11:06 AM, 19th January 2012, About 10 years ago 11
In the previous article I tried to make the point that a Letting Agent should act like an Asset Manager, managing a landlord’s portfolio to maximise the benefit to the landlord. This could only happen if the interests of the landlord are directly aligned with the interests of the Letting Agent but if this did occur, it would revolutionise the letting agency sector.
However, even if the financial interests are aligned there are numerous other aspects of the service a modern agency should attend to in order to maximise the security of a landlord’s investment. After all, what good does maximising income do if the agency goes broke owing the landlord thousands of pounds or tenants with hundreds of pounds of arrears? A 21st Century Agent can actively work to protect the landlord by insuring they maintain the income to the landlord and protect against default.
To this end they should be doing ALL of the following.
Cash is king and it should be in your bank working for you and not in the agencies bank working for them. While it’s in their account it is vulnerable. Some will argue it is possible to pay the moment the funds are cleared and for those with one or two properties this is suitable. For portfolio landlords though, a single payment each week reduces banking costs and, allied with a proper reporting system (more on that in a later article), is more than adequate.
The second benefit is the control it gives to increase the rent at the appropriate time. It simply involves a letter or email to the tenant informing them that from x date the rent will be increased and that they need do nothing as your agent will amend the DD. The situation is controlled by the Agency and it involves fewer tenancy terminations arising from rent increases, therefore fewer voids and fewer refurbs. Most Letting Agents are reluctant to raise rents where no DD is in place as it increases their workload for minimal reward to the agency, meaning landlords miss out. Also, negotiating the new rent gives less scrupulous agents the chance to move a tenant into another property and a new tenant into yours resulting in two finders fees. This is why only one fee in 18mths is such a good idea from the landlords prospective.
Not withstanding all the above a 21st Century Letting Agent should always indemnify their client against losses arising from the failure of the agency to the tune of £25000 through a Bond and as members of ARLA.
The above activities will help protect the landlord against the financial ravages that an agent default and/or arrears can inflict on the profits of a landlord. I will also continue to ensure an uplift in the rental each year. However, getting the property filled with the right tenant as soon as possible and avoiding voids is crucial and I will suggest how the 21st Century Letting Agent can ensure this for their landlord in the next feature.
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