Property Buying Guide

Buy to Let Advice: Letting agents

You may choose to manage the letting of your property yourself, but it can be quite a complex and stressful undertaking, particularly if you live at a distance. For example, you will need to ensure that the property meets the regulations that apply to buy to let. You will also need to advertise for tenants, interview them, show them the property and gather references. You will need to draw up a tenancy agreement and arrange for the collection of rent, payment of bills that are your responsibility as the landlord, and overseeing the maintenance and redecoration of the property.

If this all seems rather daunting and impractical, you may choose to use a letting agent. A letting agent will manage the renting of the property on your behalf. Some mortgage lenders will require you to use an  ARLA registered agent as one of the terms of granting a mortgage.

Each agency will offer a range of services covering finding tenants for you and managing the property on your behalf. You can expect to pay around 10 per cent of the value of the rent for the first part of the service and another 5 per cent of the rent for the ongoing management.  This is usually charged in a six-month or yearly upfront amount - + VAT, of course.

 The agent will visit the property and agree on the type of tenant and the amount of rent you can expect. He should also advise you of legislation that may be relevant when checking for any repairs or maintenance. The agency will advertise for, and interview, prospective tenants on your behalf. A representative from the agency will show people around the property on your behalf. The agent will vet tenants for you, check their references (employer, bank and personal) and collect the rent to pay into your account, if you go for full management. Otherwise, the rent will go straight into your account each month,  paid by standing order.

If you opt for full management, the letting agent  will collect  hold and protect the  deposit, which will be paid back to the tenant when the property and inventory has been checked at the end of a tenancy. The deposit is also there in case tenants  cause loss or damage to the property or contents. The deposit is usually between one month and six weeks' rent. The letting agent will collect and pay the rent on a monthly basis, having deducted fees and the cost of any expenses incurred.  Deposits must not be used as rent; they are purely to cover dilapidations and do not form part of the rent.

Any maintenance or repairs will be overseen by the agent and it will obtain estimates and supervise work on your behalf, but only if you go for full management. The agent can arrange access to any tradesmen and will settle any accounts for work undertaken from the rental received at the end of the month. In any case, is the agent's role to inform the utility companies when a tenancy changes. If there are any repairs, maintenance or other requests from tenants, the agent will visit the property on your behalf.

All related administration services should be provided within the terms of the agreement.  Agents can arrange an inventory check, but this comes at extra cost.  They can also check and inspect the property at the end of a tenancy before returning the deposit to the tenant.

 Your agent will draw up a legally binding tenancy agreement, the cost of which may be divided between you and the tenant. Some will also undertake refurnishing and refurbishing on your behalf. Some may also be able to prepare tax statements for Inland Revenue returns.  This will happen in any case if you are living overseas or go for short lets. Make sure you fully understand which services are being included, as many come at extra cost and not all are necessary. For instance, it is perfectly possible for you to draw up an inventory yourself.

The Association of Residential Letting Agents (ARLA) is the professional self-regulating body which is solely concerned with lettings. Agents are only able to become members of ARLA if they implement best-management practice and demonstrate that they have a thorough knowledge of their profession. ARLA offers a buy-to-let guide, which is available from ARLA member letting agents or from ARLA's website, where you can also find the agent nearest you.

More buy to let advice:

Buy to let – for first time buyers and everyone l How much can you borrow? l Buy-to-let mortgages l The tax situation l The hidden costs l Finding a suitable property l Your responsibilities as a landlord l Tenants l Furnished and unfurnished properties l Buy-to-let useful websites l Buying Property Abroad 

Useful Links: 

www.arla.co.uk
www.cml.org.uk/
www.landlords.org.uk/
www.direct.gov.uk/
www.rics.org.uk/