How much are Chichester’s landlords spending on property maintenance?

As another tax year recently came to a close, annual account statements were sent out to all of my landlords who use my fully managed service. It’s something I include (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made i.e. CRJ Lettings’ management fees and any maintenance costs. It’s similar to what they receive each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important when the deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,228pcm, which means the bulk of my managed properties are slightly cheaper than the current average rental property available in Chichester (which costs £1,300pcm). More telling is the fact my landlords have received all of the rent due to them. Each year I question whether I will repeat this achievement, such is the economic landscape and frequent tales in the press of non-paying tenants. 

What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 8.5% for an award-winning full management service. One landlord is paying just 5.8% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.

What is also interesting to see is that my landlords are spending an average of just £361 a year on property maintenance, which is only 2.5% of the total rent they receive. Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so it seems my landlords are doing far better than this. 

I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, but also because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer reasonable value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission on such works. I’ll also typically run through a few simple steps with tenants when issues do occur, in case we can resolve them without the need for paid help.

Landlords; let me know how much you’re spending on maintenance and where you’re spending it (boiler repairs and faulty toilet flushes made up a good chunk of our maintenance spend this year!). And if you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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How useful is calculating ‘£ per square foot’?

 

I am currently helping a landlord find a suitable rental property to add to his portfolio. I suggested an array of two-bedroom houses in Tangmere, which, amongst other things, I highlighted as offering excellent value when considering their ‘£ per square foot’. The landlord was a little baffled as to what this was and why it was important. 

I explained that £ per square foot is one of the metrics I always use when analysing a potential property purchase (property price divided by total square footage of the property) as it gives an idea of the value for money you are getting.

Obviously, you have to consider the quality of the ‘square foot’ you are calculating i.e. an immaculate property in the best part of town will rightly cost more on a square foot basis than a rundown shack in a less desirable area.

When comparing similar homes in the same neighbourhood though, it can be a good gauge as to how much you should be paying for a particular property. Most estate agents will just talk about the number of bedrooms as an indicator of size, but this is an unfair comparison when a large bedroom has been split in two or a living room has been redesignated as a ‘bedroom’.

It can also become a powerful negotiation tool. Being armed with the knowledge of comparable properties is one thing, but the £ per square foot metric brings a level of objectivity to negotiations (although it does ignore garden size). 

Back to the search at hand…

There are currently four traditional ‘two-up two-down’ houses in Tangmere, all with a garage and within 500 yards of one another. They are priced at £249,500, £259,950, £270,000 and £300,000.

Based on that, it seems pretty obvious which one to plump for right? This is where my trusty £ per square foot calculation comes in handy.

The ‘cheapest’ of the two-bed houses would be a decent buy at £249,500; and with a footprint of 605 square feet means it would cost £412 per square foot.

Spending £10,450 more will get you an additional 50 square feet, bringing the overall cost down to £397 per square foot.

The £270,000 option is the smallest of them all (at 588 square feet). That equates to £459 per square foot, placing it bottom of the pack when considering ‘bricks for your buck’.

The most expensive of the four (priced at £300,000) is also the biggest thanks to the addition of a 90 square foot conservatory. Whilst conservatory space is normally less ‘valuable’ than original house space (traditional conservatories are cheaper to add on than bricks and mortar), this one warrants using its total 745 square feet when calculating a cost of £403 per square foot.

The eagle-eyed amongst you will note the most expensive house is NOT the outright cheapest when it comes to £ per square foot (going against the narrative I was surely spinning). But, when you factor in each property’s condition and the works required to bring all four houses up to an immaculate standard, you soon realise it does in fact warrant the (small) extra expense when using this metric. 

Furthermore, this is where I believe those who are ‘in the know’ could use the traditional headline figures to work for them. Give it a little time and, having been overlooked as ‘expensive’, I suspect a price reduction is likely before it eventually sells. 

Also, do you think it will be easier to negotiate the price of the already ‘cheap’ two-bed houses downwards, or do you think it will be easier to state the fact that, at £300,000, this one seems pretty pricey considering you can get a similar two-bed house round the corner (albeit in need of some work) for £50,000 less? 

By using this knowledge to your advantage, I think you could end up bagging a bit of a bargain by getting the best of the comparable properties on offer for a better price; ultimately meaning that it would become the cheapest on a ‘£ per square foot’ basis.

If you are thinking of buying a rental property and would like me to crunch the numbers on it to ensure you are maximising your investment, please get in touch.

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Landlords - what you should check before arranging a viewing

Demand for rental property is at record highs, with literally dozens of prospective tenants wanting to view and snap up a property within hours of it being marketed. A recent house I listed had over 50 enquiries within 48 hours; but clearly it can only be let once! Processes therefore need to be put in place to avoid wasting the time of both yourself and some of the interested tenants who either won’t be suitable for the property or will find that the property is not suitable for them.

The first port of call is to understand who will be living at the property, as there may be restrictions on the property’s usage from both a legal and/or practical perspective. For example, I recently had two couples and a friend wanting to share a three-bedroom house. Housing five adults would mean more wear and tear on the property than many of the other potential applicants but, even more importantly, it would mean the landlord having to apply for an HMO license from the council (at a cost of £1,422!). Conversely, I had two friends wanting to rent a two-bedroom apartment; not a problem I said, but are you happy with the second bedroom only being a single? They weren’t, and thus checking this saved me and them the bother of viewing a flat that wasn’t appropriate for their needs.

You should also speak to the tenants about their financial situation; doing so now will save conducting a viewing with tenants who might fall in love with a property, only to find they can’t pass the referencing. You should ask whether they have any credit issues that might affect their application, along with understanding their income to ensure it passes the affordability criteria set out by referencing agents (typically requiring an annual household income of 30 times the monthly rent). If an issue is identified, you could consider whether an alternative solution can be found, such as having a guarantor or for them to pay rent upfront.

Finally, understanding the tenants’ situation is often useful. If the property is vacant and therefore available to rent immediately, it is beneficial to find tenants who can move in as promptly as possible. On the other hand, if the property is not ready to move into for a couple of months, then it’s little good showing it to someone who needs to move within a fortnight! You may also discover that the prospective tenants are only looking to rent for a short period of time, which may not fit with your preference for a long-term tenancy.

All being well, I then send the prospective tenants a video walkthrough of the property, which is recorded from a first-person perspective as if they were viewing the property (including commentary). This shows far more than a description, photographs and floorplan can do alone, and helps to ensure the property is suitable for them. This has greatly cut down the number of viewings whereby the prospective tenants weren’t already chomping at the bit to take the property (saving everyone’s time).

This all means by the time I’m viewing a property with potential tenants it is highly likely that they will want the property (assuming it matches the video) and that I will want to, and be able to (from a referencing point-of-view) rent it to them.

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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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How much are Chichester’s landlords spending on property maintenance?

As another tax year recently came to a close, annual account statements were sent out to all of my landlords who use my fully managed service. It’s something I include (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made i.e. CRJ Lettings’ management fees and any maintenance costs. It’s similar to what they receive each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important when the deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,140pcm, which means the bulk of my managed properties are cheaper than the current average rental property available in Chichester (which costs £1,395pcm). More telling is the fact my landlords have received all of the rent due to them. Each year I question whether I will repeat this achievement, such is the economic landscape and frequent tales in the press of non-paying tenants. 

What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 8.7% for an award-winning full management service. One landlord is paying just 5.6% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.

What is also interesting to see is that my landlords are spending an average of just £414 a year on property maintenance, which is only 3% of the total rent they receive. Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so it seems my landlords are doing far better than this. 

I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, but also because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer reasonable value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission on such works. I’ll also typically run through a few simple steps with tenants when issues do occur, in case we can resolve them without the need for paid help.

Landlords; let me know how much you’re spending on maintenance and where you’re spending it (boiler repairs made up a good chunk of our maintenance spend this year!). And if you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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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

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

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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 and be available on their website - 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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This article was featured in...

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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

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

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How to move tenants out

There are a variety of things that should be carried out when a tenant vacates their rental property in addition to the obvious - getting the keys back! Unlike when starting a tenancy there aren’t many legal requirements at this final stage of the tenancy, but there are a few things that should be done to help ensure it’s a smooth process. 

Just like at the move-in, here at CRJ Lettings we use a checklist to ensure nothing gets forgotten. Final meter readings and a forwarding address for the departing tenants are taken, meaning the utility providers can receive the correct details so as to send the tenants their final bills. This should stop any debate over who owes what, as the date and meter readings will be documented for both parties (a copy of the checklist is both retained and provided to the tenants).

It’s then time to receive back the keys and check over the condition of the property. This is when it becomes so important to have had a thorough inventory (with photos) in place at the start of the tenancy. Most people’s memory simply isn’t good enough to remember every imperfection that existed (sometimes years before)! It also ensures the process is fair to the tenants; providing proof of any discrepancies, whilst ensuring they aren’t made responsible for something that wasn’t their doing.

My top tip for landlords would be to visit the property a few days before the move-out date to undertake a ‘pre-check’ with the tenants. This basically means inspecting the property and telling the tenants anything that might be an issue in regards to the full return of their security deposit.

This then gives the tenants an opportunity to remedy any issues prior to the actual move-out appointment. Assuming they take this advice on board, it’s good for me as I’ll be able to re-let the property promptly without having to arrange repairs. Moreover, it’s good for the tenants as they won’t have monies unnecessarily deducted from their security deposit (and if they don’t remedy the issues highlighted to them, they can’t say they weren’t warned or given the opportunity to make things right).

If there are any issues that remain when the tenants move-out (subject to fair wear and tear) this should be pointed out to them, noted and discussed in regards to the best way of resolving matters. This is why I recommend tenants are present when checking the property; so that any issues can be raised immediately and the course of action mutually agreed.

This process (including the ‘pre-check’) should ensure the tenants are aware of their responsibilities, are able to return the property in the required condition to receive most, if not all, of their security deposit back and it should minimise any void periods caused by having to put things right.

If you’d like a free copy of my ‘move-out checklist’ please contact me and I’ll be happy to send it to you via e-mail.  

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How to move tenants in

As a landlord and letting agent it is crucial to have processes in place to ensure you not only provide a consistently good service, but that all the legal stuff is taken care of. The move-in process I created can be a pretty mundane hour or so of paperwork checking, contract signing and multiple page initialling! But, it’s crucially important that all the i’s are dotted and the t’s are crossed to ensure the tenancy gets off to the right start. Done properly, it will also mean a tenant is fully-equipped to enjoy their new home, whilst keeping it in good order for the landlord.

Here at CRJ Lettings we use a ‘move-in checklist’ to ensure nothing is missed; starting with the paperwork. The tenants sign the tenancy agreement (sent to them in advance so they can read it first), along with the security deposit certificate and prescribed information forms.

The tenants are then shown where the water stop tap, gas safety valve, fuse box and mains isolator switches are and what to do in case of an emergency. Showing tenants these is both crucial for their safety, as well as helping to minimise any damage to the property (for instance, in the case of a water leak). Meter readings are taken too and the tenants are shown any communal areas of the property, along with how the heating system and kitchen appliances work.

Just in case the tenants forget any of this important information though, they are provided with a house manual (prepared for our fully managed properties). This lists the location and operation of all the above, as well as setting out other general tips about good home management, along with all the contact details they’ll need throughout the tenancy. It also contains the property’s safety certificates and EPC, as well as the governments ‘How to Rent’ guide, as legally required (all of which are e-mailed to the tenants prior to the commencement of the tenancy).

The last bit of paperwork to go through is the inventory, which outlines the condition of the property and forms the basis of how it should be returned at the end of their tenancy. Fortunately, the tenants are given seven days to look through this beast of a document (typically 50+ pages) to report any errors or omissions.

Finally, the keys are distributed to the tenants and any other questions can be answered. It’s also a good opportunity to explain when they’ll next be contacted in regards to the receipt of rent and future check-ups.

The completed ‘move-in checklist’ also provides proof that all the legal requirements have been completed (including showing the tenants a working smoke alarm on each floor of the property and a carbon monoxide alarm, if required).

A thorough move-in process creates a good start to the relationship and helps to ensure the landlord is legally compliant, whilst the tenants are aware of everything they need to know about the property and tenancy. 

If you’d like a free copy of my ‘move-in checklist’ please contact me and I’ll be happy to send it to you via e-mail.

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Landlords: is it time to increase the rent?

I should stress that I don’t see it as ‘the norm’ to increase the rent as a matter of course. I particularly dislike tenancy agreements that have onerous automatic rent increase clauses built into them. In fact, I would far rather reward a tenant by not increasing the rent (assuming they have paid on time each month and looked after the property), thus retaining them for a longer period.

Unfortunately, an increase in legislation and the negative impact from changes in taxation towards landlords has altered my view on this in recent years. Adding to that are the significant interest rate increases over the past year (some landlords have seen their buy-to-let mortgage payments triple!) alongside the fact that rents on new tenancies are soaring; all of which makes it hard to justify not increasing the rent at the moment. There are, however, rules about how this is done, as well as the need for compassion to navigate what is a sensitive subject.

The rent cannot be increased on tenancies that are still within their ‘fixed-term’ period (normally 6 or 12 months) without the tenant’s agreement. For those that fall outside this, the rent can be increased by the landlord by using a ‘Section 13’ document with at least one month’s notice (although I typically give 6-8 weeks’ notice to ease the process). The rent cannot then be increased for at least another year (unless the tenant specifically agrees to it).

A rent review will assess what the market rate is for the property by analysing what is currently on the market (just like you would when you initially let a property). You may also consider the tenant’s conduct throughout the tenancy, their payment record and affordability. Showing comparable properties to tenants can soften the blow of a rent increase if they are unaware of the going rate, especially when rents have increased quite a lot. Any increase should be ‘fair and realistic’ and ideally made in agreement with the tenant, otherwise they can refuse the increase and ask a tribunal to set the rental figure.

Tenants should be aware though that these rent tribunals can set the rent at a higher amount than the landlord had originally requested! This is why tenants also need to be realistic when subjected to a rent increase if it is in line (or better than) the market rate for the property. In one such case in May of this year, a landlord had asked to up the rent of their property in Surrey from £1,260pcm to £1,300pcm. The tenant disputed this and took it to the rent tribunal…who set the rent at £1,540pcm!

I typically recommend meeting tenants half-way in regards to the amount of any rent increase i.e. keeping it below market value so they have an incentive to stay in the home they have looked after and paid rent for throughout their tenancy. Ultimately though, this is the landlord’s decision; some will never increase rents (thus not ‘rocking the boat’ so tenants stay longer; aware of the re-let costs and possible need for refurbishment if the current tenant were to leave), some want the maximum rent at all times (likely seeing a higher turnover of tenants / risk of affordability issues or resentment from tenants arising), whilst others take the middle ground. 

The average rent in Chichester is currently £1,300pcm, which is an increase of 8.3% compared to the £1,200pcm average figure from one year ago. This is slightly below the average increase seen across the UK, which has been 10.4% in the last 12 months (with UK rents averaging £1,229pcm overall / £1,027pcm excluding London).

Despite quickly rising prices, rental homes are continuing to let at speed and many landlords are still being met with long queues of prospective tenants wanting to view and rent their property. As market rents have increased greatly, many landlords are taking the opportunity to offset some of the financial impact from increasing legislation, taxation and interest rates by passing on rent increases to current tenants. The sad reality for these tenants is that if they don’t want to pay the increase there are a number of prospective tenants chomping at the bit to move in (who will perhaps pay even more for the property!). 

If you’re a landlord and would like a ‘rent review’ for one of your properties, or if you’re a tenant facing a rent increase and would like an impartial opinion on its validity, please get in touch and I’ll be happy to provide assistance.

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Landlords - what you should check before arranging a viewing

Demand for rental property is at record highs, with literally dozens of prospective tenants wanting to view and snap up a property within hours of it being marketed. A recent house I listed had over 50 enquiries within 48 hours; but clearly it can only be let once! Processes therefore need to be put in place to avoid wasting the time of both yourself and some of the interested tenants who either won’t be suitable for the property or will find that the property is not suitable for them.

The first port of call is to understand who will be living at the property, as there may be restrictions on the property’s usage from both a legal and/or practical perspective. For example, I recently had two couples and a friend wanting to share a three-bedroom house. Housing five adults would mean more wear and tear on the property than many of the other potential applicants but, even more importantly, it would mean the landlord having to apply for an HMO license from the council (at a cost of £1,333!). Conversely, I had two friends wanting to rent a two-bedroom apartment; not a problem I said, but are you happy with the second bedroom only being a single? They weren’t, and thus checking this saved me and them the bother of viewing a flat that wasn’t appropriate for their needs.

You should also speak to the tenants about their financial situation; doing so now will save conducting a viewing with tenants who might fall in love with a property, only to find they can’t pass the referencing. You should ask whether they have any credit issues that might affect their application, along with understanding their income to ensure it passes the affordability criteria set out by referencing agents (typically requiring an annual household income of 30 times the monthly rent). If an issue is identified, you could consider whether an alternative solution can be found, such as having a guarantor or for them to pay rent upfront.

Finally, understanding the tenants’ situation is often useful. If the property is vacant and therefore available to rent immediately, it is beneficial to find tenants who can move in as promptly as possible. On the other hand, if the property is not ready to move into for a couple of months, then it’s little good showing it to someone who needs to move within a fortnight! You may also discover that the prospective tenants are only looking to rent for a short period of time, which may not fit with your preference for a long-term tenancy.

All being well, I then send the prospective tenants a video walkthrough of the property, which is recorded from a first-person perspective as if they were viewing the property (including commentary). This shows far more than a description, photographs and floorplan can do alone, and helps to ensure the property is suitable for them. This has greatly cut down the number of viewings whereby the prospective tenants weren’t already chomping at the bit to take the property (saving everyone’s time).

This all means by the time I’m viewing a property with potential tenants it is highly likely that they will want the property (assuming it matches the video) and that I will want to, and be able to (from a referencing point-of-view) rent it to them.

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How much are Chichester’s landlords spending on property maintenance?

As another tax year recently came to a close, annual account statements were sent out to all of my landlords who use my fully managed service. It’s something I include (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made i.e. CRJ Lettings’ management fees and any maintenance costs. It’s similar to what they receive each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important when the deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,175pcm, which means the bulk of my managed properties are cheaper than the current average rental property available in Chichester (which costs £1,295pcm). More telling is the fact my landlords have received all of the rent due to them. Each year I question whether I will repeat this achievement, such is the economic landscape and frequent tales in the press of non-paying tenants.                                                                                                                                            What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 8.9% for an award-winning full management service. One landlord is paying just 5.4% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.

What is also interesting to see is that my landlords are spending an average of just £470 a year on property maintenance, which is only 3.5% of the total rent they receive. Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so it seems my landlords are doing far better than this. 

I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, but also because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer reasonable value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission on such works. I’ll also typically run through a few simple steps with tenants when issues do occur, in case we can resolve them without the need for paid help.

Landlords; let me know how much you’re spending on maintenance and where you’re spending it (several replacement boilers made up a good chunk of our maintenance spend this year!). And if you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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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

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

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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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This article was featured in...

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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

^{_{c/o CRJ Lettings, 30B Southgate, Chichester, West Sussex, PO19 1DP}}

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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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