The Happy Tenant Company works on behalf of landlords to manage their properties and improve their yields and has put together this list of 10 top tips for buy-to-let landlords.
1. Leave it to the professionals – Whether a tenant or landlord, choose a letting agent that is a member of a recognised professional body, such as Association of Residential letting Agents (ARLA) or National Approved Letting Scheme (NALS).
2. Check the agency fees – Typically agents charge around 8% for finding a tenant but many charge considerably more. Most agents will charge a renewal fee, often at the same level as the prior year’s fees. The Happy Tenant Company believes you should not pay renewal fees as it is effectively charging again and again for finding the tenant.
3. Take one year at a time – Agents may manipulate the situation so that the landlord and tenant both think the other wants a long term tenancy of, say 3 years, enabling them to charge huge fees on commencement of the tenancy. This places the landlord at great risk should the tenant leave prematurely.
4. Shop around – Find a company that represents a large number of landlords so is able to negotiate ratings with reputable letting agents, whereas most landlords generally have a single investment property and have little negotiation power. That said, shopping around may lead to savings on the letting and renewal fees.
5. Safety first – Ensure you are compliant with current letting legislation and safety regulations. Non-compliance in most areas can result in hefty fines and in some cases imprisonment. Consider using a reputable property management company that is independent of a letting agent.
6. Check for mark-ups and secret commissions – Many agents mark up by as much as 300% for tenant referencing, cleaning, inventory and tenancy agreements. The Happy Tenant Company charges at cost, supplying landlords directly with the contractor’s invoice.
7. Confirm who is paying for what – Before signing-up get the costs confirmed in writing, as some rogue lettings agents double charge the tenant and landlord for the same service, such as for inventory when a tenant moves in, referencing and setting up a tenancy agreement.
8. Understand who will be managing the property – If you contract your agent to manage the property as well as find the tenant then it is important to ensure you meet the relevant property manager, as many agents simply outsource the work to third party companies and simply make a margin on the fees you pay them. Even if they do have “in house” managers, make sure they have the relevant experience and the capacity to manage your asset.
9. Seek transparency – Most agents take commissions from contractors they engage to undertake the property management services such as maintenance, cleaning and inventory and it is generally without the knowledge or consent of the landlord, who ultimately foots the bill.
10. Deal fairly with your tenant – A happy tenant is simply good for business and is far more likely to pay their rent on time and stay longer, thereby, reducing void periods. Equally, if they are on side, they will act as your eyes and ears and report issues at the early stage, preventing the small things becoming big problems.
Twitter: My Finances
Join the conversation at #news_myfinances