Property Management 101: Everything you need to know

Property Management 101: Everything you need to know

Rental property management is something that will always come into your mind as a landlord starting your property investment journey.

Deciding whether to self-manage your rental property (or properties) or hire a property manager is one of many big decisions you’ll face and questions you’ll ask.

What do property managers do?

Essentially, a property manager’s role is to bridge the gap between you as a landlord and the tenants living in your properties.

A property manager’s duties include ensuring your rental properties are well maintained and adhere to health and safety regulations and other lettings legislation.

When looking to appoint a letting agent to manage your property, you should look for:

• A local and respected letting agency

• An agency whose property managers are organised and have a good reputation

• A good communicator

• A calm and considerate personality

Is a property manager the same as a landlord?

The main difference between a landlord and a property manager is the landlord owns the property, while a property manager is hired by a landlord to look after their properties and tenants.

However, if you’re a landlord self-managing your rental properties, you’re a property manager, too.

How to become a property manager

Becoming a property manager doesn’t always require you to have experience in the property sector.

But you do need to be able to maintain a good relationship with tenants and be able to communicate with them effectively, as well as know and understand the huge amount of lettings compliance landlords need to adhere to.

If you’re a landlord looking to self-manage your rental properties and in essence become a property manager yourself, you’ll certainly need these skills and the ability to keep on top of maintenance demands at your property, not to mention staying on top of ever-changing legislation.

Organisation is key when you’re a property manager, as you’ll need to undertake regular inspections and keep abreast of regulation and legislation changes, as well as handling tenancy renewals and deposit returns or disputes.

How do property management fees work

If you’re hiring a letting agent to look after your property, the management fees you’ll pay can vary for many reasons.

Firstly, you may find differences between the fees charged by an estate or letting agent and a specialist property management company.

Secondly, the fees you’re charged for property management will depend on the kind of service being provided.

Letting agents will generally offer three basic tiers of property management:

• Tenant-find only

• Rent collection

• Full management

In the case of tenant find, the agent will usually find you a tenant, undertake referencing, collect and lodge deposits with a deposit protection scheme, undertake an inventory and draw up a tenancy agreement for a one-off fixed fee.

Rent collection means your property manager or letting agent will collect your tenant’s rent and process the payment to you, or chase the rent if it’s late, all for a fixed fee.

A full management service sees a property manager look after all aspects of your rental property, including rent collection and maintenance requirements, as well as keeping up with all-important and constantly changing pieces of lettings legislation.

Full management services usually see a property manager or agent take a percentage of your monthly rent as payment, usually between 10% and 20%.

Property management agreements in the UK

Property management agreements between a landlord and property manager are not dissimilar to a tenancy agreement between a landlord and a tenant.

A binding contract that sets out what is expected of both you as a landlord and your property manager, a property management agreement also sets out the fees that will be paid and the timescales of the agreement.

Most importantly, it also makes clear the legal obligations of both landlord and property manager.

Make no mistake, this agreement is always required if you’re hiring someone to manage your rental properties.

It’s a document that protects your interests – while a verbal agreement might seem like less paperwork and less hassle, such an agreement is rarely enforceable by law.

How to manage multiple properties

Managing multiple rental properties is not for the faint-hearted.

Of course, it can be done. CJ Hole property managers often look after hundreds of rental properties to an extremely high standard.

But one of the benefits of becoming a portfolio landlord is the freedom ongoing rental income can give you.

You might want to give up work and become a full-time landlord – but if you’re managing dozens of your own rental properties, that’s a huge demand on your time.

If you are going to manage multiple properties yourself, you’ll need to be organised and structured in the way you work – not to mention ready to except phone calls from tenants, often at highly-inconvenient times, regarding emergencies.

You’ll also need to stay compliant with all aspects of lettings legislation, which across multiple properties, can be extremely time-consuming.

What makes a successful property manager?

If you’re looking to become a property manager, or you’re a landlord looking to hire one, here’s our top-10 tips…

1 Treat your properties like a business

If you do this, you’ll automatically fall into an organised, systematic process that will help you be a better property manager.

Put contingency plans in place, too, when it comes to maintenance – having a fighting fund and trades you can call on at short notice will help you fix issues quickly, meaning you keep your tenants happy.

2 Get screening right and good things will follow

The biggest mistake a self-managing landlord can make is letting the wrong tenant into their rental property. It can lead to major problems, potential evictions, court orders and lots of expense.

So, getting tenant screening right at the start of the process is crucial.

3 Treat tenants as you’d like to be treated

You don’t have to be lifelong friends with your tenants, although some landlords do end up building amazing relationships with the people in their rental properties.

But you should always treat tenants with respect and not allow personal feelings to impact your decision-making as a self-managing landlord.

4 But don’t be overly nice

Being a property manager is about fairness – fairness to the landlord and fairness to the tenant.

So, as a landlord, you should also aim to be fair to yourself and your tenant.

Don’t be tempted to let rules slip. If you’ve stated no smoking in your rental property and your tenant asks, don’t amend the rules simply because you like them.

5 Don’t be afraid to ask

Being a property manager is about learning – and it never stops because every tenant and every scenario is different.

If you come across an issue you don’t have the experience to deal with, ask someone who does.

There’s little a good local letting agent won’t have seen or experienced and as a new landlord, that experience and know-how can be a huge asset.

In fact, failing to do so can often be far more costly.

The benefits of using a letting agent

When it comes to effective property management, there are few people better placed than your local letting agent.

Here are seven reasons why you should consider a letting agent when looking for property management services…

1. Regulation and accreditation

All UK letting and sales agents must join one of two property redress schemes by law.

This means if landlords, tenants or sellers have any complaints about that agent’s service and they’re unable to find a resolution, they can direct their complaint to one of those schemes.

The redress schemes also help ensure that agents abide by certain codes of practice to maintain high standards of service.

Here at CJ Hole, we’re members of the Property Ombudsman scheme, while our tenant referencing services are carried out by industry-leading referencing agencies.

2. Deposit protection

By law, landlords must lodge all tenancy deposits with one of three government-approved protection schemes within 30 days.

Failure to do so can result in a compensation claim by your tenant, while you’ll also be unable to issue a section-21 notice to regain possession of your property.

A letting agent will lodge deposits on your behalf and ensure your tenants have all the prescribed information they need, keeping you compliant.

3. Efficient systemisation

When you let your rental property through an agent, they’ll provide a legally binding tenancy agreement that protects both your interests and those of your tenant.

Here at CJ Hole, we also use all the latest online systems and processes to make tenancy check-ins and check-outs seamless and ongoing management organised and efficient.

4. Peace of mind over health, safety and compliance

Compliance is the most important part of being a landlord – not only are the penalties for non-compliance severe, it can also put your tenants at risk.

There are more than 150 pieces of legislation landlords must comply with, including:

• Gas and electrical safety

• Fire safety and smoke alarm compliance

• Sanitation, plumbing and heating safety

• Maintenance and repair obligations

A good letting agent will take care of all your obligations and be on top of any changes throughout your management agreement, giving you the ultimate peace of mind that your tenants are safe and the property is well-maintained.

5. Accompanied and online viewings

A good letting agent should offer accompanied viewings, showing prospective new tenants around your rental property and explaining how everything works.

Since the pandemic, your agent should also be able to offer online viewings to potential tenants, as we do here at CJ Hole.

6. Great local knowledge

A local letting agent should have a superb knowledge of the area, so they showcase things like travel links and amenities to potential tenants from out of town.

By renting through a letting agent, you’ll also benefit from their knowledge of the local rental market, and they’ll be able to advise on rent charges or potential changes you could make to your property to make it appeal more to your target market.

Your agent will undertake annual rent reviews to ensure you’re receiving a good and fair rent for your property that matches current market conditions.

7. Communication and action

Unfortunately, when you rent out a property, issues can occur.

By using a letting agent’s management services, you’ll ensure that routine and emergency maintenance problems are taken care of quickly and efficiently thanks to their close relationships with trusted, local contractors and trades.

Your tenants will also have a point of contact in an emergency, such as a boiler breakdown, and the agent will arrange for their approved tradespeople to attend and fix any issues.

Further reading…

A guide to fixtures and fittings

How to maintain your outbuildings

Buy-to-let hotspots in Bristol