When investing in Buy to let a landlord must decide whether to manage the property yourself or hand over that responsibility to a letting agent. This is a critical decision since it will impact how hands-on you want to be with your business as well as the returns you achieve.
Below are the pros and cons of each one.
- Allows you to manage the relationship with the tenant yourself.
- You can keep a close eye on your property and ensure that it is maintained to your standards.
- You will save money on letting agent fees.
- It can be time-consuming and result in having to deal with situations at awkward hours.
- This requires you to have the right personality – you need to be friendly and approachable yet firm at times.
- There is a myriad of rules and regulations which are constantly changing. You will need to ensure you are up to speed on these. The penalties for non-compliance can be severe.
- If you live far away from the property, it may not be practical to manage the property yourself.
Using a letting agent
- A good letting agent will take all the heavy-lifting away from you and allow you to earn a relatively passive income from your property portfolio.
- They should be up to speed on the regulations and be complaint with them.
- Usually, letting agents will have their own contractors and should allow for maintenance issues to be fixed quickly.
- They will deal with arrears/non-paying tenants which can be a stressful part of the job.
- Letting agent fees are tax deductible.
- All the pros of using a letting agent only apply to a “good” one. And as most landlords will tell you, they are hard to find.
- You will pay a significant part of your rental income over to them to manage your properties (it can be as much as 20%).
- While a letting agent will take care of most things, you as the landlord are ultimately responsible for them. So if the letting agent does not do the job properly, any actions by the authorities will be against you.