Have you noticed how many Estate Agents, who did not previously offer residential letting services, that have suddenly opened a lettings department to try and supplement their monthly income, and stop their businesses from going to the wall, as the house sales market continues to stagnate?
The Estate Agent will usually select junior, inexperienced, staff members to create their new letting facility and a “Letting Department” banner will be proudly erected above their desk.
An estate agency sales flyer will be printed and delivered to all houses within the vicinity announcing that “we now do LETTINGS – so LET US impress you”. As many of the letting tasks as possible will be outsourced to third parties. For example, security deposits will be sent to the custodial scheme and inventories and check-ins / check-outs will be created and performed by third party inventory clerks (with the associated additional charges passed back to the landlord – of course!).
That’s it – job done – letting agency created. No letting qualifications, no letting experienced staff, no knowledge of tenancy law, no idea what they are really doing and no shame that they are providing, at best, a third rate service to an unsuspecting, often accidental, landlord! But then we are talking about Estate Agents I suppose!
The problem is that the General Public don’t understand the difference between a Letting Agent and an Estate Agent. They think they are the same thing (as they both deal in property). Nothing could be further from the truth!
To explain – when I have toothache I go to a tooth specialist – the Dentist. I don’t visit the Doctor who deals with general matters relating to the human body to get my teeth fixed. I guess I could go to the Doctor but the advice and service I would receive would not be as specialised or experienced as the Dentist.
Using the same analogy – if I have a house to let then I visit the specialist Letting Agent (rather than the generalist Estate Agent). I don’t understand why the General Public don’t understand this!
Landlords need to be very wary of these “hard up” Estate Agents that have moved into residential lettings as a side-line as they do not have a thorough understanding of the complex legislation surrounding the renting of property; a detailed knowledge of the local lettings market; trusted relationships with local handymen and property maintenance companies; and the interpersonal and negotiation skills to handle all of the issues that the landlord and the tenant will raise throughout the lifecycle of the tenancy.
Pointedly, Estate Agents usually earn their sales fee when the property is sold (and this is automatically paid to them by the solicitor during sales process). The Letting Agent is paid a management fee that is deducted from the tenants rent for every day that the tenancy continues. If the tenant doesn’t pay the rent – the Letting Agent works “for free”.
So, the Letting Agent has to collect the rent and mediate between the landlord (who wants to maximise the investment income by not spending any money unless he has to) and the tenant (who always has a list of jobs that they would like the landlord to pay for).
So, letting a property (and generating a fee) requires a very different skill set to selling a property to a purchaser and being paid by a solicitor. The Letting Agent will need to have strong, but tactful, negotiation skills to ensure that the rent does not fall into arrears and that the landlord maintains the property to an acceptable and safe standard.
Letting is not a business you can easily dip in and out of when it suits. There is a lot at stake, not least the safety and well-being of the tenants as well as the success or failure of the landlord’s investment. Getting it wrong and making elementary schoolboy errors can have dire consequences for landlords, including huge legal expenses, loss of rent, extended void periods, loss of tenant’s deposit money and penalties for not complying with legislation.
Use an Estate Agent to rent out your investment property AT YOUR PERIL.
About Mark Trenfield
An enthusiastic property investor/landlord with investment properties across Wiltshire and Dorset. Started investing in property back in 1998 when I became disillusioned with the stock market and then created his own letting agency - mlettings - in 2002 Member of UKALA) A regular columnist in the Swindon Advertiser as well as providing expert landlord commentary to BBC Radio Swindon and BBC Radio Wiltshire since 2006. Never afraid to raise and discuss highly controversial topics that affect landlords and tenants.