UK Landlord Forum / Life

Afternoon,

First post on here so hope you don't think its a waste of time and that you might find the time to reply.

I am at college studying business management and as my dad has some properties, some which he looks after himself, others that he has with an agency (houses some distance away from where we live), I have picked the topic of property management for part of the course I am doing. I am trying to gather some feedback from current private landlords where they let their houses through agencies. That doesn't mean if you manage them yourselves that you can't let me know your thoughts on the questions but really keen to hear from those who have theirs managed...

Apart from the distance reason (as mentioned above) would you let me know your thoughts on why you use an agency to manage your rentals?
If you had the opportunity/time wise etc would you rather manage them yourselves or if you had lots of free time would you still use an agency?
I know the agency my dad uses covers a fully managed service, they pretty much do everything for him, but he always complains on the fee they charge - what kind of fees do you pay for fully managed?, what do you think are reasonable fees and what is the industry average?
Do agencies make a lot of money from the industry they are in or do they have to work hard to earn a decent return? I wonder what a decent return would be classed as?
Through some of my research I know there are a lot of regulations that need to be adhered to when letting out properties - is the awareness and responsibility of this enough to put private landlords off managing them themselves?

I am also interested in what landlords would say are fees that are too low - for example I think the local lettings/estate agents know of my dad locally as we keep getting flyers through the letter box. One company was offering a fully managed service for 5% but most are around the 10%-15% mark - like i said my dad looks after his own locally and said really low agency fees puts him off as they'll likely do a poor job - not sure I agree but what do others think?

I am writing my project paper over the next few months so hopefully can get some feedback and ask a few more questions for those that have time - think im going to call it something along the lines of "DIY property management or Better left to the experts?"

Appreciate your time

thanks

N

Let me think.  Why would I use an Agency.

Do I want to use someone I probably cant trust - No
Do I want to use someone who is probably incompetant - No
Do I want to use someone who will probably cock things up and cost me extra bucks - No
Do I want to give a huge cut of my income to someone who will not hold their end up - No.

There are four things in life to be wary of  :

Fire
Electricity
Water
Property Agents.

The premise of your project title is wholly incorrect to begin with, sorry.

Best for you to understand why a Letting Agent is, decidedly, not an expert first. Research whether these people require any qualifications to set up, find out whether they must do any training, therein lies some of your answers, possibly. Distance is one of the only good reasons, and it's still a tough call... most Agents will earn their crust from green and doubtful Landlords.

If I had to guess, I'd say you'll find that those who use an agent will have no more than one or two properties and/or will be relatively new landlords and/or live an inconvenient distance from their properties.I'm an accidental landlord. When I got married we effectively ended up with a spare house and, rather than sell it and put the money in a bank account to earn a few percent in interest, we decided to keep it as a hedge against property price rises. That way, if we decide to move up the property ladder in the future, our "savings" will have kept pace with the domestic property market, whichever way it goes.

As such, we're not looking to make landlording a full-time job and, with only one property, we're not in a position to take advantage of economies of scale, so we prefer to pay a local estate agent around 10% for full management, at least while we're still new to the business. It's the same firm that originally sold me the house, they manage a lot of other properties on the same estate and I get on well with them. If there's a problem, they're the ones who get the call from the tenants, and they're in a position to assess the problem and arrange a visit from a tradesmen that they trust, which is better than me leafing through the Yellow Pages every time I needed a plumber, electrician, roofer or whatever. This way, I only have to trust one person, albeit he's an estate agent!

I think in situations like ours, using an agent gives the tenants a better experience too. They're not having to deal with an "amateur" who takes weeks to get round to bodging a DIY repair, or somebody who's so emotionally attached to "their" house that they get upset if the tenants keep their cutlery in a different drawer. (I'd like to think I wouldn't be at all influenced by the fact that it was once my home but, this way, I can be sure it's not an issue.)

I'm pretty sure our agent does very nicely out of the business. It's not quite money for old rope but it's not far off. Once you're looking after enough properties for enough people, then the economies of scale build up and it all falls into a routine. Having said that, I don't begrudge them their fee. If I were so inclined, I could take over the management of the property myself, but I don't, in the same way that I don't service my own car or make my own crockery: it's better to pay somebody who does it day in, day out.

Quote from: Simon Pambin on January 31, 2016, 09:27:25 PM...in the same way that I don't service my own car or make my own crockery: it's better to pay somebody who does it day in, day out.

But, obviously, only if they're what you would consider to be a professional. There are many Letting Agents out there who would not fulfil that description, by any stretch, hence their reputation. I would assume you need some qualifications to service a car... maybe you don't... but you certainly don't need any qualifications, or even any training, to become a Letting Agent. Them doing it day-in-day-out is a good thing if they're good at it - you wouldn't want to pay a person who isn't good at it - many Landlords are in that particular boat, sadly.

I'm currently trying to ditch my letting agent.

My reason for using them in the first place? In a word, naivety. I assumed they'd take all the hassle out of being a landlord whereas the opposite has proved to be the case.

Evening and firstly can I say to everyone who has commented I am extremely grateful!

Its been really useful to read your comments and in fact somewhat different to what I thought I would originally get.

I'd like to come back on a few points made (indicating who aimed at as much as possible, but still happy to have any follow up response).

I guess the first key point shining through is that of 'trust' - there doesn't seem to be much out there from responders, whether that's through direct experience or anecdotal. The other point that comes through clearly is that many don't feel it requires much in the way of academia/qualifications/regulations to actually be a letting agent. I am assuming you can't simply roll out of bed one day and decide to become a letting agent, open up a small premise on the high street, swallow the content of a decent website covering residential management regulations and begin trading? Maybe I was wrong.

Through my course I know that many affiliate themselves with the likes of ARLA or similar and they require qualifications to be passed to join and use their logos etc but assume you can trade as an unaffiliated company as well.

I managed to get into a local letting agent today and asked them how many clients they had and whats the average no. of properties a client has - they have circa 150 properties under management with a real mix of 1-2 property landlords to some fairly decent sized 10+ holdings - i didnt get the impression they were a bodgit and scarper crew but I am sure, like with any trade, you get cowboys amongst the offerings.

Simon, thanks for your detailed response - the points you make are good ones as to why someone might use an agency rather than themselves doing it (even for a small number of properties) - if I can follow on from your points with a couple of questions:

Are you happy with your agency - in as much are you satisfied you get value for money? You say the rate is 10% - do you feel thats justified for what they do? Would 8% or even 5% make you happier or more satisfied? Do they 'talk' to you much, report on how its going, offer you other services, give you feedback and so on or is it pretty much leave you alone now they have your business? Dependent on your answers to those questions - would you want them 'talking' to you more if the dont?

I guess what I'd like to get into for my studies are - what would the ideal agency do/offer/provide you as a landlord? How could an agency or agencies in general rebuild or throw-off that 'trust' issue so far everyone appears to have with them on this thread?

Prog - regarding your agency and your plans to ditch them - would you be able to detail the reasons you want to get rid?

thank you

I look forward to any replies

N

Cattclan,

Here's a view (admittedly slightly (ok more than slightly) jaded from the landlord malarkey.

1. 99.999% of agents are lower than whale shit on the bottom of the ocean floor.  There are some good ones but they are so much rarer than unicorns.
2. Legally for almost everything the Landlord is liable and the agent is not.  Some landlords think that the agent will take out the hassle of landlord ship but all that happens is that landlords end up chasing the agent for rent, information, notices.
2.a. Many agents have no clue at all about the changes in regulations and are therefore more of a liability than a help.  This isn't limited to only small agents even the bigger ones send incomplete guidance to their offices.
3. Agents don't give a damn about damage to property and sometime side with the tenants.
3.a. In fact damage to property is a chance for the agent to make more money by creaming off a fee for picking up the phone and asking one of their regular tradesmen to visit.

I don't use agents anymore (other than case set out below).... This is not anecdotal but I will give you direct examples of shit that I have to sort out myself (mostly before it cost me anything) which meant I was paying them so I could do their job for them....each time I ended up with a direct relationship to the tenant.

A. Multiple mistakes and typos on rental agreements
B. incorrectly completed section 21 notices
C. NO understanding of latest regulations and requirement e.g. Smoke alarm, serving how to rent guide etc etc
D. Failure to pass on rent -timely; Failure to chase rent when not paid
E. Failure to report water leaks
F. Requests for electrical certificate when not required
G. Letting tenant not pay rent due to claim of (incorrect) disrepair
H. Claimed tenant would not agree to rent increases (one visit over a cup of tea (they served) sorted out small increase)
I. Lack of property checks
J. poor credit checking (one chap surrendered the lease 2 months after getting in)
K. piss poor inventory - wrong date
L. Agent requesting tenant to renew lease (new fixed term) so they can scalp a fee from the landlord..

The agent cannot even represent the landlord in court anymore.

Basically if you can write down all the services the agent is supposed to provide then perhaps bar one I have seen first hand fail.
The one thing agents can do is get tenants in quickly but that means they compromise quality of tenant for speed.  Think how are they incentivised by a fee for the entire fixed period up front, they don't care about the quality of tenant....

As to your points....absolutely 101% any joe can set up a letting agents.  I am not sure what qualifications are actually required by the ARLA folks ...they are not exactly incentivised to limit their membership.

Agents in my experience don't at all talk to the landlord and this applies at times when they should.  Sometimes the first almalord finds out a tenant has left is when the rent stops coming in.

In your dissertation put down a list of economic drivers for a tenant a landlord and an agent ... Maybe a venn diagram type thing and see where the overlaps are.

Now to the one area where an agent might be of use...and this applies to only to unicorn agents....
Guaranteed rent service.  This is where you lease the property to an agent for 2-3 years that you would literally entrust with £900K of your money (I live in Surrey, other areas more or less than this).   They rent the property to who ever they want (subject to limitations you agree up front) in that three years but even if the property is empty you still get rent.  Of course they take a cut from the rent but I now have this cut to less than what other agents charge for a managed non guarantee rent.  This does take out a lot of the hassle of  landlordship but you still get involved with the tenants over inspections, maintenance and repairs (unless you want to also pass that on but risk the fee on top charges).  This is more for those with limited time and even then I don't do this with all my properties nor do I give any agent more than 4 properties - yes I have trust issues.

No matter how you use an agent you as the landlord can never be absolved of either blame or work so you need to be sure you want to slice your cake with someone else.

If I ever started a letting agent service then to get the landlords trust I would issue a clear as glass letter of commitment ...
Stating ever so clearly service levels in respect of checks, maintenance, fees and restructure the fees so they are more in line with the landlords economic drivers. And then I'd have to deliver on them....

Best of luck with your work

Quote from: cattclan on February 01, 2016, 11:48:59 PMI am assuming you can't simply roll out of bed one day and decide to become a letting agent, open up a small premise on the high street, swallow the content of a decent website covering residential management regulations and begin trading? Maybe I was wrong.

Yeah, sorry to tell you that you are wrong. You don't even have to do the swallowing...

Quote from: theangrylandlord on February 02, 2016, 01:03:24 AMIf I ever started a letting agent service...

Gah, is that what the world needs? More Letting Agents? Of course, you might claim it needs more good Letting Agents... but I'll stick to the world not needing any more at all. Please don't.

My mind works like this... I want to be a Landlord. I enjoy the lifestyle. Most of the time it's quiet, with the odd emergency or flurry of action. It's a people business, not a property business. For those reasons I use a Letting Agent for the only thing I cannot do that easily myself at this current time - the initial advertising and referencing. Yes, I can do these things and I tried UPad - but I wasn't very successful with it. Perversely, from the customer's side, it seems they still like to think that there's a proper Agent involved... not just direct contact with the Landlord (which UPad shows)... that is strange, when you think about it... it's like the prospective Tenant thinks (mistakenly, of course) that the Agent involved will be on their side somehow and bring a level of professionalism to the transaction. Nothing could be further from the truth. Many Tenants think the Agent is their Agent, they don't understand (and it's not' cos they're stupid) that the Agent works for the Landlord solely... the reason why? Well, they are paying fees to the Agent as well, right? So - back to my mind - if I wanted to be some kind of silent hands-off investor then I would consider an Agent, but it's not what I want to be... I want to be a Landlord, and take all the trouble and strife that comes with that (intermittently). Being a Landlord is for lazy people, demonstrably.

Oh totally hypothetical statement...I have no plans whatsoever to start a letting agency...EVER!

"It's a people business not a property business". Interesting viewpoint.
Not one I subscribe to but interesting nonetheless.

I do agree though the agent can be useful in the initial advertising and referencing, even the initial viewings if the landlord doesn't have the time (like me) and can help to filter out the hopeless applicants.

I have never tried UPad either and maybe another avenue for said thesis is to see if these websites are a true replacement for an agent....

Yes, I'm pretty happy with the agent we use, although we've only been letting for just over a year and it's been plain sailing thus far, so we haven't really seen how they handle a crisis. I was impressed with how efficient they were at finding good tenants and preparing the property - new bedroom carpet, kitchen flooring, oven, washing machine, shower unit, gas certificate and electrical check all done in a week at a price I'd struggle to beat. I could have arranged all the bits myself but it would have taken a sod of a lot longer (I know what I'm like!) and that could mean a month's rent gone west, on top of the hassle of chasing up tradesmen while I'm at work.

In some ways it's odd to work out management charges on a percentage basis. After all, does a property that's rented out at £1000 per month really need twice as much looking after as one at £500 per month? I suppose it just shows that agents are basing their fees on what the market will bear, rather than cost-plus. We pay just shy of £100 per month (including Her Majesty's Vodka And Tonic) for full management. (There are more stripped down packages available for less.) Some months that's going to be money for old rope but I reckon it balances out overall. If I didn't think it was worth it, I wouldn't have signed up. I certainly wouldn't mind getting exactly the same service for less but, once you get below a certain point, you start to wonder which corners are being cut.

In terms of communication, we get the monthly rent statement and six-monthly inspection reports. In between, we'll get an e-mail if the tenants have reported a problem or made a request, so that we can authorise repairs if necessary. I reckon the level of communication is about right. We only need to hear from them if there's a problem.

The trust issue is a tricky one. I trust our agents but maybe that's just because they haven't done anything yet to betray that trust. If all they're doing is making a tidy profit out of us then frankly I can live with that. It seems to be a business where you can make a comfortable living without being dishonest, so it puzzles me that there are apparently so many cowboys around. Maybe greater accreditation, either formal or informal, is the way to sort the wheat from the chaff.

Quote from: Simon Pambin on February 02, 2016, 11:10:14 PM

The trust issue is a tricky one. I trust our agents but maybe that's just because they haven't done anything yet to betray that trust. If all they're doing is making a tidy profit out of us then frankly I can live with that. It seems to be a business where you can make a comfortable living without being dishonest, so it puzzles me that there are apparently so many cowboys around. Maybe greater accreditation, either formal or informal, is the way to sort the wheat from the chaff.

The trouble is that you wont see whether they are cowboys or not until things start going wrong.  By then it is game over.

Is that not true of almost all trades/professions though? The agents we use have been in business for years, they've got a good reputation locally and it wouldn't be in their interests to act like cowboys. They've done all the legal stuff (deposit protection and PI, gas cert etc) without prompting, the rent is never late getting to us and the tenants and their neighbours have our contact details so we'd soon hear if there was a problem on that side. Yes, there's always a small potential risk they'll go rogue, but if you let that thought rule your life, you'd never eat out for fear that the chef was gobbing in the soup.

Quote from: Simon Pambin on February 07, 2016, 05:05:37 PM
Is that not true of almost all trades/professions though?

Yes that's why you should only use services which have been recommended by someone.

I dont know how many times you have heard anyone enthusing about how great a particular agent is, but for me it is zero.  And along with that plenty of negative ones to boot.  I wish you luck and hope you have found an agent who cuts the mustard, but it is after all too early to tell yet. Fingers crossed.

Quote from: Simon Pambin on February 07, 2016, 05:05:37 PMThey've done all the legal stuff (deposit protection and PI, gas cert etc) without prompting...

Or so you believe?

Do you have the deposit protecting in an account with your Landlord ID, under your control, or is the Agent doing that for you?

The trouble is competent property managers just getting on and doing the job don't make for very exciting anecdotes, so the picture tends to get a bit skewed, just as if you were to read through all the comments on this site, you might well go away thinking that the majority of tenants are filthy, non-paying, litigious hooligans and the majority of landlords are corner-cutting, penny-pinching paragons of arrant bellendery, (if you didn't know better!) while the reality is that most landlord-tenant relationships are so straightforwardly dull that they're barely worth mentioning.

After all, if the OP hadn't specifically asked a question about agents, I wouldn't have mentioned them.

Thanks again to everyone commenting here, I do appreciate the information - will keep in touch - have a great weekend everyone!

Quote from: Simon Pambin on February 08, 2016, 06:21:24 PM
The trouble is competent property managers just getting on and doing the job don't make for very exciting anecdotes, so the picture tends to get a bit skewed, just as if you were to read through all the comments on this site, you might well go away thinking that the majority of tenants are filthy, non-paying, litigious hooligans and the majority of landlords are corner-cutting, penny-pinching paragons of arrant bellendery, (if you didn't know better!) while the reality is that most landlord-tenant relationships are so straightforwardly dull that they're barely worth mentioning.

After all, if the OP hadn't specifically asked a question about agents, I wouldn't have mentioned them.

Thank you Simon, all too true! Its like getting a pain in your chest and googling it. Before long you've diagnosed yourself with heart failure because nobody who has indigestion ever bothers posting about it. I am afraid that agents who fix things efficiently without adding anything to the bill do not make for exciting reading.