What’s The Best Way To Choose An Agent?
Lesley Henderson has been a landlord all her adult life and now runs a family business. She is also the author of the Landlord's Survival Guide.
What’s the best way to choose an agent?
I couldn’t speculate – it’s horses a for courses service. What I do know is that, were I selecting an agent – I would not hand over control of a massive asset like property without seeing the whites of someone’s eyes who is accountable – nor would I settle for a 21 year old, who’s only been doing the job six months.
Many agencies are combined sales and lettings options and that can be a conflict – and also cloud what the office is really good at. If an office can survive on lettings alone, it’s probably doing okay.
Ask if they have written references from satisfied landlords. If not, ask why not. It would be the first thing I’d do – wouldn’t you?
Never get fobbed off with half an answer – if the agent’s evasive now – things won’t improve once your entire rental stream is accessible only through his office. Remember – contracts are always easier to get into than out of.
Be realistic about what agents can achieve
Agents cannot (and shouldn’t be expected to) replicate what a well prepared independent can offer. And in fairness, if they did try to, some landlords would be screaming down the phone at them ten times a week about unlet property. An agent’s position is profitable but not necessarily pleasant. It’s unrealistic to expect an agent to prioritise your unit in the way you’d do yourself – agencies are volume players.
What you can really buy
I hate to be the endless killjoy here, but when you start to see how it actually works, ask yourself if this kind of expensive arrangement is really what you want? Remember that the whole purpose of the 1988 Housing Act was to make assured shorthold tenancies trouble-free to set up, simple to run, and with a legal guarantee of possession after the first six months. Twenty per cent is an awfully large slice of rent for managing tenants who haven’t enough rights to balance on a pinhead after six months.
No one knows better than I how lovely it would be to hand over the odd late calls and the misplaced keys. But is that twice-a-year drama really worth 20 per cent (or your entire realistic profit)? And just how many decisions about a new boiler or carpets do you want to leave with a stranger who gets their hands on your cash first?
On deposits and agents
Full management agents used to hold deposits on behalf of landlords and, in theory, they should consult landlords over deposit returns and retentions and play honest broker.
However, given that almost a hundred million pounds of deposit money is illegally withheld each year, the government has acted. It has finally moved to intervene (in April 2007) to prevent deposit theft with a new compulsory system for all landlords and agents.
If your managed unit has repeated tenant or rent
Start asking yourself what it is about the overall management (of agent or landlord) or the type of unit – or its condition – if you repeatedly attract poor quality tenants. If you (or your agent) are repeatedly attracting the bad minority – look closely at the management. Remember that for every rotten tenant there are a dozen brilliant ones, so if you never get one, start wondering why?
The landlord’s clause
Endless discussion about voids can be a useful excuse for sloppy practice. All decent assured shorthold leases contain a clause, which allows landlords (or agents) to undertake viewings during the final month of the tenancy. Independents use this month’s notice period to find new tenants. At the right rent level and with good tenant relationships, it’s possible to have one tenant move out at noon and another move in at dusk. This gives a six-hour cleaning period and you can do a great deal of wiping in six hours. However, this clearly isn’t practicable where redecoration and industrial cleaning are required. But even that should be reasonably organised by an efficient agent within one week maximum. Agents refusing to utilise this last month wisely are wasting your money – not theirs!
How can I ensure my agent uses this landlord clause in the
Instruct your agent to notify you as soon as tenants give notice and insist they get moving. Check up every few days. Don’t be fobbed off. If their phone isn’t ringing, they’re probably not actively marketing. If not – get on their case. You can’t afford weeks of voids. Tenants are not, by and large, stupid people. They can see past a few dishes in the sink.
What if the unit has been allowed to deteriorate beyond the
normal untidy state?
Ask why your agent didn’t pick this up during a routine quarterly inspection and act earlier to protect your belongings. Or didn’t they do what they charged you for in the contract? Insist that staff do explain to prospective tenants that the building will be in the correct condition before they move in. If your agent has pre-tenancy photos of how the unit will be presented – so much the better. If not, why not? I certainly always take them as insurance for disputes, as does every independent I know these days (see Lesson 7: Inventories). Make your agent learn how to be flexible. There’s always more than the way they’ve always done things to improve results.
A final caution
When challenged about their astonishing fees, a spokesperson for ARLA told a BBC reporter that costs were so high because it may take 30 viewings to let a unit. I could weep when I hear things like this. There’s something terribly wrong with either the unit or the rent level when 30 people have turned it down.
I repeat – decent units with rents set that reflect the local levels of supply and demand should let out relatively easily (two, three, four viewings maximum, before you have to start worrying and doing something like dropping the rent or buying a new sofa to make your unit more obviously appealing).
If you engage an agent make them work for you not the other way round. Landlords who sound as if they know what they are doing will always get better service than those who don’t.
It needs to be remembered that the land of the lettings agent remains a quicksand for the unwary. There is no guarantee you won’t be charged over and over for a service done once and there’s precious little comeback with teeth. Moreover, this whole agency ‘ah well, it takes time to rent a unit’ philosophy is alien to an independent landlord whose day-to-day losses are a cold, hard reality.
Whys and wherefores
Agency practice is so varied, there’s no reading list I can suggest. Weigh up the services and the costs of each service provider you find and try negotiating. The internet will provide thousands of hits for UK lettings agents. Press archives will let you access the numerous articles that are repeatedly written by concerned journalists. And, if you contact some of their trading associations ARLA/NAEA etc direct, they’ll send you enough information to fill a skip. I’m afraid that this is the one lesson where each and every landlord is working blind – unless you’ve been lucky enough to get an agent recommended by a satisfied private landlord.
- Genuine professions demand years of scrutinised study (usually at university), challenging levels of examination and ultimate registration with a professional body. No lettings agency can properly call itself ‘professional’ – they belong to trading associations. Take this up with your MP. Assets this valuable ought to have both an appropriate qualification and a powerful regulator.
- Some agencies charge landlords ‘front loaded fees’. Don’t accept this – find an agent willing to share your risk.
- Check the rate you’re committing yourself to pay and make sure there’s no tie-in for unduly long periods at this rate.
- If the same tenant stays in place for longer than the initial six-month fixed term, ask the following questions:
- It’s the agent’s job to make as much money as possible from your investment risk. Understand this. Watch costs don’t escalate disproportionately.
- Understand what you sign.
- Agents charge tenants astronomical fees for their services. Be aware that many decent tenants avoid renting through them for this reason.
- Monitor your agent’s conduct by asking for regular written reports, etc.
- Agents who do misbehave should always be reported – try Trading Standards.
- If you agree to pay them, let them do their job – don’t endlessly interfere.
- Read the whole lesson – even if it’s setting your teeth on edge.