Finding a good letting agent is not easy. But it is not impossible.
The starting point is to work out what exactly you are looking for in an agent. You should be looking at factors such as expertise, reputation, service quality and cost.
What are your main criteria? Your task will be a lot easier once you know that.
This article looks at 15 points you should know about finding a good letting agent.
1 Finding your good letting agent
You should start by working out the type of letting agent you want. Cost is usually at the top of mind for most people.
Do you want someone charging a high fee or a low fee? Someone charging a high fee is not necessarily the best. Someone charging a low fee is not necessarily the worst.
Perhaps the smartest approach is not to concentrate on money alone.
An effective approach is to have a shopping list of priorities such as:
- Service quality
- Service delivery
In practical terms, you are looking to answer the question:
Who is likely to let my property the quickest, for the highest rent, and the most cost-effective fee?
2 A good letting agent for you and your tenant
When considering the agent to engage, try to assess how that agent is likely to interact with your tenant. That is especially important if you are also asking the agent to manage your property after letting it.
Does the agent have good “people skills”? Are they someone you find efficient, likeable and easy to get on with?
If so, your tenant is likely to have a similar view. That is good news for you in terms of having a happy tenant and well-managed property.
3 Identifying a good letting agent
How should you go about identifying a good letting agent? What procedures should you follow?
Perhaps the best way to start is to find an agent who comes highly recommended by someone you know and trust. Ideally, the referrer should have used the agent and received good service in the recent past.
In the absence of a recommendation, you should carry out a thorough due diligence assessment of any agent you are thinking of engaging.
Conduct your research by studying the website of the agent and looking at testimonials and reviews. Read their marketing materials and terms and conditions. Take account of the length of time the agent has been in business. Use search engines to see if there is any negative or positive news or publicity about the agent.
INTERESTED IN INVESTMENT STRATEGIES BEYOND RENTING?
4 What are the qualifications of a good letting agent?
Surprisingly, letting agents in England & Wales don’t need to have a specific qualification to practice.
Of course, qualifications are not necessarily proof of competence, performance or quality. However, they are clear evidence of a certain level of knowledge and ability. All things being equal, it makes sense to favour an agent with relevant qualifications over one without.
However, don’t just focus on the qualifications of agents. Also, consider their experience and expertise – taking account of your target tenants.
For instance, if you are looking to rent out an HMO or a serviced accommodation unit, look for agents who specialise in those sectors.
5 Is the agent signed up to a redress scheme?
All good letting agents will be fully compliant with the regulations that apply to letting agents.
You should expect your letting agent to be:
- Signed up with a redress scheme – such as the Property Redress Scheme or the Property Ombudsman
- Registered for money laundering purposes
- Registered with the Information Commissioner’s Office for the purpose of data protection.
Also, look to see if the agent has an internal complaints procedure. You can use this before having to rely on any external redress scheme or court proceedings.
6 Is the agent duly insured?
You should ensure that the agent you appoint is duly insured – especially if you also appoint them to manage your property.
You may have no intention of suing an agent at a later date. However, it is sensible to know if they have indemnity insurance.
That will give you some protection in the event of having to sue the agent for negligence or breach of contract. It is remarkable how few landlords check this key point. It is best practice to always do so.
Most agents operate through a limited company which has the benefit of limited liability. If something goes wrong, the company could deny responsibility and leave you without financial redress.
If there is insurance in place, you will at least have a viable opportunity to recover compensation.
Always ask a prospective letting agent about the insurance arrangements they have in place.
7 A good letting agent protects rents
These days, the best letting agents will have banking arrangements in place to protect rents and deposits received from tenants.
They will keep such money in a separate bank account and will not use it or mix it with their own money.
Don’t assume that an agent will have arrangements in place to protect money received from tenants. Specifically, ask about such arrangements.
8 Consider the business status of the agent
Check the business set-up of the agent you are dealing with. Are you dealing with an individual, a partnership or a limited company?
Because of limited liability, companies may be more difficult to sue or recover money from in the event of a dispute.
Limited liability status may not be a concern with a long-established reputable agent. If, however, the agent is a newly set up company, without a track record, that may present greater risk.
INTERESTED IN INVESTMENT STRATEGIES BEYOND RENTING?
9 Know the true amount you will have to pay
Ensure that you know the exact amount – including VAT – you will have to pay for the agent’s services.
Sometimes an agent will draw you in by offering a relatively attractive commission. For instance, you could be offered a fee of 8% for “let only” instead of the usual 12%. But then the agent could try to claw back the discount by making an additional charge for various individual items.
You should read the letting agreement carefully. Check to see what the headline fee actually covers. Does it include:
- All advertising and marketing?
- Preparing the tenancy agreement?
- Obtaining references?
- Tenant check-in?
- Check-in inventory and photographs?
- Check-in meter readings?
- Protecting the deposit?
- The deposit protection fee?
10 How will the tenant’s deposit be dealt with?
A good letting agent will deal seamlessly with the important matter of the tenant’s deposit.
Expect them to give you a choice as to whether you want to protect the deposit, or you want them to do so.
If they are to do the protecting, they should provide you with full details of what they will do and the charges they will make. In particular, they should make it clear whether they will levy additional charges if their input is needed at the end of the tenancy.
You should think carefully about whether to hand the protection of the deposit to the agent.
Giving the job to the letting agent may be easy and inexpensive. However, if there is a dispute with the tenant and you want to utilise the deposit, you will lack a certain amount of control of the situation.
11 What if you want the letting agent to do more?
After engaging a letting agent to let your property, you may decide that you want help with the rent collection and property management side of things.
If you do that, you will want to be confident that the letting agent is also a good managing agent. You will carry out similar due diligence checks – this time looking at the agent’s qualifications, experience, expertise and reputation in terms of management rather than letting.
If the same agent, or a colleague in their office, don’t come up to scratch, you will need to look elsewhere.
12 What to expect from a good managing agent
A managing agent is going to be doing much more work for you than a letting agent. You should expect to see that work, and the likely cost, clearly set out in the management agreement presented for your signature.
Fees should be related to work done. You will want to avoid agreements where you are paying a commission of, say, 12% of rent for nothing more than an electronic transfer of the rent to your account each month.
Check how the management agreement deals with, and charges for, the following key matters :
- Payment of the rent to you
- Regular visits to the property/inspections
- Carrying out of repairs and maintenance
- Dealing with unpaid rent or other breach of tenancy
- Preparation and service of notice seeking possession
- Commencement of court proceedings
- Tenancy Renewal
- Check-out and meter readings
- Check-out inventory
- Repayment of the deposit (where protected by the agent)
13 The money side of things is super important
Finding a good letting agent is not only about money or cost. However, money is often at the root of problems and issues which can arise.
If the service you get from an agent is first-class, you will usually overlook the fact that their charges seem a bit on the high side.
If the service to you is not great, charges and lack of value for money can quickly become centre stage.
Typically the fee of an agent will be a percentage of the rent plus VAT – if the agent is VAT registered.
With a let only agreement, a charge of 8-10% of the rent is fairly typical; with a management agreement, the norm is around 10-15% of the rent.
All things being equal, you will usually want to negotiate the lowest percentage possible. However, watch out for extra or hidden charges. These are often a source of disaffection and disputes – especially where the agent is providing management services.
14 Read before you sign!
You can minimise the risk of disappointment or disputes with your agent by making sure you read and understand everything before you sign.
Don’t just rely on what the agent tells you. Read the relevant documents to see what they actually say.
The need to be diligent is especially important if the contract documents are sent to you electronically for e-signature. If you are busy, it is easy to go straight to the signing without opening and carefully considering all the documents sent to you.
15 Finding a good letting agent: Conclusion
Finding a good letting agent is primarily about you knowing the:
- Kind of tenant you want
- Type, level, and quality of service you want
- Amount you are prepared to pay for that service.
There is no such thing as a good letting agent that is good at letting any kind of property.
Everything starts with you. You need to carefully think about the type of agent you want.
Do you want someone who can find you a great tenant or someone who can find you a tenant quickly?
Do you want to pay market average fees or below market average fees?
Are you prepared to spend time carrying out thorough due diligence or are you just willing to hit and hope?
One thing seems clear. If you don’t put the time and effort into identifying a good agent – you’re not likely to find one.
Have you had good or bad experiences with letting agents? Do you wish to share? Other readers may be able to learn from your story. Please leave your comments below.
About the author
Dalton Barrett is a long practising property solicitor, investor, PRS registered property coach and Amazon author. Read about his unconventional worldview of property here
Please share this blog
Enjoyed this blog? Please share it with friends by clicking on the LinkedIn, Twitter, Facebook or Instagram icon on this page.
If you have not signed up to get my latest blogs sent to you weekly, please do so HERE
Dalton Barrett, Solicitor
Rebel Property Coach
My website is: www.rebelpropertycoach.com