understand the benefit of a buy-to-let fully managed service but can sometimes be put off by the costs. The issue is that, as there is no industry standard for fully managed letting services costs, then landlord letting fees can vary considerably from agent to agent.
If a landlord is planning to hand over properties to a letting agency, the first step is to check that the agency is a member of an industry body such as the National Approved Lettings Scheme, ARLA, RICS or SAFEAgents who hold Client Money Protection Insurance and are a member of a Property Ombudsman to give peace of mind the property will be managed well and the clients funds are protected.
Fully Managed Letting Service Costs
As mentioned previously, there is no typical management letting fees threshold as the costs can vary from agency to agency.
Landlords that opt for a buy-to-let fully managed service can expect all of the same levels of service as a let only service but will not have the hassle of day-to-day contact with tenants or all of the other regular activities associated with managing a tenancy. For example, if anything goes wrong with the property or if there any issues with the tenants, then the letting agent will deal with the problems and instruct one of their approved contractors to carry out any repairs.
Fees for this service will normally vary from between 12% and 20% (including VAT) depending on the level of management required. These fees are deducted directly from the agreed monthly rent. Landlords need to be skeptical of any letting agents with fees lower than these thresholds, raising questions of quality of the management levels offered by the agency.
Most letting agencies will also charge a tenancy set up fee, usually between £180 to £200 or an agreed percentage of the first month’s rent.
During a Buy to Let Fully Managed Service
Once a landlord has found one or two letting agencies who meet all the criteria outlined above and whose fee structure is acceptable, the next step is to read the fine print to see what level of service is offered for the fee in question.
Professional agencies that are upfront about their fees will normally have these published on their website, see McCartan Lettings example here.
In addition to the set up and ongoing management fees, the sort of costs an agency should be transparent about include renewal of tenancy contracts, deposit management, rent protection and legal cover, if applicable.
Some agents will include variable costs in their breakdown of typical letting agency fees. These will cover activities such as obtaining proof of ownership, duplication and testing of keys plus the administration of NRL (Non-resident landlord) Tax Returns. Some of these fees may be optional and it’s worth discussing the choices with your chosen letting agent.
Landlords who opt for a fully managed letting service can also expect some level of contractor costs which will be managed by the agents but passed onto the landlord. Some examples include EPC reports, gas safety services and certificates, electrical condition reports, Legionella risk assessments, inventory and check out services by an independent organisation.
General maintenance costs must also be factored in, make sure you are working with an agent who references their contractors and have an agreed terms of business with those contractors so you know they can be trusted to work on your property. Some agents will add a surcharge on each maintenance order, so as mentioned previously read the fine print to see what level of service is offered for the fee in question.
A good agent will want the best for you and your property so will only use reputable contractors and source the best prices for the work to be undertaken.
Rent Guarantee Option
Landlords working with professional, established letting agents can also benefit from a rent guarantee option which protects their rental income for the first six months of the tenancy. This insurance can then be renewed after the free six month period at a small cost.
Some letting agencies can offer this for free under a fully managed letting service, but be wary of agents offering free insurance policies on a tenant find only basis as you may not be able to make a successful claim if you needed to.
Free Rent Guarantee and Legal Expenses cover for the first 6 months is one of the many beneficial services that Swansea-based McCartan Lettings offers all landlords who sign up their full managed letting service.
Hannah McCartan, Managing Director at McCartan Lettings explains how the management fees work at her agency:
To find out more about McCartan Lettings managed rental fees, call them on 01792 430100 or visit their website at www.mccartanlettings.co.uk.