Paying a letting agent for peace of mind, is it worth it ?

by Readers Question

8:45 AM, 10th April 2013
About 8 years ago

Paying a letting agent for peace of mind, is it worth it ?

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Paying a letting agent for peace of mind, is it worth it ?

Paying letting agent for piece of mindBecause I live abroad I pay a letting agent agent to find tenants and for property management.

I have a property let to 4 tenants. It is an unlicenseable HMO (House in Multiple Occupation). 

In practice, the letting agents do very little property management because I have to fix every thing and send my own people because the agent tries to overcharge for everything.

I think I am paying the management fee just in case the proverbial …. hits the fan and the tenants default or cause major problems etc.

In such a case I assume they will know what to do and they are much better informed than I am living abroad.

Am I correct that I should continue to pay the agent the management fee even though I fix all repairs etc ?

Help would be appreciated.

Thanks

Cris Stoian


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Comments

9:16 AM, 10th April 2013
About 8 years ago

Hi Cris,
I opperate a lettIngs and management department within my business model so I can hopefully answer your question accurately. LettIngs and property management is divided by four key service lines.

1) Tenant find and installation.
2) Maintenance.
3) Legal.
4) Rent collection.

It would appear that the current deal you have with your managing agent is that they provide you with 1) & 4) but there isn't any clarity about who is responsible for handling the legal aspect of the management if things go wrong. By this I mean tenants requiring eviction etc. In my experience most letting agents have stated within their terms of business that, "the landlord gives the agent authority to instruct a solicitor when required, the cost of which to be bared by the landlord."

If this is the case with your current arrangement then yes your agent will appoint a solicitor on your behalf but not much more. This is a very costly exercise and something most landlords ASSUME comps part and parcel with a fully managed service.

Firstly I recommend reading your terms of business but if you don't have any then send your agent an email with your expectations under the current rate that you pay. This should help you both allign your interests and define the clarity you seek in order to give you the required peace of mind. My firm includes all legal work as part of our fully managed package which I know is something of rarity in the industry so I would highly recommend speaking with your current agent but ensuring you obtain something in writing from them or a paper trail agreement via email will suffice.

Good luck.
David Giles
Embarq Property Partners

Mark Alexander

10:16 AM, 10th April 2013
About 8 years ago

Hi Chris

Given your circumstances I think it is very wise for you to employ the services of a good property manager. Make sure they know what they are doing though and have the right qualifications and Client Money Protection. Ideally they will be registered with ARLA, NALS or RICS. Of course trust and price comes into this too. Please see details of the company I recommend here >>> http://www.property118.com/index.php/full-property-management-from-just-14-99-a-month/34413/

18:25 PM, 11th April 2013
About 8 years ago

I have recently stopped using an agent which I had engaged due to a recent cancer diagnosis. I found myself spending more time managing them than I would have spent on managing the property. They were late in paying over the rent, dreadful communicators with me (and I have subsequently discovered were terrible communicators with the tenants to such an extent that did not deal with a mould issue which has now cost me quite a bit to resolve), have failed, after 2 months, to pass over my paperwork and finally returned the deposit to the tenants rather than transfering it to my deposit scheme account. I am based in Scotland and am finding it difficult to identify how to 'warn' other landlords from engaing their services as they have been and continue to be a huge drain of resources.

Puzzler

21:20 PM, 11th April 2013
About 8 years ago

A lot of people think that maintenance is the key with letting management. It isn't. All agents will refer to the landlord as they will be picking up the tab. You will either do it yourself (as you do) or they will employ tradesmen on your behalf. You employ an agent to keep you legal, collect your rent, deal with problems (whether maintenance or not), inspections, agreements, inventories. A good agent is worth their weight in gold. But they don't generally do the maintenance themselves although they can arrange it on your behalf.

If your agent is overcharging then shop around for another. Mine charges nothing, just passes on the cost to me.

2:26 AM, 12th April 2013
About 8 years ago

I'm afraid you are a hostage to fortune and in your case there isn't really any other option apart from a LA managing things for you.
It doesn't have to be a LA; anyone can do it.
BUT you really need a good LA with all the protections in place.
This is why LA are need for LL who can't or don't want to be involved in their property management.
LA fill a commercial need.
Trouble is you have to pick a good one and that is where the problem lies.................................picking a good one.
Best of luck with that.
All you can do is follow the excellent advice proffered to you on this forum and hope you pick right.
You may feel that fees etc are high but you face hobson's choice; which as you know is no choice at all.
You just have to factor losing about 10% of your rental income every year.
But remember you are probably on some beach somewhere whils the poor old LA is stuck here.
Don't resent the fees you have to pay.
It goes with the territory if you have to or wish to be a hands off LL!!!

Mark Alexander

7:28 AM, 12th April 2013
About 8 years ago

Hi Paul

It dosn't have to cost anywhere near 10% of rental income to employ a good ARLA agent. For an overseas landlord who requires a full service then £25 a month will buy all the services required, £35 is RGI is included and I know you would recommend that. Please see >>> http://www.property118.com/index.php/full-property-management-from-just-14-99-a-month/34413/

4:38 AM, 13th April 2013
About 8 years ago

Well if it can be less than than 10% charges that is even better.
Wouldn't it be great to be able to find a list of LA and their qualifications and their usual charges.
This would help LL who are trying to source a good LA.
Surely ALL LA might wish to put their terms of business in tabular form on a well frequented website......................................................like property118!!

10:36 AM, 18th April 2013
About 8 years ago

Using a GOOD letting agent takes all the worry away, but beware there are an awful lot of bad agents out there. I beg you not to go for the cheapest, which is what I originally did, which ended up costing me a fortune.

20:00 PM, 18th April 2013
About 8 years ago

Hi Cris....I can totally understand your reluctance to fork out for poor and over-priced services. There are so many naff letting agents about it`s scary.
Not sure where your properties are but I have come across a new *** letting Agent and Property Mgt Co that you might want to check out if your places are in ***. I certainly plan to use them myself when I get out of my current deals...oh yes they are called ***MODERATED - unapproved promotion***
Good Luck
IvyEllen


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