What to look for in a letting agent – by Sim Sekhon, MD.
Friends, family members and landlords within my network often ask my advice. Of all the subjects concerning them, one stands out: letting agents. They want clarity and straight answers. Sometimes they want to know if they should manage the rental of their property themselves.
All the questions are very understandable. There’s a vast choice of letting agents and it’s natural to seek out recommendations or to ask for pointers. Trust is also a big issue. Landlords rely on agents to protect their income and their assets. They’ve heard stories about ineffective agents and wonder if they’d be able to do a better job. Of course, they also like the idea of keeping hold of all the rental income and not losing a percentage.
These conversations are valuable – both for those who need sound advice and for me. They give me insights into the general perception of lettings agents. They’re like mini focus groups, full of different perspectives. But there is a dominant theme – most landlords in the UK own just one or two properties. They are part-time landlords with other demands on their time and little chance of gleaning the experience required to deal with every eventuality.
There are an enormous number of landlords in this situation. According to Generation Rent, there are just over 13 million people, or 20% of the population, renting now. That’s around 4.4 million dwellings, an awful lot of landlords looking for the best way to manage the property they’ve invested in, and plenty of agents competing for custom.
So how do you pick a letting agent? What should you look for? I give the same answer to everyone who asks. Do your homework. Delve into those KPIs.
I’m perfectly serious because your investment is a serious business. Don’t listen to flannel, check the facts – and if the agent doesn’t have them or doesn’t want to share, walk away.
10 facts to check
- What’s the achievable rent? Can the agent provide comparable information to back this up? Could the property be enhanced in any way to increase the overall yield? What’s the full picture long term?
- What is the percentage of arrears within the agent’s current portfolio? What is the percentage in the area where your property is located?
- What is the current average length of tenancy?
- What percentage of landlords continue to use the agent after the initial contract term?
- How much is the average maintenance spend per landlord for this type of property?
- What is the typical demographic and profile of tenants in the area? Ask for details on job status, average salary and key employers. The more the agent can tell you, the better.
- What’s the average time taken to find a tenant from instruction? How long does it take to get them moved into the property?
- What is the average void period for landlords at the relet stage?
- For how long are your rentals typically on the market?
- What are your costs for fully managed, let only and ongoing services?
You may question why the issue of cost is at the end of the list, not the beginning. There are two parts to the answer:
Firstly, I always recommend that, when comparing two or three agents, you should only choose the lowest price if all options are brilliant and it’s a tough call on which is the best option.
Secondly – and most importantly – unless you’re an experienced landlord or investor with enough time on your hands to understand all the complexities and nuances of property rental, you should choose a fully managed service. We recently surveyed just under 30,000 landlords. Results highlighted the self-managing landlords’ number one concern is compliance.
People buy people, they say. There’s truth in that and the gut instinct can be reliable, but landlords are time short and cash poor. Check those KPIs. Do it properly.