While some landlords invest in property primarily for long-term capital growth, we know that many rely on monthly rental profit to supplement their other income, so they’re understandably keen to keep hold of as much of it as possible. That means one of the first questions an agent usually gets asked about their letting and property management service is how much it’s going to cost.
For a Fully Managed Service, you will be charged a percentage of your monthly income (including VAT), depending on the area you’re in and the individual agent. While you might think that’s a fairly significant monthly expense, when you look at everything that’s involved in letting a property legally and professionally, the reality is that rather than being a cost, it’s actually an investment that should save you money overall. And, it’s worth remembering that any agent fees are tax deductible.
Here are just five of the reasons why investing in a managing agent can be a sound financial move:
They save you a huge amount of time – and time is money!
One big mistake some landlords make when working out costs is forgetting to put a price on their own time. In addition to carrying out all the practical tasks related to letting and managing property, something that is incredibly time-consuming – especially when you first become a landlord – is getting to know and understand all the lettings legals that apply to you. That can take weeks to get to grips with, and then you have to dedicate time to staying up to date with changes in the law, both nationally and at a local level.
This is all time that could be more valuably spent with friends and family or earning money working elsewhere. So, its worth calculating the annual cost of an agent and how many hours’ work they take off your hands over the course of a year, take into account the fact it will be tax deductible and then calculate the hourly rate. Is it worth your time?
- Their expertise can help you avoid potentially huge fines
Getting things wrong and falling foul of the law, even if it’s unintentional, can result in fines that could easily wipe out many months’ rental profit – or a lot more. If you get the law wrong on safety issues and put your tenants’ health and/or lives at risk, the fines can run to tens of thousands of pounds and you could face jail time, which might cause irreparable damage not only to your finances, but also other areas of your life.
Using an agent that’s a member of ARLA Propertymark, as we are, means your property is in the hands of experts that are qualified in letting, undertake ongoing training and have legal support to ensure all the properties they manage are fully compliant.
- Their market knowledge can help you secure the best possible monthly rent
Agents are immersed in the lettings market every day, so they know exactly what the supply and demand is in the local area and how much tenants are willing to pay at any given time for the right kind of property. That means not only are they able to price your rental correctly, but they can also advise you if there are any changes that would be worth making to increase the value. And, while some self-managing landlords leave their tenants’ rent unchanged for years at a time, an agent will always look to increase the rent annually to ensure it rises, where possible, in line with inflation and at a competitive market rate.
- Professional tenant management means problems are caught early
Good agents have robust tenant referencing processes, so it’s rare to get a problem tenant in the first place, but issues can arise in any tenancy. Professional property managers are experienced in dealing with tenants and are usually able to spot and rectify potential problems at an early stage before they turn into something bigger and more expensive.
- They will always use contractors that understand buy to let
Because there are very specific building and health and safety laws for properties that are rented out, it’s vital to use contractors and tradespeople that know what these regulations are and the standards that must be adhered to. Again, any breaches of the rules can result in fines and may be expensive to put right. Agents typically have reliable local contractors for both general maintenance and emergency repairs that are experienced in working on buy to let properties, so you can be confident all the work will be appropriate and legally compliant.