Sep 13 2007 |
Lack Of Properties On The Letting Market- Time To Cut The MiddlemanCategory: Landlord Advice |
When the rental market is booming, why use a letting agent? It makes no sense. They charge extortionate rates for doing very little work. Yeah, I said it.
Currently, there’s been a lot of articles in the news about the serious drought of properties to rent. Supply simply isn’t meeting demand at the moment. When the rental market is in that kind of state it’s good news for landlords because they know they can quickly fill properties with tenants! If you’re a landlord and you’re struggling to find tenants in the middle of a rental frenzy, you either give really bad first impressions, or you’re trying to rent out a piece of shit.
Currently, a lot of people want to rent. Why? There are 3 main reasons:
a) properties are too expensive to buy
b) a lot of people are getting their homes repossessed (i.e interest hikes are causing strains)
c) a lot of people are selling their homes as they anticipate a property crash.
Yesterday I encountered my first actual real-life sign of there being literally a shortage of properties to rent. I recieved this letter from a letting agency:
“We are finding that the renting market is currently very buoyant and we would envisage having no problem at all in finding you a suitable tenant”
That’s nice to know, aye?
When I was looking for a tenant, I went to a few agencies; this particular agency happened to be one of them. Unfortunately, I never ended up using them as I got better rates elsewhere.
I guess this agency is sending out letters to every client in their books that aren’t currently housing one of their tenants. There really must be a shortage.
I’m thinking, if demand is that high, why would landlords need to go through agencies? What exactly do letting agencies do?
- They do credit checks (apparently)
- Draw up contracts
- Depending on the package, they can collect rent for you
- They do routine checks on your property (apparently)
- They advertise your property for rent
- Chase your tenants for late payments
For all that, they take a ridiculous 8-14% cut of your rent.
Here are some solutions:
- Advertise in the local paper and on forums (£30 approx for the paper)
- Go direct to a credit checking firm (£30 approx)
- Buy a contract, or even make a copy of an existing contract. THEY’RE AVAILABLE EVERYWHERE. (£30 approx)
- Get your tenant to pay directly into your account
- Get landlord rental insurance (£90 per year approx)
- Check the condition of your property yourself
All that will cost you a fraction of what agents charge, and the work they do really isn’t THAT taxing. I say cut out the middle man, and take advantage of the demand.
Like I said, when the rental market is booming - who needs a letting agent?
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This is interesting news. My experience confirms this to be the case. The landlord of the house I rent has already had five viewings! And this is before I have even handed the keys back. And there were people leaving notes on the doorstep, too. Funny, though, because I have read too many articles telling you why buy-to-let is no longer good rate of return.
Hey Danny,
To be honest, I think the rate of return isn’t as great as it once was. That’s mainly due to high interest rates. But that unfortunate situation mainly applies to landlords that are just entering the industry at this moment of time.
In my case, I have a property on a decent fixed rate, repayment mortgage- the figures stack up, and I believe i’m getting a good rate of return. My rent covers my mortgage. However, if a landlord is on a 6% interest-only mortgage policy, which is just about covered by rent; the return may not be so great. I think the rate of return depends on the individual circumstance.
But there’s definately room for a great return, especially with rental demand being so high.
In the longterm, it’s very unlikely a landlord will get a bad return, unless they do something stupid
[...] for a letting agent, and I think it’s relatively easy to cut out the middleman, as my article Lack Of Properties On The Letting Market- Time To Cut The Middleman explains. However, if you do use a letting agent to fully manage your property or simply find you a [...]