Five things to check when choosing a letting agent

Using a letting agent to manage your rental property should relieve you of hassle, whilst improving your return on investment. Here are five things to look out for though to prevent you being stung by a poor performing or sneaky letting agent.

1. Legal requirements
It is a legal requirement for all letting agents to be a member of a property ombudsman or redress scheme, which ensures you have a port of call if you have reason to complain about their service. Letting agents should also have indemnity insurance to protect you against any mistakes, as well as Client Money Protection insurance, which will compensate you if the agent should misappropriate your funds. Certificates for all of these should be provided upon request - if they don’t have them, they are breaking the law!

2. Service
Ensure you understand what level of service you expect from a letting agent and whether they can deliver it. Discuss what options are available and what the proposed service includes as letting agents’ interpretation of ‘fully managed’ can vary, and this can be at odds with landlords’ expectations. Ask what marketing the agent will undertake, what tenant referencing they perform (and if they’ll supply you with copies) and what the move-in process entails (including which deposit scheme they use and the level of detail to their inventories). Ask how often they will undertake inspections at your property and what their process is if rent isn’t received on time.

3. Fees
A major factor in choosing any service is its cost (although I’d argue value for money is more important than ultimate price). Fortunately, it is a legal requirement for letting agents to list all their fees on their website and in their offices. You should question those who aren’t doing this - firstly because it’s illegal not to, but secondly…what are they hiding?! A myriad of extra fees hidden away in the small print of their management contract can soon add up. Also, ask if they add commission to maintenance invoices; this isn’t illegal (if it’s made clear), but you might wonder why organising repairs isn’t simply part of their management fee.

4. Reviews
Perhaps the best way to choose a letting agent (like with any service) is by seeking a recommendation or referral from someone you trust. Failing that, letting agents are likely to offer up testimonials from their current clients, although it’s perhaps better to seek them out for yourself by looking up their reviews online.

5. Contracts
Whichever agent you decide upon, make sure you receive a written management contract. This should set out the service the letting agent will undertake for you, whilst clearly listing all the fees you’ll ever need to pay. This will provide clarity for both parties and should help avoid any mis-understandings or disputes at a later date. Be sure to carefully read the contract and raise any terms you are unhappy with before you sign it and the agent starts working for you.

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If you are looking for an agent that is well established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.

E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

Don't forget to visit the links below to view my previous buy-to-let deals and Chichester Property News articles:

• Follow The Buy-To-Let Property Investment Market in Chichester
• Chichester Property Market LinkedIn Page for Clive Janes
• CRJ Letting Agents Chichester Facebook Page
• CRJ Letting Agents Chichester Twitter Page
• Chichester Investment Property Management Specialist CRJ Letting Agents Website

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BUY-TO-LET DEAL OF THE WEEK:4 bed house in Chichester, £415,000, 4.6% yield

Summary

4 bed house in Chichester

Listed for sale on 15/11/22 @ £415,000

Rent = £1,600pcm

Yield = 4.6%

The property is on the market with White & Brooks and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/129106523

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Preparing your property for Winter

The following tips can be applied all year round but they’re particularly relevant at this time of year as it gets colder, darker and wetter outside.

Familiarise yourself with your property

Ensure you know where the fuse box, gas safety valve and water stop valve are and how they operate, in case of an emergency (I provide a house guide to my tenants with this information and also show them when they move in).

Keep on top of basic maintenance

Check roofs and gutters for slipped or damaged tiles and for any leaks. Check overflows and pipework for any leaks as well as damp smells or flaking paint, which may indicate a hidden problem.

Bleed the radiators and check the pressure of the boiler to see if it needs topping up.

Avoid condensation

Build-up of condensation can be more prevalent in winter as more heating is used, clothes are dried inside and there is a tendency to want all the windows shut.

All this moisture in the property needs to go somewhere and will invariably attach itself to cold surfaces (exterior walls/window surrounds) and create unsightly condensation/mould patches.

Keep windows open throughout the property, particularly in bathrooms and kitchens and especially during and after showering/bathing and cooking. Use extractor fans where fitted and wipe down any wet surfaces after using the shower/bath.

Don’t turn the heating off completely

This is very important to prevent the freezing of the water system and expensive burst pipes. It’ll also help in the fight against condensation, which thrives on a changing temperature.

The easiest solution if you are planning to be away from the property is to leave the boiler on and set the thermostat to a low temperature e.g. 12 degrees.

Fire safety

Do not overload electrical sockets with appliances and Christmas lights as this can cause a fire hazard. Avoid using candles, particularly near Christmas trees, decorations and curtains.

Test all smoke and carbon monoxide alarms to ensure they are working correctly.

I believe prevention is better than cure, which is why I pre-arm my tenants with a 'winter maintenance guide' at the beginning of their tenancy and re-issue it as winter approaches. You can download this short guide, free of charge, from www.crjlettings.co.uk/winter-advice

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BUY-TO-LET DEAL OF THE WEEK: 2 bed house in Chichester, £225,000, 5.9% yield

Summary

2 bed house in Chichester

Listed for sale on 25/10/22 @ £225,000

Rent = £1,100pcm (REQUIRES REFURBISHMENT)

Yield = 5.9%

The property is on the market with Leaders and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/128389232

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Should you renew your tenancy agreement?

Most tenancy agreements last for a fixed period of six or twelve months. This means the tenants are obligated to pay rent and remain in the property for that length of time, whilst the landlord can’t increase the rent or ask the tenants to leave (without applying to a court). Many take it as read that as the end date of the contract approaches they’ll need to renew it, but that isn’t actually the case.

You see, most tenancy agreements make provisions for the contract to continue on a contractual periodic basis. And even if they don’t, by law it will continue on a statutory periodic tenancy. In layman’s terms, these are both monthly rolling contracts, whereby the tenant is required to give one month’s notice to vacate the property, whilst the landlord may give two months’ notice to end the tenancy and regain possession of the property (this has been extended to three months during the Coronavirus pandemic).

Whilst some tenants like the certainty of a fixed contract, many actually prefer the flexibility of not being ‘locked in’ to a long-term rental contract in case their circumstances change. Consider the uncertainty around job security currently and tenants who can give a month’s notice to leave their current home certainly have more opportunities available than homeowners or tenants in a fixed contract.

As a landlord and letting agent I have always operated like this i.e. not re-signing contracts, finding it to be the best and easiest way to continue a tenancy, both administratively and in providing flexibility to both the tenants and landlord.

For me and my landlords, there’s also the added security that should the tenants conduct change or they start to fail in their obligations e.g. they stop paying the rent, we can regain possession with the set notice, rather than having to wait until the end of the new fixed term (or having to take them to court, which is time-consuming, expensive and uncertain).

And whilst a landlord can, if they wish, increase the rent with two months’ notice during a periodic tenancy, you may have read in my previous articles that I prefer to promote long-term tenancies by avoiding this where possible; only increasing the rent when it is significantly out of kilter from the ‘going rate’.

So why then do most letting agents insist on renewals? Well, whilst some may argue there’s more stability for their landlords that way, I think the only stability many of them are interested in is receiving their fees i.e. locking in a prolonged management fee and charging a renewal fee to both the landlord and tenant. Funnily enough, since letting agents were banned from charging fees to tenants, many have decided it might be best to just allow tenancies to continue on a rolling basis rather than renewing them like they’ve always done…

Are you a landlord or a tenant and, if so, do you prefer to renew contracts each year or let them amicably turn into a periodic tenancy? Please get in touch and let me know.

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BUY-TO-LET DEAL OF THE WEEK:3 bed house in Chichester, £275,000, 5.2% yield

Summary

3 bed house in Chichester

Listed for sale on 10/10/22 @ £275,000

Rent = £1,200pcm

Yield = 5.2%

Last sold for £220,000 in 2015 (+25% in 7 years)

The property is on the market with Bell & Blake and full details can be found on Rightmove via the following link: www.rightmove.co.uk/properties/127921706

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Should landlords take a security deposit?

There is nothing to say that a landlord must take a security deposit, but it is always advisable to do so. Most landlords choose to take a security deposit from their tenants to provide some protection against the risk of non-payment of rent and/or damage caused to their property. It is important, however, to understand the rules about taking a security deposit, which have changed in recent years.

Major legislation was first brought in back in 2007, whereby security deposits needed to be protected in one of the approved government schemes. This was introduced amid claims of unscrupulous landlords simply pocketing the security deposit by default at the end of the tenancy, regardless of the tenant’s conduct. These schemes either hold the money (custodial schemes) or insure against its disappearance (insurance schemes). They also act as arbitrators between landlord and tenant if there is any disagreement in regards to the return of the security deposit at the end of the tenancy.

CRJ Lettings is a member of the DPS (Deposit Protection Service) and their custodial scheme. It’s free to use and it means neither the landlord nor the letting agent is holding the tenant’s security deposit; it’s held in a government-backed ring-fenced account throughout the tenancy.

This seems preferable for both landlords and tenants, compared to letting agents who hold the deposit monies in their own bank accounts (via the insurance schemes). There have been too many stories of fraudulent (or just poorly managed) letting agencies dipping into these funds to cover their own cashflow, or even going bust and losing the deposit monies in the process (which the landlord will have to cough up when the time comes to repay the tenant).

Whichever scheme you opt for though, they bring with them additional paperwork and responsibilities, for which it is absolutely critical you get correct. The deposit needs to be properly protected and the paperwork served to the tenants within 30 days of receiving their money. If this is not done, the landlord cannot serve notice upon the tenant if it becomes necessary and can also be held liable for compensation in the amount of three times the deposit!

In 2019, security deposits were capped to a maximum of five week’s rent (in most cases). This rather curious addition to the Tenant Fees Act has meant it is now far more difficult for tenants without a squeaky-clean credit history and good references to be accepted. Previously, such worries could be bypassed by taking a larger-than-normal security deposit, but the government has made this practice illegal. The same goes for tenants with pets; which is why you now regularly see premiums attached to the rental amount for such individuals instead.

Recently, there have been a plethora of ‘zero deposit’ schemes pitched as an alternative to tenants stumping up the deposit themselves. Personally, I’m not a fan of these schemes in their current form. Most landlords prefer to rent to tenants with some ‘skin in the game’ and most (good) tenants prefer to hand over a security deposit, knowing they’ll get it back at the end of the tenancy, rather than paying an upfront or monthly fee that they won’t see again.

A major criticism of security deposits though is the challenge many tenants face in raising a second one whilst their current security deposit is tied up in their present tenancy. The government are talking about introducing a ‘transferable’ deposit, whereby the same security deposit passes from one tenancy to the next (making it easier for tenants to move home). The problem here is that you never truly know if a tenant’s security deposit will be re-paid in full until they have vacated the property, by which time they’ll have already moved home (for which they’ll need the security deposit for). So, it doesn’t seem altogether workable without some form of insurance product involved, which is likely to cost tenants money one way or another.

If you’re a landlord and all of the above sounds like too much trouble, or you’ve not been taking all the necessary steps (or worse, you’re with a letting agent who hasn’t), please feel free to give me a call to instruct me to take this important burden away from you.

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