UK: Advice For New Landlords, And Guidance On Choosing Letting Agents

Last Updated: 2 February 2009
Article by Tessa Shepperson, BA, LLB, Solicitor

Maybe you need to move to another city, but already own your own home.  Or perhaps you have recently inherited a property.  However, it may be difficult to sell (perhaps you have tried and failed).  But you cannot afford to just leave the property empty. You will have to let it.

There are many people in this position, particularly in the current economic climate (January 2009).   If you are new to letting property - what should you do?  How do  you start?  Here is some preliminary advice, to help you on your way.

SHOULD YOU USE A LETTING AGENT?

This is an important decision.  Many people use an agent because they do not have the time, do not want the bother and worry of dealing with things themselves, or are worried that they will do something wrong.  However although many agents are wonderful, some are most definitely not.  The letting industry is (at present) unregulated and there is nothing to stop anyone setting up as a letting agent.  Here are a few pointers to help you:

Reasons For Using A Letting Agent

If you live at a distance from the property it is probably best to use a letting agent (particularly if you live abroad), unless you have someone living nearby who can visit the property if required.  There needs to be someone on the spot who can go round and deal with problems, for example provide duplicate keys when the tenants have locked themselves out.

If you lead a very busy life, again it may be best to consider using an agent.  Renting property can be fairly time consuming, although this will to a certain extend depend on the type of tenants you have.  Some tenants live for years in a property and all the landlord does is count the rent dropping into his bank account every month.  Other tenants require endless input, whether it is dealing with complaints, replacing lost keys, or writing to them about non payment of rent.  

If you don't like paperwork and are bad at administration, again it may be best to use an agent.  Renting property is highly regulated nowadays and you need to have the correct paperwork.  At best having the wrong paperwork can waste time, at worst it will cost you money in lost rent and may even result in prosecution.

If you don't have good people skills.   Ideally you should be interested in property and enjoy and be good at dealing with people.  For example, the most important part of letting property is choosing the right tenant.  Then during the tenancy, good people skills can often defuse a situation which could, dealt with the wrong way, escalate into trouble.  

Reasons For Not Using A Letting Agent

To save money.  Agents are expensive.  Many landlords have saved themselves thousands of pounds by managing their properties themselves.  Provided you are careful, and have a good source of help and support (such as www.landlordlaw.co.uk), it is perfectly possible to do a good job yourself.

To ensure that prospective tenants are referenced properly.  Although this is often the main reason why landlords use them, it is amazing how often agents (even some good agents) do not check prospective tenants rigorously and follow up all references.  If you have a bad tenant this can be a disaster.  For example, I have just recovered possession of a (high value) property through the courts for a client where the tenant had run up over £20,000 worth of rent arrears.  This tenant had been chosen by a reputable letting agency.

To monitor the property during the letting.  Again this is something that agents, good agents, will do for you, but it is not unknown for them to neglect this work.

To ensure that repair work is not overpriced.  Many properties will need some sort of repair work done during the tenancy, and again this is something that landlords use agents for.  However it could be costing them dear.  Most agents will always use the same firms and will not 'shop around' for the best deal.  Some will even receive commission for using certain firms.  

IF YOU DECIDE TO USE AN AGENT

Be very careful which agent you use.  Ideally it is best to use a firm which is a member of one of the main professional organisations: The Association of Residential Letting Agents (ARLA), The Royal Institute of Chartered Surveyors (RICS), The National Association of Estate Agents (NAEA) or the National Approved Letting Scheme (NALS).  All of these organisations will require their agents to have proper insurance, client money protection schemes and a complaints service you can use if you have a bad experience.

However even these organisations have some agents who provide a poor service. Talk to the staff.  Are they bright and friendly?  What training have they received in letting and management?  How do they treat prospective tenants?  (It may be worth getting a friend to pretend to be a tenant to see how they deal with them.)  How long has the firm been trading?

It is also worth checking out what sort of property they deal with.  Take a look at the other properties on their list.  If they are different from yours, this firm may not be the best choice for you.

Note also that most agents will offer two services, a finding tenant service, where you then take over the management, and a full management service where they do everything.  If you feel happy about managing the property yourself, but just want someone to deal with the preliminary stages, then using an agent's tenant find service may be a good option.

In either case your agent will be able to give you advice about the condition of the property, so it meets all the legal standards before it is offered to tenants.

IF YOU DECIDE NOT TO USE AN AGENT

Do Some Research

You should read up on managing property before doing anything else.  There are plenty of excellent books available.  There is my book, The Complete Guide to Residential Letting published by Lawpack.  Two other excellent books are Successful Property Letting by David Lawrenson, and The Buy to Let Handbook by Tony Booth.  Fiona Fullerton and Liz Hodgkinson have both written several books which are particularly helpful on doing properties up, and if you intend letting to students The Landlord's Guide to Student Letting by Catherine Bancroft-Rimmer is highly recommended.  

You will find a huge amount of information (FAQ, tips and articles) on my legal information web-site service Landlord-Law at www.landlordlaw.co.uk, plus this contains most of the documentation you will need to manage your property. Another good source of help are landlords associations, such as the National Landlords Association.  There are also several free information sites on the internet (the best of which is the LandlordZone site) which can be very useful, however it is generally best to treat free services with a degree of caution.

Make Sure That Your Property Is In Good Condition

Your research will have given you a lot of guidance on preparing a property to let.  At the very least it should comply with the governments 'decent homes' standard.  However if you want to attract good tenants, your property will need to be better than this, with good quality fittings and fixtures.  The style and quality of these will depend on the type of property you have, and the type of tenants you are looking to let to (for example, it is not a good idea to have expensive antique furniture in a student let).

You need to be particularly careful that the property and its appliances are safe.  You do not want to be prosecuted for manslaughter!  Perhaps the most dangerous appliances are gas.  For this reason there are special gas regulations, requiring landlords to get their properties checked by a CORGI registered installer before the tenants go in, and then every year after that.  The installer will provide a certificate and a copy of this must be given to the tenant.  Failure to comply with the regulations is a criminal offence. There are also regulations regarding furniture and furnishings which must be fire retardant.

If you are going to be letting to groups of people who are not related (for example a student house), it is possible that your property may be classed as an HMO.  If so you will be subject to additional management regulations (for example you will need to obtain a certificate regarding electrical safety) and your property may need to be licensed.  Have a word with the Housing Officer at your Local Authority.  He will be able to advise you about this, and let you know if there are any additional requirements you need to comply with.

One way to attract good tenants is to make your property energy efficient.  All tenants now have to be given an Energy Performance Certificate along with the property particulars.  Why not carry out improvements to your property so that the report shows good results?  For example, some certificate providers offer a pre-assessment and assessment service, where you get a second certificate after you have carried out the recommended improvements.  Most people are concerned about the environment nowadays, and tenants will be attracted by lower heating bills.

CONCLUSION

If you have followed the advice in this article, you will either be using a (carefully chosen) letting agent or will have decided to go it alone.  Whichever option you choose, it is always important to do some research on residential landlord law and practice.  If you are managing the property yourself, it is essential.  If you are using an agent, how will you know whether they are doing a good job if you have no idea what they are supposed to be doing?  You will also be much better placed to deal with the problems which, sooner or later, will inevitably come your way.

For further information please see the New Landlords Guide on the Landlord-Law web-site. Landlord-Law members can also read detailed articles on choosing letting agents and problems with letting agents in this section ).

(Note – This article is written for landlords in England and Wales UK)

www.landlordlaw.co.uk

© Tessa Shepperson, January 2009

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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