When calculating the return on your investment in buy to let property you may have done so the basis of a hands-on approach involving your own time and effort in advertising for and selecting tenants, collecting the rents, organising the repairs and the host of other jobs that are likely to fall to a busy landlord.
That is exactly one of the problems faced by many landlords - the sheer time and effort involved in the nuts and bolts of the operation, to the extent that there is little energy in reserve for actually running the business as profitably as possible.
The answer for many such landlords, therefore, is a letting agent. Fees for this type of service typically vary and depend on the individual agency, however, 10-15% of the monthly rental income taken as a fee may not be uncommon.
In order to make sure that you are simply not jumping out of the frying pan into the fire when choosing a property management company, you may wish to keep in mind some of the following suggestions:
- perhaps the first thing to take into account is that whilst a management company may be able to take on a lot of the burden, there are still important matters for which you retain responsibility;
- amongst these is the question of protecting your property and the smooth running of your business - insurance for landlords is something in which we at UKinsuranceNET are specialists, so you might want to take advantage of our knowledge and expertise;
- that clarity of responsibility is something which is also likely to inform your choice of any property management company - are your agents empowered to carry out repairs and maintenance on your behalf, for example, and if so up to what amount;
- similarly both you and the agent need to agree on the period for which any management agreement may run and the notice of termination either party is required to give - typically, this may be two months, although a six-month period of notice is not uncommon;
- although many estate agents offer property management services, such high street offices are by no means your only choice - there also exist a range of independent agents who may offer an equally satisfactory service;
- letting or property management agents are probably most widely used simply for finding tenants on your behalf - this is otherwise probably the most energy and time-consuming part of the landlord's job;
- the basic service typically includes the preparation of the necessary advertising, showing prospective tenants around the property, taking up tenants' references and drafting and arranging the signing of the tenancy agreement;
- additional services might also include not only this basic letting service, but also the collection of rent from your tenants;
- a comprehensive, or full, management service typically involves the agent acting on your behalf in practically every situation - the relationship with the tenants and responsibility for day to day running, repair and maintenance of the let property.
With careful thought given to the type of property you want to let, and the broad category of tenants to whom you wish to let it, the services of a property management agent may relieve you of much of the more time-consuming aspects of being a landlord.