When it comes to learning, ‘What are the dangers of letting a property without an agent?’ Then careful thought is needed.
There are a lot of considerations when it comes to weighing up whether you should rent out your property directly or whether you should use a letting agent.
Whether you are starting out as a landlord, or if you have years of renting experience in renting out property, it’s a question that many of the 2.5 million landlords in the UK will have asked.
It’s also an important decision that could have an impact on the profit you make from your investment property and your home life.
Private landlord managing a property
Firstly, as a private landlord managing your property, you will have complete control over it. This also means that you will be on-call 24/7 and will need to deal with tenant issues, however trivial.
If you don’t have the time or the enthusiasm to deal with tenants, then a letting agent can deal with most of your responsibilities and you will need to pay them for doing so.
When it comes to deciding whether you should manage property directly or using a letting agent will be down to personal circumstances.
It’s probably best to understand the rights and responsibilities between private landlords and letting agents. You must appreciate that private landlords have legal responsibilities, regardless of the tenancy type, when you rent a property to tenants. You will also need to:
- Marketing your property: You need to market your property to find tenants, so you’ll need to advertise it and then arrange viewings.
- Finding tenants and referencing: Since it’s your job to find tenants, it is also your responsibility to carry out a proper referencing procedure. You need to carry out financial background checks and also character references from an employer and previous landlord. In England, you’ll also need to check the immigration status of the tenant using the Right to Rent scheme.
- Rent: You’ll need to decide how much the rent will be for your property and whether there are bills included. You are responsible for chasing rent when it’s not paid on time and also deciding when to put the rent up.
- Tenancy agreements: You will need to create a tenancy agreement that is not only fair but is legally compliant. You must give your tenants a copy of this before they move in.
- Tenant deposits: It’s now the law that the landlord cannot hold a tenant’s deposit if they have an assured shorthold tenancy. Instead, you must use a government-approved tenancy deposit scheme within 30 days of receiving it. You also need to tell the tenant where the deposit is being held and failing to do so could lead to big fines.
- Informing tenants: You will need to provide your tenants with the information they need, including your full name and contact details, including your address. You’ll need a copy of the Gas Safety certificate and Energy Performance Certificate. You must also hand your tenant a copy of the ‘How to Rent’ guide if it’s an assured shorthold tenancy.
- GDPR: You also need to comply with the General Data Protection Regulation rules because you will be handling a tenant’s personal information.
- Health and safety: As a landlord, you have a legal responsibility to ensure that your property is free from hazards and is in a good state of repair. You must also:
- Check the electrical items are in good working order, if you have supplied them
- Each floor will need a working smoke alarm
- Bathrooms, kitchens and toilets must be sanitary
- If you have a wood-burning stove, you need a carbon monoxide alarm
- Gas equipment must be inspected every year by a Gas Safe registered engineer
- If it’s a furnished property, your furnishings must meet fire and furnishing regulations.
As a landlord you will be legally responsible
While these are all important considerations, as a landlord you will be legally responsible for the keep of your property.
This means you need to carry out maintenance and repairs when required, including any structural repairs to the building’s exterior roof along with providing hot water, heating and gas and electric supply.
You will need to inspect your investment property regularly and carry out any updates when required.
You must also work to keep your tenants happy because a happy tenant will look after your property and want to remain in it for a long period of time.
There’s also the issue of handling evictions and there are strict legal procedures to follow.
An illegal eviction will be considered to be a criminal offence, so you must, in most cases, get a court order and then hand the tenant a Section 21 notice before following the eviction process outlined in your tenancy agreement.
There’s no doubt that for most property investors, becoming a landlord brings legal responsibilities they may not have considered previously.
Case for hiring a letting agent
This means there is a very sound case for hiring a letting agent to do all of this work on your behalf and pay them for doing so. The benefits of using a letting agency include:
- Use a professional letting agent, preferably one that has signed up to the Association of Residential Letting Agents or the UK Association of Letting Agents. This means they have rules and regulations in place to protect landlords.
- Choose a service: The agent will offer either a let-only service so they will market your property, offer advice, find tenants, carry out the reference credit checks and take the deposit.
You can also opt for a full management service, so they will take care of the day-to-day management issues of your property deal with tenant problems.
- Rent collection: The agent will be responsible for finding a tenant and collecting rent and chasing up rent arrears.
- Pay a letting agent: Letting agent fees in the UK vary and while some may charge a one-off fee, landlords should expect to pay between 5% and 10% of the rent on a one-off fee, a let-only service will cost around 10% of your monthly rental income and full management fees can range from 15% to 20%.
Finally, we mentioned that deciding between renting out a property directly or using the letting agent was down to personal circumstances but whichever route you take, the legal liability when letting a property always remains with the landlord, even if you hire a letting agent and they make a mistake.