Letting agents get a bad press – and for good reason. A lot of them run shoddy operations with no care or diligence towards their landlords nor the tenants and charge a high price to boot.
When looking for a letting agent for your property, your diligence must be thorough since you are effectively handing them the keys and responsibility for a high value asset. Here are questions you need to ask and why
- Are they members of an accredited scheme such as ARLA, NALS etc.. If the answer is NO, you should not use that agent. Membership of such a body gives you comfort over the agent’s agreement to certain standards and complaints handling. Without this, if you have a complaint you will have no recourse except to take legal action which can be costly and protracted.
- Do they hold money belonging to landlords separate client accounts – this is usually demonstrated by being members of certain schemes such as SAFEAGENT. As above, it the answer is No look elsewhere.
- Which ombudsman are they a member of? Again if there not a member of any schemes, move on.
The above are fundamental. If the answer to any of the above is unsatisfactory, you need to move on and find someone else. The remainder is a long list and we would expect a good agent to give positive answers to most, if not all of them. It is your judgment as to if you can live without certain items.
- How long have they been in operation?
- How many properties do they manage?
- How many staff do they have?
- What qualifications do the staff have?
- How are they split (e.g. Lettings, Property Management, Administrative etc)?
- What are their opening hours? What are the earliest and latest time of day that they do viewings?
The above questions are useful to work out whether the company has been around for long and are not fly by night operators. In addition, you want to check that they have sufficient staff to (a) ensure people are around to do viewings and (b) manage your property efficiently. You want long opening hours so that viewings can be done by tenants around their working week. When it comes to rentals (as opposed to sales), a potential tenant ringing up to view on a Saturday who is told that no staff is available is a lost tenant – it is very unlikely he/she will be around the next Saturday.
Finding and referencing tenants
The next step is to see their ability to find tenants quickly.
- How do they market your property? Which internet portals are they on?
- Do they incorporate floorplans in the marketing of their property?
- Do they take photos themselves or use a third party?
- Do they have a database of parties interested in the type of property you are looking to rent? If so, how many? It is worth taking this number with a pinch of salt because even if they genuinely have a long list, a lot of them will likely have found somewhere else by the time they contact them?
You want to ensure that they market as widely as possible. For the internet portals, you want them to be on Rightmove and Zoopla as a minimum but after that the more the merrier. You should check if they advertise in the local papers? – while these are not as important as they used to be, they can still be a useful source of potential tenants.
Once they have found likely tenants you need to know that they have a rigorous process in place to ensure the tenants will be of a high quality.
- What is their process for selecting tenants? What type of referencing do they do?
- What criteria do they use along with the referencing process in determining whether a tenant is suitable (e.g. do they visit them in their current property)?
- What % of their tenants are in arrears?
This is a critical part of the letting agent’s job. A robust process here can lead to a good tenant that is low hassle and pays their rent on time. A poor process can lead to a nightmare tenant with huge time and financial consequences. Consider taking out rent guarantee insurance and see if their referencing process is adequate for the insurance provider.
Rent arrear process
If you are a landlord for long enough, chances are you are going to deal with rental arrears at some point. If the referencing process has been robust then this should be a rare occurrence. But unfortunately circumstances do change – people lose their jobs, fall ill and so on. The key here is for the letting agent to be on top of things early and ensure that procedures are being followed. They should be chasing regularly reminding the tenant of their obligations. However they must be very careful not to stray into harassment or threats – the courts do not take kindly to tenants being harassed, even if they are in arrears. You want a letting agent who is aware of the situation, communicating frequently both with yourself and the tenant such that you can ultimately take a view as to what actions you want to take.
- What is their process for dealing with arrears?
- What is their process for rent evictions?
- What are their charges for dealing with S21/S28 notices and/or further action (e.g. court attendance fees)?
With respect to the deposit schemes, we assume that the letting agent uses one – if not, then you cannot go ahead since you would be breaking the law.
- Which deposit protection scheme do they use?
- What % of deposits have been contested over the past three years?
- How quickly are deposits returned on average?
- Do they use an insurance based or custodial scheme? If former, who holds the money and how is it protected (it should be held in a client account). Can the deposit be passed over to the landlord to hold?
Note that contested deposits and/or late return can be due to landlords and tenants and so no fault of the agent, but it is still worth knowing. If you find that there are lots of disputes, it could be because there are issues with inventory, check-in/out, maintenance or just communication.
- How do tenants notify them of maintenance issues and what is the process?
- Do their contractors all have relevant qualifications and insurances? How do they ensure that this is kept up to date?
- Is there a 24/7 phone number for tenants to call in emergencies? How is it manned?
- Are tenants charged for calling up in the middle of teh night in the case of an emergency? (they shouldn’t be)
- How often are property inspections done?
- How many quotes will be obtained for jobs?
- How can letting agent ensure that contractors are charging a reasonable price?
It is only once you have got answers to the above that you should ask questions on fees.
- A full list of landlord fees
- A full list of tenant fees
While the landlord doesn’t pay the tenant fees, it is worth knowing since high tenant fees may put off tenants for applying for the property. Also, looking at both sets of fees will alert you to cases of “double dipping” – where the agent charges the tenants and the landlords for the same fees – effectively doubling their income. In terms of landlord fees, don’t just focus on the % of monthly rent. You need to see the full picture and ensure you are comfortable with other fees such as renewal fees, inspection fees, inventory fees, fees to issue a S8 or S21 notice and so on. Also, ask whether they mark-up contractors costs – this is a common way for them to make extra money from a landlord without them knowing. Note that there is likely to upcoming legislation in England with respect to the banning of tenant fees – it will be interesting to see how this impacts on the fees charged by letting agents to landlords. tenants
In addition to all of the above, you then need to review the terms and conditions very carefully since these can be full of traps for the unwary – however, this is for a separate blog in the future.