Property Management: Should you use a Management Agency?
So, you have made the decision to let out your property to prospective tenants. The next question that arises is how you plan to manage the rental, something that will have a huge impact on the success of your property let.
Property management is essential to the success of your buy-to-let investment, and your options are straight forward here, you can manage the property yourself, or pay a company to manage the property (and tenant) for you.
Although private landlords running their own lettings is on the rise, up 7% from Q3 2019, the majority still opt to have a company manage the property on their behalf. 57% use a company to manage their property, largely due to the experience they offer, knowing they will act fairly for both parties.
The increase might be due to the recent changes on tenant fees introduced by the current Government. Since June 2019, agents have been banned from charging tenants’ certain fees, such as inventories, reference checks and administration charges.
Before this was introduced, there was a consensus this cost would be passed onto landlords, which could explain this drop. It will be interesting to see by the close of the year if this increase is reverted.
The importance of property management
The quality of property management that is carried out at your rental property will make or break you when it comes to your investment.
Communication between the parties involved will be hugely important and will make up the majority of how the tenant perceives the property. Ultimately, they have viewed and liked the property enough to choose it as their home for the meantime, the experience you give them after that will determine the success or failure of the future duration.
Repairs and maintenance that fall into your responsibility should be acted on quickly. Ultimately, it is your property, and you should want it in the best state irrespective of the tenant’s comfort. The quicker you are to communicate and act on problems, the more likely you are to receive rent payments and increase the duration of their stay, a bonus knowing the lengths it can take to get someone in.
In fact, a recent survey of over 5,000 tenants highlighted that responsiveness to issues was the biggest issue facing tenants. Good communication and a quick turnaround for repairs are proven to be the main points to consider.
These points apply not only to standard buy-to-let properties, but also houses and shared houses such as HMOs. Landlords should see their tenants as customers.
The benefits to self-management
The question you may be thinking is, should I go alone or use an agent? The answer is not straight forward and very much relies on your personal circumstances.
Since some agents have begun increasing letting fees for landlords, as mentioned previously, the rate of self-management has increased. In fact, management fees are reported to have rose by a massive 59% over the course of 2019, it is hardly surprising people are making the shift.
There is a case emerging that direct communication between tenant and landlord, largely due to reduced times for responses is seeing greater happiness in tenants than when using an agent.
For landlords that take their role seriously, this makes sense. Tenants often prefer to communicate with the landlord about an issue, whilst landlords feel more in control of their letting. Landlords retain control when it comes to major decisions and allows the opportunity to build a relationship with the tenant. The money saved on the agent fees also takes the stress off maintenance and repair costs on the property.
Using a letting agent
There are scenarios where an agent is better for your needs when it comes to letting out the property. Whilst some agents upped their fees, many did not, so it is worth shopping around if you feel an agent will be beneficial.
The benefits to appointing a management agent can be essential in some circumstances. Whilst there is an additional cost, the time saved, and expertise gained means most landlords simply treat this as a necessary business expense.
An agent becomes increasingly essential as you scale up the number of properties you let out. Many would argue that, if you have more than one property, an agent is essential to properly manage your tenants.
Location is a factor here also. Many landlords live elsewhere, even overseas, so the need to use a management company to deal with ongoing maintenance etc. is essential.
Touching on the previous point in expertise, an agent will keep up to date with any regulatory changes and advise you where necessary. Changes are happening more and more frequently, so it is important you know your rights, and are advised on this where necessary to avoid legal issues down the line.