We all know that letting agents can be a expensive and ineffective distraction for landlords. Letting agents promise to deliver trouble free letting when in reality they often fleece the poor tenant with unnecessary charges, whilst costing poor landlords a small fortune in lost rent through unearned property management fees. For example, tenants are often 'encouraged' to pay for the renewal of a 6 month AST when actually both landlord and tenant would be perfectly happy with it simply becoming a periodic Assured Shorthold Tenancy.
Costs of a full management service
A full management service normally starts at minimum 10% of gross rent and in London is more likely to be at around 12-15% or more if you use one of the expensively branded corporates.
My experience of full management
I tried a period of a full management service, but when I looked at the amount of rent I was losing and how little the letting agent was doing for 'their money' I decided to take back control. One of the annoying aspects of using a fully managed service I find is that many letting agents often have 'arrangements' with contractors employed to do work on your buy-to-let. This means you can easily end up funding the letting agents 'kick back' rather than having the job done at the lowest price. This is not always the case, but be aware - it does happen!
The other aspect that I find frustrating is that you can get caught in a strange social triangle, where you have to work through your letting agent to talk to your tenant. Given the letting agent has 'found them' for you, this often means that you may never have met them. If there is a problem with the tenancy, then you belatedly find out that you are dealing with tenants you would have never let any where near your prized buy-to-let in the first place. Given you have been delivered a poor quality tenant you are powerless as the problems with the tenancy mount.
I was contacted recently by one landlord whose experience highlights the fact that whilst you trust your letting agent to act on your behalf, the comprehensiveness of their actions and rigor cannot always be relied on. One of the main difficulties with employing a letting agent is that there are no standard terms of engagement. Each letting agent can & will operate in a different way so it is down to you as the landlord to ensure that they carry out all the duties that you expect and know what services are included in their fee. Make sure that you have a signed written copy that you can refer to should a dispute arise.
Chris Horne is an experienced landlord and property professional who now runs the website Property Hawk, a site aimed directly at UK Landlords. The site incorporates free property management software that enables landlords to track all their financial data relating to their portfolio. It allows users to print tenancy agreements and other forms FREE FOREVER. The site generates a real time rent book for each property as well as calculating a landlords tax liability.