Being a landlord can boost your income, but it also comes with a lot of responsibility and paperwork. If you already let out a property or are considering doing so in the future, you may have wondered whether to handle it all yourself or engage the services of a letting agent.
As with any decision, there are pros and cons to working with a letting agent that you should weigh up first.
The advantages of using a letting agent
They’ll handle the vetting and referencing procedure: One of the biggest challenges of being a landlord is finding the right tenants. We’ve all heard of stories of tenants destroying property as they leave or not paying rent leading to difficult and time-consuming disputes. A letting agent will have a vetting and referencing procedure in place to filter out tenants that have previously caused trouble or may be unlikely to keep up with rent. It can be a weight off your mind knowing that someone is handling this on your behalf.
It’s a hands-off approach day-to-day: If you want to invest in a Buy to Let property without the day-to-day tasks of doing so, a letting agent can handle this from start to end. It may include securing the tenant’s deposit in line with regulation, handling calls about repair work that needs to be completed, and scheduling regular inspections to ensure everything is in order. If you want to be able to focus on other aspects of your life, a letting agent can make being a landlord far easier.
They may help you achieve a higher rental rate: When people are looking for rental properties, it’s often agencies they use. This, combined with a knowledge of the market and what prospective tenants are looking for, can mean a letting agency could secure higher rental yields. Of course, you need to weigh this benefit with the additional cost of working with a letting agent but it can help offset the expenses.
They can offer support and guidance on regulation: There’s a lot of regulation that landlords need to adhere to, from checking gas appliances to ensuring a property meets fire regulations. These regulations and responsibilities can change and keeping track of them can be difficult. As an expert in the industry, a letting agent should be able to offer guidance and support where needed, including advising when changes are being implemented and what it means for you.
The disadvantages of using a letting agent
It comes at a cost: Of course, the services provided by a letting agent don’t come free of charge. You’ll typically pay a portion of the rental income as an ongoing management fee and may also face additional costs for one-off work, such as updating tenancy agreements. Typically letting agency monthly fees will be 10-20% of the rent, significantly eating into your profit. Remember, if you do decide to go ahead with using a letting agent, these fees are negotiable and you should carefully assess what’s covered to avoid being hit with unexpected costs.
Maintenance work can be more expensive: This depends on your contacts and the contractors that the letting agent uses. At times, your property will need maintenance or repair work to be carried out, sometimes as an emergency. As the letting agent will handle setting this up, it can work out more costly than if you organised the work yourself.
You won’t be in control: For some, taking a hands-off approach is preferable, but others would rather be involved. If you fall into the latter category, not being in control of your own property can be difficult. As you’ll unlikely have direct contact with the tenants, it can take longer to organise viewing repair work, for example. While a letting agent can help free up your time, it also means you’re far less involved in the investment you’ve made.
Which option suits you?
When asked if you should work with a letting agent, it’s not a question that a straightforward answer can be given to. It depends on your circumstances and priorities. If you have plenty of free time, live close to the property and enjoy being involved, then forgoing a letting agent might be right for you. If, on the other hand, you want to focus your attention on other areas of your life, a letting agent can make being a landlord easier.
Thinking about the pros and cons of a letting agent can help you see how being a landlord can fit into your current lifestyle and goals.