Not all property investors want to be landlords. Deciding whether you want to manage your own rental property, or hand it over to a Swansea letting agent, is one of the most important decisions you will make about your property.
Many first time landlords often decide to manage their own rental properties themselves because they don’t want to pay lettings agents fees but without realising what is involved. Though it may not be rocket science, as experience shows, it will take up a fair chunk of time and landlords will need to think carefully about whether or not they are prepared to sacrifice that time. It’s about weighing up the cost of time and effort managing tenant and maintenance issues compared to paying a letting agent fee percentage of the rental income.
The team at McCartan Lettings, a specialist and dedicated lettings agency based in Swansea, have broken down the pros and cons of landlords managing their own properties versus using a letting agent to help make an educated choice. They also explain the benefits of a fully-managed service compared to a let only service,.
Using a Letting Agent – Full Management or Let-Only?
Letting agents will typically offer two levels of service: let-only, or full management.
The let-only service is pretty self-explanatory – the agent will find tenants and successfully let out the property for a landlord, but will not normally be involved any further in the on-going management of the tenancy. The full management service, on the other hand, is a much more comprehensive service and will take 90% of the responsibility off a landlord’s hands.
How much are letting agents’ fees? A Let-Only service will usually be charged as a fixed fee relating to a percentage of the first month’s rent. A full management service, on the other hand, will usually be charged as a commission-based fee, typically 10-15% of rent payable for the whole tenancy period along with a tenancy set up fee.
This may seem like a sizeable chunk of the rental income but remember that with a full management service the agent will: produce a details sheet and market the property, handle enquiries and conduct viewings, screen potential tenants and carry out referencing, provide an Assured Short-hold Tenancy Agreement, take the first rental payment and handle deposit protection, carry out inventory checks and handover, issue the relevant certificates, carry out safety checks and manage communications with the tenants throughout the tenancy. The agent will also handle all maintenance issues provided no major works are involved.
Benefits of a Full Management Service
The full management service is an attractive option for many landlords, especially if they don’t live near the property they are renting out.
If a landlord isn’t sure whether a fully managed service is required or not, the best process is to think about the target audience for the property and how problematic or demanding they may be throughout the tenancy. A landlord should also take into account the condition of your property – is it likely to require improvement or maintenance works over the next 12 months or is everything in perfect working order?
When deciding how to manage your rental property, a landlord’s availability and stress levels need to be considered. The cost of a full management service may seem significant, but if it allows a landlord peace of mind and safe in the knowledge that the tenants and property are being properly taken care of, then it will be well worth the money.
Also, the costs of a letting agent are off-settable against tax liability – so landlords can claim back some of the costs!
When it comes to maintenance or repair work is required on your property, your letting agent will undoubtedly have a list of approved contractors and so are likely to be able to get better rates than if a landlord is looking for a one-off repair.
Is Self-Management a Realistic Option?
All self-managing landlords should treat being a landlord as running a business, otherwise they are putting themselves at risk of serious issues further down the line when they need to evict tenants, or challenge an inventory document, or rely on documentation that has not been properly completed.
As we mentioned earlier, being a landlord is not rocket science, but those who wish to self-manage their properties will have to commit a time and effort to learning the ropes and doing some research to make sure they know their rights and responsibilities – as long as they’re happy to do this, self-management is certainly a realistic option, even for novice or newbie landlords.
It is widely accepted that self-managing your rental properties, as opposed to taking on a letting agent, will save a certain amount of money – however it is important to remember that there will be regular maintenance costs to come out of the landlord’s pocket, as well as unexpected one-off cash costs.
Professional help and advice on Letting Agents Fees
A local agent will have in-depth knowledge of the local market, such as target audiences, levels of supply/demand and achievable rental values, which should help a landlord make an informed decision about how to market your property and whether to use the services of a lettings agency.
It’s always worth speaking to a few agents in order to get an idea of costs, enabling landlords to make letting agents fees comparisons. Also, agents are legally obliged to put their fee structure on their website or display them in their offices. So there should be no surprises if a landlord should appoint a specific agency to manage his or her rental properties.
There are a whole host of books available for both experienced and novice landlords covering everything from choosing the perfect tenant, to tax liability and eviction procedures. The internet is another great source of help and advice for landlords, with popular online forums such as Property Tribes, LandlordZone and The Landlord Law Blog giving you the chance to pose questions to industry experts and likeminded landlords.
Self-managing rental properties does involve inescapable paper-pushing and forms must be filled out accurately and correctly to avoid damaging a landlord’s interests. There are loads of pitfalls such as using the correct tenancy agreement, filling out tax returns, depositing the bonds in a deposit protection scheme, issuing prescribed information for the deposits and ensuring tenants get the correct paperwork on time and in full, to name but a few.
Hannah McCartan, Managing Director of McCartan Lettings explains the benefits of a fully managed letting service in the video below:
For further information about McCartan Lettings landlord fees, call McCartan Lettings on 01792 430100.