There are three ways you can let and manage a property:
- Handle everything yourself. That means dealing directly with the tenant from start to finish and managing and maintaining the property. You’ve also got the responsibility of keeping up with all the legals and managing any tenant disputes yourself.
- Engage an agent to find a tenant for you. That gives you the benefit of having your property advertised on Rightmove and other portals that can only be utilised by agents. Then you can manage the property once a tenant has moved in.
- Have an agent handle everything for you. This is the ‘hands off’ option, where the agent manages the entire letting and management process from start to finish.
A lot of landlords who started to let property back in the 1990s have done very well. They’ve had good property price growth and a huge increase in tenant demand over the years, and most of them self-managed. But times have changed. Buy to let is no longer simply about buying any property and letting it to any tenant. In particular, the legal changes that have come in since 2004 have meant that property management really needs to be carried out by people with specialist knowledge, who are working in the industry on a day-to-day basis, due to its complexity.
This month, a big change is being introduced and it could easily catch out landlords who are basically law-abiding but end up falling foul of the law simply because they didn’t know about a new rule. This change is an increase in the level of civil penalty a Local Authorities can impose on landlords who breach regulations. That might be not securing the right licence or having a damp property. The maximum fine has gone up from £5,000 to £30,000 and Local Authorities can keep these fines to help fund more enforcement.
Alongside this is the fact that in Wales you have to be properly trained and hold a licence to manage property, while in Northern Ireland and Scotland both you and your property need to be registered.
So, with all these legal requirements and the seemingly constant changes to the PRS, having your property professionally managed may well be a better way to stay on the right side of the law. Why not tap into the professional services available to help make sure your buy to let investment carries on being successful?
If you’re not sure whether to go for full management, here are a few key things to consider:
1. The legals are complicated
In the past, most landlords used an agent to find a tenant then managed the tenancy themselves. But that was then – these days there are a lot more legal responsibilities on the shoulders of landlords. You’ve got to give the tenant prescribed information before they move in and if you don’t abide by the rules around repairs during a tenancy, you could be reported to the Local Authority and fined up to £30,000.
On top of national letting regulations, your Local Authority will have its own particular rules that you’ve got to abide by. You need to understand whether you and/or your property need to be registered or licenced, and know what letting standards you have to satisfy. Regulations are constantly changing and if you don’t have a way of keeping up to date with the law, managing a property and tenancy can be a legal minefield.
We invest thousands of pounds keeping up with legal changes and making sure we input into new ones so they’re fair and practical for landlords. That means if we’re managing your property for you, legals are one of the things you certainly don’t need to worry about.
2. Individual governments are cracking down on landlords
It’s become very clear that the governments of Scotland, Wales, Northern Ireland and England are all determined to crack down on landlords that fail to legally let property or treat tenants unfairly. Local Authorities used to be pretty ‘light’ on enforcement but now, even with cuts in budgets, they’re being given the tools to take action against rogue landlords – and even those who accidentally fall foul of the rules.
For example, by December 2016, Newham in London had issued more than 2,000 notices requiring improvements, cautioned nearly 400 landlords, prosecuted over 900 and banned 28 landlords from letting property. Meanwhile, Oxford continually publishes information about the landlords they fine, especially those letting Houses in Multiple Occupation. (https://www.oxford.gov.uk/news/20113/houses_in_multiple_occupation)
This crackdown is great news for landlords and agents because it means the people who give the industry a bad name are finally being penalised. But, because the rules can be complicated and will continue to change, it’s another reason why it might be a good idea to have your property professionally managed.
3. Tenants are better educated
Thanks to the internet and an increase in the amount of help and support for tenants, they’re much more savvy than they used to be. They’re now demanding better quality accommodation and tending to negotiate more on the rent, especially in areas where there’s a big choice of property. It’s also because they’re looking for homes for the longer term: according to the English Housing Survey 2015/16, the average tenant stays in the same property for over four years. More tenants are also realising they can dispute any amount a landlord tries to deduct from their deposit, for free.
We deal with local tenants on a daily basis, so we’re able to very quickly see any new trends or expectations they have and feed that back to our landlords. And, because we’re a national agent, we can invest in quality surveys like this one
– revealed the surprising fact that 18% of our tenants are over 55 years old. That’s the same number as are aged 18-25. This kind of insight and expertise helps us advise you on what and where to buy, as well as the best way to renovate and decorate a property so it’s right up there with the latest tenant trends.
4. It’s tax deductible
A lot of landlords don’t realise their agent’s fees are tax deductible. That makes the ‘real’ cost to you 20% or 40% cheaper than the ‘gross’ charges that the agent makes. So most property management charges are actually very cost effective, especially when you consider how much work agents do to keep up to date with all the legals, which can cost them tens or hundreds of thousands of pounds a year.
5. Enjoy your investment!
Although it can be fun to look after a property and tenants, all the new rules, regulations and potential fines have turned property management into a full-time job, rather than something that can be done ‘on the side’.
And why should you worry when someone else can take away the hassle? An agent can ensure the smooth and legal running ofyour let, leaving you to holiday when you want and enjoy your weekends and spare time, without having to worry about complaints and maintenance.
So whether you live down the road from your property or are out of the country, perhaps it’s time to reconsider how you manage your property portfolio, so do come and speak to us, find the contact details for your local branch here.