Now is a great time to invest in property.
There may still be savings to be made through the stamp duty ‘holiday’ if it’s extended, demand for great rental properties is high here in the South West and property remains a solid long-term investment. But one of the biggest decisions you’ll have to make when investing in a rental property for the first time is whether to manage it yourself or use a letting agent.
Here, we’ll explain what a letting agent does and outline 10 reasons why you should consider using one to manage your property…
What is a letting agent?
A letting agent works on behalf of landlords to let out, manage and maintain their rental properties.
Using a letting agent can provide peace of mind for a landlord on:
• Their legal and legislative responsibilities
• Their tenants’ safety and complying with safety regulations
• Maintenance at their rental properties
• Their rental income
• The quality of the tenants renting their properties
What does a letting agent do for a landlord?
Depending on the level of service you agree with your letting agent, they are able to:
• Find and reference tenants
• Advise on market conditions
• Do a rental valuation
• Book and accompany viewings
• Collect rent
• Collect and protect tenant deposits
• Undertake and prepare inventories for check-in and check-out
• Draw up tenancy agreements
• Manage property repairs and maintenance
• Undertake regular property inspections
• Manage disputes over deposits
• Ensure gas and electrical safety checks are carried out
• Ensure fire safety regulations are complied with
• Manage rent arrears and liaise with tenants in the event of non-payment of rent
How do letting agents work with landlords?
A letting agent’s overall role is to provide a landlord with peace of mind, remove the burden of property management from their shoulders and help ensure they remain compliant with ever-changing landlord legislation and safety regulations.
But your rental property is exactly that – yours.
So, a good letting agent should be a partner to its landlords and work and communicate with them effectively to ensure their requirements are met.
Why should I use a letting agent?
There are many, many reasons why using an effective and proactive letting agent can benefit you as a landlord.
One major area is legislation.
Did you know, landlords must comply with more than 160 pieces of letting legislation in order to remain legally compliant?
That’s a huge number of obligations and keeping track of changes to lettings law can be overwhelming.
Here are 10 reasons why using a letting agent should be on your agenda when investing in property this year:
1. Deposit protection
Your tenant’s deposit must be placed in one of three government-backed tenancy deposit schemes within 30 days of their tenancy start date.
Failure to do this can mean you’re unable to use a section 21 notice to evict your tenants at the end of their fixed term agreement.
Your tenant can also take you to court for failing to protect their deposit, where a judge can order you to pay up to three times the deposit amount in compensation.
Your letting agent will work closely with one of the three deposit protection schemes and ensure you’re fully compliant when it comes to your tenant’s money.
2. Finding the best tenants
Finding and retaining good tenants is one of the best ways to save money as a landlord.
Good tenants look after rental properties, meaning there can be fewer costly maintenance issues to deal with, and pay their rent in full and on time every month.
And if they’re happy in your rental property, they will be more inclined to stay there for longer, meaning fewer void periods and fewer costs associated with re-marketing. A letting agent will use a thorough referencing process to ensure you get the best tenants for your property.
3. The Renters Reform Bill
The Renters Reform Bill will see some major changes to the Private Rented Sector (PRS) when it comes into force.
Originally due to be read in 2020, its passage through parliament was delayed due to the Covid-19 pandemic.
However, it’s widely expected that the Bill will be heard this year – meaning there are two major changes on the horizon for landlords:
The end of no-fault evictions
Currently, you can regain possession of your rental property at the end of a fixed term agreement or a periodic tenancy using a section 21 eviction process. However, under the Renters Reform Bill, section 21 will be abolished, meaning you’ll have to use a reformed court process to get your property back.
The Renters Reform Bill includes plans for deposits that will travel with a tenant when they rent a new property. This is to help tenants avoid having to save a new deposit each time they rent a property, while they wait for their previous deposit to be returned.
By using a letting agent’s management services, you’ll have all the support and advise you need when adjusting to changes that will come with the Renters Reform Bill.
4. Electrical safety checks
Since July 1, 2020, Electrical Installation Condition Reports (EICRs) have been mandatory for all new tenancies in England. From April 1, 2021, EICRs will become mandatory for all tenancies and must be renewed every five years.
Moreover, any remedial work required after an EICR must be carried out within 28 days to remain compliant. Fines of up to £30,000 can be issued to landlords who fail to comply with EICR rules – But with the support and expertise of a letting agent, you can ensure you remain compliant.
5. Covid-19 eviction rules
Under emergency coronavirus legislation, tenants must now be given a minimum of six months’ notice if a landlord wishes to regain possession of their property at the end of a fixed term or periodic tenancy.
Those rules are in place until at least March 2021. By using a letting agent, you can stay on top of ever-changing pandemic eviction rules.
6. Changes to Right to Rent
Now the UK has finally severed ties with the European Union, a new points-based immigration system is in place. Under Right to Rent rules in the UK, all adult tenants from overseas must be able to prove they have a right to rent a property here – but the rules are set to change now the points-based system is in place.
A good letting agent will be able to ensure you don’t fall foul of the complex Right to Rent rules, where you could face a fine of up to £3,000.
7. Get back your time
One of the best things about generating an income through property is the time you get back – but that’s only the case if you use a letting agent.
If you’re self-managing your rental property, you’ll save some money on letting agent fees, but you’ll have to deal with:
• Property maintenance issues
• Emergencies with tenants
• Rent and deposit collection
• Inventories and check-in / check-out processes
• Finding tenants and marketing
• Rent arrears and deposit disputes
• Changes to legislation
• Remaining compliant
By using a letting agent to deal with these responsibilities and much more, you can get back more of your time.
8. Dealing with maintenance issues
Maintaining your rental property to an acceptable standard is not just for show – it’s a legal requirement.
Under the Landlord and Tenant Act 1985, you’re required to:
• Keep your property’s structure and exterior, including drains, guttering and external pipes, in good repair
• Ensure your water, gas, electricity and sanitation systems are kept in good working order
• Keep heating systems in good working order
You must also ensure major repairs are carried out within a reasonable timeframe.
9. Achieve the best possible rents
Deciding how much to charge your tenants in rent is a big decision.
A letting agent will have superb knowledge of the local rental market and will be able to advise on the amount of rent you should charge. They’ll also undertake an annual rent review and suggest whether raising your rent, or keeping it the same, is the best course of action based on market analysis and tenant demand.
10. Protection of your rental income
By using a letting agent to collect your tenants’ rent each month, you’re receiving an extra layer of protection for your money.
All letting agents must be members of a Client Money Protection redress scheme, meaning your rental income is fully protected should that agent be unable to pay you or suffer insolvency issues.
How do I choose a letting agent?
When choosing a letting agent to manage your rental property, you should look for:
• The agent’s redress scheme – here at CJ Hole, we’re members of the Property Ombudsman scheme
• How long they’ve been working in your area – we’ve been serving local communities in the South West for more than 150 years!
• Different levels of service – not all management services are right for all landlords, which is why we’re able to tailor services to your individual needs
Property investment can be a great way to help secure your financial future and make your money work harder for you – but you need to know what you’re doing. Our property investment guide for beginners is a great starting point.
Staying compliant with legislation, meanwhile, is the most important part of being a landlord – our guide outlines everything you need to know about the rules and regulations.
And if you do purchase a new rental property this year, did you know you can get funding to help with its energy efficiency?