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How & Why Landlords Should Find Tenants Without A Letting Agent
There’s going to come a time when every landlord [that uses a letting agent] asks the question: do I actually need to be paying through the nose for my letting agent’s service? Can’t I just do this myself?
The short answer: probably, yes.
What do letting agents actually do?
Broadly speaking, you can expect your local agent to provide the following services:
- Market property to find tenants
- Conduct viewings
- Conduct credit checks and prospective applicants
- Arrange tenancy agreement
- Rent collection
- Conduct routine inspections
Certainly there’s value provided, but there’s nothing there that you can’t do yourself. Easily.
Why landlords should consider going it alone (without your local high-street agent)!
A common misconception is that letting agents provide us with a skill set which can’t quickly and easily be duplicated by the average person/landlord. We assume that they have an advantage over us by having all the trade tools and resources. In reality, that’s just a smokescreen perception. All agents provide us with is a service which we don’t know enough about to confidently duplicate. But when you break it down, it’s not really that difficult or time-consuming to learn the essentials, which will enable us to find and manage tenants for ourselves.
As long as you stuck to the golden rules of buying a BTL, which simply consists of buying a suitable property in a suitable area, there is no reason why a letting agent should be vital in your Landlording crusade.
I think the main edge agents have over regular folks is “local knowledge”, but I genuinely believe that’s not as powerful or useful as once before, especially in the modern world, where the Internet has become such a dominant provider in daily life. Most agents rely on widely available internet services to find tenants. They use tools we can all tap into; we just need to be shown where and how. Consequently, “local knowledge” has become redundant in a sense, especially when the enquiries are flooding in via the means of online marketing.
I’ve seen high-street agents charge between 8%-15% of the rental return for their services, depending on the type of service. The most basic service agents’ offer is typically a “tenant-only” service, which is where an agent will find a tenant and leave the management role up to the landlord. On top of that, most “novice” landlords will buy the legally required extras from the agent (e.g. Energy Performance Certificates (EPC’s) and Gas Safety Certificates) simply due to ease and ignorance. Using letting agents for those extra services is not the cheapest option because they subcontract other companies to provide them, and most agents add their own premium to make money from the referrals. So it’s easy to see how and where the costs add up.
Let me show you how the figures stack up with a real example:
Let’s assume an agent has found me a tenant willing to sign a 12 month agreement. The rent is £1000 per month. Based on the lower end 8% fee, an agent would charge £960 as a fixed annual fee for their service. On top of the regular service charge, most agents charge a renewal fee, which means I would need to pay an additional annual fee if I wish to keep the same tenant after the 12 months expires. As you can see, the cost can easily escalate, and it usually does.
Over the past 3 years I’ve not used an agent once, and my cost for finding tenants has been £0 – £100.
So, it’s your call, you can either spend £1000 on an agent, or learn how to do it yourself and spend £0 – £100. It’s a no-brainer for me. Remember, a buy-to-let investment is a business, so it’s about keeping costs down.
Of course, my example only took into consideration the “tenant finding” aspect. There’s more money to be saved when independently looking for companies to provide you with an EPC and Gas Safety Certificate, as opposed to going through an agent to acquire those legal documents.
Agents can get it wrong, and they often do!
One very important point to remember is that just because agents charge a fee to find tenants, it doesn’t mean the prospective they find will be any better than then one you can find yourself. I’ve had an 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.
If you think you’ll always get a better quality of tenant from an agent, you’ve been grossly misled. Most agents do standard reference checking on their applications. Clearly, the referencing isn’t bullet-proof, regardless of how it’s done.
My point is, going It alone can be just as risky as using a letting agent in respect of the return in tenant quality.
Tenancy Agreements and Landlord legal responsibilities
Many landlords get scared away of going it alone because of the complications behind Tenancy Agreements and other landlord legal obligations. Again, this is a common misconception, because it really isn’t that complicated.
You don’t need a specialist solicitor/lawyer to draw up any contracts. There are hundreds of reputable Tenancy Agreement vendors online. All you need to do is download one and fill in the missing spaces. Most of it is self-explanatory. Same applies with Tenant Guarantor Forms.
I do stress though, it’s important you get the correct documents from reputable sources.
Regarding the other legalities, here’s a list of Landlord Obligations / Regulations.
How to start finding tenants for yourself!
Over the previous few years I’ve written an obscene amount of blog posts about how landlords, even the most novice and foolish, can successfully find tenants without using letting agents and consequently save £1000’s on fees. The best way to get started is by sniffing through those…
- Start here: A Guide to finding tenants – it covers the A-Z of finding good quality tenants quickly and cheaply, including how to Market your rental on Rightmove via an Online Letting Agent (which is by far the best way to find tenants, in my opinion). In fact, if you’re simply here to find out how to effectively find tenants without an agent, go over to the online letting agent guide.
Hold on though, letting agents may be perfect for you!
I’d just like to clarify that 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. For example, if you’re the type of landlord that doesn’t want to deal with the chore of finding or managing your own property, then letting agents are perfect (if you don’t mind paying the premium).
But I warn you, while you may feel like you’re taking a back seat position when employing the services of a letting agent; reality can often have an entirely different agenda for you.
Letting agents will take care of the day-to-day management, but remember, if your tenant turns rogue and defaults on rent, the responsibility and stress will always fall back onto the landlord’s lap. That is unavoidable.
I’m not trying to take anything away from letting agents here. They know their industry and they know how to find tenants. They’re trained at their jobs and know the shortcuts. However, I just want to make it clear that there are other options.
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.
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About the Blogger ("The Landlord")
Hi. I'm a Landlord blogger; I inconsistently share my useful and useless thoughts on Landlord life. I've been in the game for over a decade, but it feels a lot longer.
I try my best to help others as much as possible. Sometimes I'm successful.
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12 Join the Conversation...
1
YesAdam 11th August, 2011 @ 21:53
As a letting agent I read articles, your blog, industry magazines, conferences and member of organisations. Their is a premium a landlord should pay to agents for all that knowledge and experience.
Novice landlords should always use a letting agent - but ask lots of questions, get copy's of everything and learn.
You mention suppliers are cheaper direct - this is not always the case. I get letters from suppliers with low prices to get our business this can be passed on to clients. A good agent can pass on savings as well as make a little. (especially if its managed by us, we want to keep landlord/tenant sweet for repeat business).
If an "agent gets it wrong" (or rather the tenant mislead them) then a good agent wont charge you for re-letting within tenancy term. Anyone can get a bad tenant landlord or agent.
As for renewal fee - we only charge a tiny fee for time it takes to re-sign the tenant. What high street agents charge seems unreasonable.
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Letting Agents cost more than being independent landlord due to overheads but EVERYTHING they pay for costs less than it would for an independent landlord - even credit checks - so its not a BIG difference. Also fees are tax deductible.
Some overcharge and some charge nothing and provide a crap service - good luck finding a good agent.
2
YesAdam 11th August, 2011 @ 22:02
Also - a good agent will help with eviction process, they loose £ if doing management, they wont stress as much as a landlord but keep a level head and provide good advice/experience.
3
Matthew 12th August, 2011 @ 08:02
I have tried several agents,and they are very good at dealing with problems, like finding tenants and collecting the rent. They have fantastic workmen, like brickies and plumbers and general handimen on call, at prices that are wonderful, but if any of them see a chance to take advantage, then they will, so complete confidence cannot be placed in most of them,as I have experienced many bad agents. My present agents, Hallams have been wonderful and extremely helpful, and although I am disabled and find it difficult to visit my properties, they have never tried to take advantage of the situation. I just wish that the other agents were as trustworthy!
4
JJR 24th November, 2011 @ 13:15
I would really like to know where the landlord's who 'go it on their own' properties are located.
I have tried gumtree once around 5 years ago for a 3 bed house near Shepherds Bush in west London - rent £550 per week (which I know will sound a lot to those of you outside London, but it was absolutely the correct rent based on what we previously received and what we have received since.)
I put it on gumtree for a bit less to make it even more attractive - £500 a week as all the agents here charge 10% and that is not negotiable (and believe me I have tried!) Had lovely photos etc.
All the applicants through gumtree were time wasters - mainly sharers rather than families etc. who basically couldn't afford it.
Now I may have been unlucky, but my gut instinct tells me that when people are paying over £350pw for a 1 bed flat, £500pw for a 2 bed and over £600 for a 3 bed in the fashionable parts of London, they want & expect to deal with high street agents.
Although afterwards, they always complain to me about feeling ripped off by the agents (and I tell them I do too....so go figure!) At the moment I have great tenants in every property I own, all found through agents. Would I have found them using Upad or the like? That's what I'm trying to figure out as any saving is money in my pocket!
So it would be great to hear from anyone who is in a similar position to me who is doing it themselves.
5
YesAdam 24th November, 2011 @ 13:43
JJR if you want the same "kind of tenants" that agents offer you then you are best of advertiseing on websites like UPAD, their is a list of them here:
http://yourletting.biz/advertise-property.html
6
JJR 24th November, 2011 @ 15:03
Thanks YesAdam. But I really want to know if a landlord on here with properties in a prime London area is using one of those services successfully.
I regularly look on Rightmove etc. to get an idea of what else is on the market in the areas that I own properties, and there are only properties to let through agents. I've never seen one through an agent I don't recognise.
I'd love to hear from a Landlord saying they own properties at the kind of price levels I mentioned, letting me know the area and their experience of using those services.
(By the way - I also own a few properties outside of London where I grew up and have successfully used private advertising in the past and intend to use these online agencies when they are up to let again.)
7
YesAdam 24th November, 2011 @ 15:25
Well JJR i am not in London but I may shine a light for you. Last week I rented out two properties in Bradford one was £1,200PCM and one was £999PCM both with large deposits. In this area thats expencive.
All i used to advertise was Zoopla (UPAD offers Zoopla and RightMove I think). I have also rented out Bedsits at £70PW, 1 bed flats at £360pcm and 3 bed semi at £550pcm.
In other words from top properties to housing benefit type properties online letting agents work. The only property I have not been able to rent at zoopla is a 4bed mansion at 4,500pcm. (no supprise)
8
Sam 28th December, 2011 @ 01:26
JJR 2-3 years ago I rented out a prime one bed in london for £330/wk, I havent had any luck since and had to use agents...currently getting £375/wk, which net is what i was getting 3 years ago...so I think yes, for prime properties tenants probably want agents but its worth listing it yourself on rightmove for £100 on the offchance you get a private tenant
9
The Landlord 28th December, 2011 @ 10:59
@Sam, just to clarify, you can list your property on Rightmove for £30, Advertise Your Rental On Rightmove :)
10
Mike Wilkins 6th August, 2015 @ 23:19
we are currently trying to let a flat. The letting agents have done very little indeed since the purchase of the flat went through. They advertised it wrongly, posted poor pictures, no floor plan or dimensions and at a high price. The advert was not submitted to us for approval. Result.... No prospective tenants. This last weekend we took matters into our own hands and took photographs and placed an advert online on Sunday afternoon. Within 24 hours we had 12 excellent prospective tenants. We shortlisted 5 and selected one. In the meantime and as a result of a heated telephone call the letting agent updated their advert. We have notified the LA that we have found ourselves a tenant. His response.... A demand for the tenants full details so that he can charge us for finding the tenant and all ongoing fees for services. He cites his right to do this by producing an agreement to use his services which was signed in respect of a totally different property which fell through due to us being gazumped. Can he do this to us as there is no mention of sole letting agency or sole marketing on his paperwork, which in any event refers to and was signed in respect of a property we did not buy? Mike W
11
V. Samanta 25th January, 2019 @ 17:37
We have a ready semi furnished apartment around 1300 sq.ft with 3 bedrooms 2 bathrooms 2 verandahs 1 roadside Lakeview and one separate kitchen with garage located at the heart of this district town Burdwan near Perbirhata.The total floors are covered with victrified tiles with modern accessories. All time water and electricity available.Rents are reasonable.
12
I shouldn't really be agreeing with you being a lettings agent but yes landlords can go it alone. In fact it would be just as simple for them if they only had one or two properties.
The advantage with us is when you have a few properties we can keep an eye on gas safety's etc, making sure rents are on time and making sure work is carried out on properties. As well as this there's the amount of websites we post across for letting a property and the credit checks we can perform for quite a minimal amount.
As for rates, our unique selling point (and something I feel keeps us alive) is the fact that we are just 7% which you would be hard pushed to find anywhere.
As always though another great article from The Landlord (I mean that sincerly)