FINDING TENANTS

There are many categories of tenant, and you will have to decide which type best suits your property or location. Tenants can be singles, couples, sharers or families and each property will attract a particular type of tenant. In general, flats are not usually suitable for families and, indeed, leases in some very upmarket blocks may not permit children, let alone pets.

Letting agents will advise on which areas and types of property attract particular tenants. The student market is growing all the time, and there are now purpose-built blocks aimed entirely at student occupation, where you can buy a flat – or maybe several – as an investor.

The student market, though, is very different from other markets and the best advice here would be to contact your local university lodgings department and ask for a copy of their landlords’ booklet. You are not usually allowed to set your own rents, for instance, but have to abide by the amounts set down in the booklet.

Using a letting agency

If you are buying on a mortgage, you will be required to use a reputable letting agent who will advertise the property, find and vet tenants, take the dilapidations deposit under the Tenancy Deposit Scheme, carry out reference checks, draw up the tenancy agreement, set up the standing order and check that the flat complies with the current health and safety regulations.

Going it alone

If you own the property outright you can, if you like, advertise it yourself. Around 50 per cent of landlords decide to go it alone and save themselves the expense of a letting agent. As always, there are pros and cons. However many layers you like to put between yourself and your tenant, you have to remember that the contract is between you and the tenant, and not between the tenant and the agency.

If you are finding tenants privately, you will have to show them round the flat and check and vet them yourself. Yes you can save yourself the ten per cent (plus VAT) commission, but it is a lot of hard work, especially if you have a full-time job as well.

Full management or not?

Letting agents can handle every aspect of finding tenants such as drawing up tenancy agreements, taking the deposit, setting up the standing order, compiling the inventory, checking tenants in and checking out. They can also arrange for repairs, for eviction of bad tenants, collection of rent and redecoration.

But all these services come at extra cost. Most agents have a scale of fees ranging from ten per cent for finding and checking out a tenant, to 15-20 per cent for full management or even more for organising holiday lets.

I would say that for ordinary tenancies you do not need to go for the full management option as in the scheme of things, the vast majority of tenancies are trouble free. With the ten per cent service, the agent withdraws once the tenancy arrangements have been completed and plays no further part in the operation.

For all levels of service, the letting agent will do a reference and credit check, make sure there is enough income to pay the rent, take and hold the deposit and show prospective tenants round. They will insist that all health and safety measures are kept and that all furniture and fittings comply with current regulations. Otherwise they will refuse to act for you as by so doing they may be breaking the law.

Full management means that the property will be checked once a month, and any repairs carried out immediately – in theory at least. For this, the agency will ask for a float to cover these costs. Typically you will be charged the cost of the repair or other work, plus ten per cent agency fee on top. VAT comes on top of all quoted prices.

Full management is probably necessary if you are abroad or unobtainable, but bear in mind that even the fullest management service does not operate at night or at weekends.