I’ve just had one of my tenant’s vacate after 4 years of faithful service. It’s an extremely sad and terrifying moment… because it means I’ll have to start the agonising process of finding suitable replacement tenants relatively soon. As every self-managing landlord knows, that process can be truly gut-wrenching and ghastly. In fact, I want to vomit just thinking about it.
But despite the horror, I still refuse to use high-street letting agents to help alleviate myself from some of the painful donkey work, including finding and managing tenants. Why? But more importantly, do you actually need to use a letting agent, whether you’re a new or experienced landlord?
I’ll give you my thoughts…
Firstly, let’s give the question some perspective.
If any landlord is pondering the idea of either finding their own tenants or managing their own rental property, then there’s obvious desire, but also hesitation. The former is usually stemmed from the prospect of saving a buttload of cheese on agency fees, while the latter is generally stemmed from inexperience and in-turn the fear of entering the unknown. So that means there’s often a debate between Saving money Vs Ease. By and large, that’s what it really boils down to when we’re deciding between self-managing and using a letting agent’s services, right?
So to provide a complete answer I’m going address two different questions:
- Should new landlords use a letting agent [despite their eye-watering costs]?
- When & why to start self-managing your rental property?
Should NEW Landlords use a letting agent [despite their eye-watering costs]?
With the emergence of online letting agents offering tenant-find services at puny costs, it’s become easier and more compelling than ever for landlords to go it alone, even for the first-timers and accidentals!
There used to be a time when the price between a “tenant find” service and a “fully managed service” was relatively marginal (2% – 5%), so it often made sense to pay the little extra for the whole shebang.
But times have changed, online letting agents have ripped apart the price differential by a substantial amount, so now opting for the managed package will cost significantly more in comparison.
However, despite that, I would still encourage shiny new landlords to use a high street letting agent to manage their property/tenancy to start with if they’re unsure about which route to take or if they lack a certain amount of confidence.
To some of my regular readers’ that may seem conflicting, because my philosophy has typically involved the demise of high street letting agents and their snake-oil tactics, and I’ve written several shirty blog posts on why everyone should avoid agents like a bucket of anal warts.
So, yes, it’s true. I’ve had very few positive things to say about letting agents in recent times, but I should clarify that my opinions were formed from the perspective of a relatively experienced landlord, and I think that’s a pertinent factor.
I actually believe letting agents are generally suitable for three types of landlords:
- the inexperienced
- those that want minimal hassle and involvement with the business
- overseas/long distant landlords
I believe most other landlords should be focusing on managing their own properties for the reasons I’ll explain shortly. But long story short, the figures don’t stack-up as well when using a high street letting agent and it really isn’t that difficult to take over the reigns (as long as you’re not a complete moron), especially if you’re rigorous with your referencing and find decent tenants.
But let’s keep the argument balanced and remind ourselves why using a letting agent can be beneficial (because it can easily forgotten):
- They create free time for landlords.
- They work on commission they have an incentive to negotiate the best rent for you.
- They can provide a regular stream of work they have access to the best and most reliable tradesmen.
- They provide a buffer zone between Landlord and tenant which can help a Landlord avoid promising something they later regret.
- They can advise you on repairs and a maintenance schedule to ensure that your property holds its value.
If you have zero or minimal experience as a landlord and you’re unsure which direction to take, then I would definitely recommend using your local high-street letting agent, at least for your first year/tenancy anyways.
New landlords should learn from letting agents
The reality is, at least for most regular landlords, being a landlord isn’t as simple as collecting rent and taking advantage of some poor donkey that can’t get onto the property ladder to pay off the mortgage. Don’t be fooled by the pretty picture I paint of my lifestyle, it’s all smoke screens and mirrors, manipulated to mask the true bullshit nature of my poor and isolated existence.
Behind the glamour, there’s a lot of industry red-tape, so-much-so that it only needs a small case of blissful ignorance to force an inexperienced landlord’s assets to reduce into vapour.
Landlords have a lot of legal responsibilities, which new landlords may not acknowledge or address… and usually don’t, not entirely anyways.
A letting agent
will should (see what I did there?) ensure all your legal obligations are complied with.
My point is, working with a letting agent is extremely useful and practical for learning the ropes, and it doesn’t even matter if you have a good or bad experience with them, because you’ll learn either way.
The premium rate you pay during that first year for an agent’s service can quickly be compensated for if you eventually decide to go it alone.
After you have gained experience as a landlord
Most tenancies are fixed for 12 months, and after that year I would expect a landlord to have gained some limited experience:
- you will have learned about the industry, even if you didn’t intend to. You won’t be an expert, you may not even be competent, but you’ll be much better equipped than you were when you first asked the question of whether you should use a letting agent or not
- You’ll be in a better position to answer the following: “do you still want to manage your own property?” You may just realise you want minimal involvement and prepared to pay a letting agent to manage your property. Or you may even have a nightmare experience with an agent which will scar you for life and forever stereotype the bastards.
When & why to start self-managing your rental property?
If you’re on the fence about ditching your letting agent and taking over the reigns, I’m not going to advise you on whether you should or shouldn’t bite the bullet, even though I make no efforts to hide the fact I’m a gigantic supporter of landlords managing their own properties, because I truly believe the perks massively outweigh the drawbacks.
Instead of giving you direct advice, I will give you a bunch of extremely compelling reasons for why you should consider making the leap of faith (and why I did).
1) Letting agents are expensive
Perhaps the most obvious reason to run a country mile; they’re ridiculously expensive, and not in a fair ‘value’ kind of way, mostly in a snake-oil conniving way.
On the surface, their flashing prices can often seem compelling, but the small-print and the super-long T&C’s are often riddled with absolutely cowboy and astronomical fees for absolute nonsense.
Moreover – and as already touched on – with the rise of “fixed-fee” Online Letting Agents, high-street prices just doesn’t make sense anymore.
High-street agents will argue that their one-to-one service is superior and can’t be matched by online agents, but I completely disagree. Yes, once-upon-a-time online letting agents were better geared towards experienced landlords that simply wanted to list their rental onto Rightmove to generate enquiries. But times have changed and for the better.
Online letting agents have revolved; many of them now offer cost-effective fully-managed services that are actually remarkably suitable for new and first-time landlords.
For example, take a gander at LettingAProperty’s premium ‘Complete’ fully managed package, for £99 per month. Just to note, this package includes ‘Rent on time’, which means you will receive rent on time even if your tenant doesn’t pay, and the package also includes home emergency cover:
|Letting Agent||Rating||Contract||Notes / Includes||Price|
Letting A Property||
Month by month
|Notes / Includes|
Solution for Rent Collection & Guaranteed Rent, Home Emergency Cover and Legal Cover!
*Landlord pays one-off £149 upfront, and then £99 per month.
*£149 + £99pmInc VAT
LettingAProperty isn’t the only online agent that offers managed services that are suitable for novice landlords (and, to be fair, experienced landlords simply wanting a managed service), but their package is a good example of one. Here is a list of other online letting agents that offer managed letting services.
2) Tenancy renewal fees
While this reason does come under letting agents overall cost being overpriced, I’ve singled-out this particular cost because I believe the tenant renewal fee crosses a moral line. The fee is unfair, unnecessary and unwarranted. Anyone that adheres to applying this fee won’t receive a penny of mine. Pffft.
3) Letting agents are just as helpless as everyone else if something actually goes wrong
The bottom-line is, in the unfortunate situation where a tenant falls into arrears, the letting agent won’t lose sleep over it. They won’t even spend a moment worrying about it. In fact, they’ll probably charge me extra for serving the eviction notices, so they may even welcome the occasion.
In reality, if a tenant ignores the eviction notices and refuses to pay rent and/or vacate the premises, there is nothing the letting agent can do. So all that money I’m paying them to manage my property can often seem like money down the drain.
My point is, agents will happily and easily handle the mundane tasks that anyone can do, but if the situation turns sour, I’ll have to take control and do the worrying, so what am I paying for exactly? Oh yeah, rent collection and occasionally dealing with repairs, which isn’t actually that much work.
4) I’m just as capable of finding tenants
Letting agents don’t have access to a magical list of prospective tenants that anyone else, like you and me, cannot access. We can all reach the same audience by using an Online Letting Agent and their tenant-find service, which can cost as little as £42.50.
I’ve had an high-street letting agent charge me £750 only to find me a tenant that fell into 2 months worth of arrears almost immediately. I eventually had to evict her, which was an added cost. So if you think you’ll always get a better quality of tenant from an agent, you’ve been grossly misled. Most letting agents run standard tenant referencing steps, which anyone can do. But from my personal experience, a landlord is capable, and has more incentive, of running a much better tenant referencing program.
5) The middle-man can often slow down processes
Having a letting agent as the middle-man can often slowdown and complicate matters when something at fault needs attention. For example, when an appliance needs repairing, the tenant will need to contact the letting agent, and then they will need to contact the landlord. At this point, the landlord may appoint their own labourer to resolve the situation.
I’m suddenly in the middle of a 4-man chain, which may not sound too tedious, but you’d be surprised at how difficult it can be to distinguish what the actual fault is, to arrange a suitable labourer to remedy the situation, and arrange an appropriate time to resolve the situation between 3-4 people.
The fewer people in the chain, the more effective and easier life is.
5) No one will care as much as the landlord
It’s a fact. No matter which letting agent I use, they will NEVER care about my investment as much as I do. That instantly makes me want to manage my own property, because I genuinely believe I will mostly make better judgments to protect my investment, while letting agents usually have other own priorities and incentives (and I don’t blame them).
6) Most Letting agents don’t know the law
Letting agents don’t need qualifications, which is unfortunate, because there’s a lot of red tape in this industry. I’m amazed at how misguided and illegal the advice and practices letting agents advocate- not only do I know this from personal experience, but from the comments other people have left on my blog. That worries me, a lot.
Not only are many of the grey tenant/landlord legal areas misrepresented, but alarmingly, even the statutory regulations are just as frequently misrepresented. For legal advice, I wouldn’t rely on letting agents, ever. I would seek advice from a tenant eviction professional (that’s usually when legal advice is required), Citizen’s Advice, a specialist landlord law solicitor, or become a member of a reputable landlord law society or association.
7) Last, but least, I simply struggle to trust letting agents
I’ve personally encountered many letting agents over the years, some have been extremely decent and honourable people, while many have been lying, money-grabbing parasites. The problem with any commission-based jobs is that it inevitably attracts the latter type of person. It’s the nature of the beast.
I hate stereotyping the industry, because I know there are a lot of good men standing, but unfortunately, it’s extremely difficult to spot the difference between the good and the bad without going for a test-drive. And in reality, I can’t afford to take a test-drive, because by the time the ride is over, it’s usually too late (assuming the agent is an idiot). I’d rather avoid the game of Russian Roulette from the start. Basically, the industry is just full of too many idiots, which makes it difficult to trust anyone.
So there you have it, a list of reasons why I personally don’t use letting agents.
So should YOU use a letting agent?
I just want to clarify that I’ve only pointed out reasons why *I*, and many other landlords, don’t use letting agents. But obviously many landlords do use letting agents and they’re happy to do so.
Letting agents aren’t perfect for everyone, but at the same time, they might just be perfect for someone. Letting agents have their uses, which I won’t and can’t deny. What’s most important is that you make a decision based on your own feelings and circumstances.
What are your thoughts?
Disclaimer: I'm just a landlord blogger; I'm 100% not qualified to give legal or financial advice. I'm a doofus. Any information I share is my unqualified opinion, and should never be construed as professional legal or financial advice. You should definitely get advice from a qualified professional for any legal or financial matters. For more information, please read my full disclaimer.