With rents at a record high and a recent report by The Association of Rental Letting Agents showing that 75% of agents had more prospective tenants on their books than property available, it’s definitely a good time to be a landlord.
Landlords who want to increase their rental yields further should ask themselves whether they really need a letting agent. By opting to let the property yourself, you can save the letting fee - typically 12% to 15% of the annual rent. With average rents in the UK recently hitting £700PCM, that’s a whopping £1,000+ a year in fees!
As well as saving the agency fee, by opting to let the property yourself, you have more leeway in negotiating the rental figure. This can make the property a much more attractive proposition for would-be tenants.
Here we list some of the main elements of the letting process. If you think you have the time to manage these things yourself, maybe it’s time to ditch the agent.
Advertising for tenants
OK, so you won’t have access to the estate agent’s website – but that doesn’t mean you can’t advertise online or that you’ll find it difficult to market your property. Many tenants prefer to deal with individuals anyway rather than a faceless agency – so make sure you say you’re a private landlord in your ad – it may well increase interest in the property.
In the past, landlords have tended to use agents to let their property because agencies have access to those websites that generate the most traffic among those looking to rent. However, with tenants in some areas clamouring for a place to rent, it’s worth thinking about advertising on free sites like vivastreet, tepilo and loot.
Alternatively for a small premium – typically £40 - there are companies like Landlord Direct which will place your property on the larger property portals like rightmove, ensuring maximum online visibility of your property.
Credit checks and references
Credit checking prospective tenants is crucial. While you’ll have to pay a fee (around £15) to the checking agency, there’s no reason why you can’t organise this yourself instead of paying an agent to do it. At Discount Letting, there’s a current offer for a free check if you open an account. These checks should come with a comprehensive report on the tenant with details of County Court Judgements, undisclosed addresses or aliases and credit scores.
The tenancy agreement
While it is possible to let the property by an oral agreement alone, it is advisable to enter into a formal contract or tenancy agreement with new tenants. For run of the mill residential lettings this will normally be an Assured Shorthold Tenancy (AST) and standard AST forms are available from law stationers like Oyez and are straightforward to complete.
Letting agents can charge up to £250 for the execution of the tenancy agreements so this is a definite potential saving. While the AST will contain lots of standard clauses you should ensure that you are happy that it accurately reflects your wishes regarding major aspects of the tenancy like length of agreement, the rent payable and what is and what isn’t allowed to be kept on the property.
Check-in and inventory
It’s critical that at the beginning of the tenancy the condition of the property is accurately recorded. You can employ a check-in company to do this – there’s a helpful list at the Landlordzone or you can do it yourself. If you do it yourself it’s important to be as thorough as possible – listing the condition of each room separately and noting down the state of walls, furniture and carpets. Disputes can then be much more easily resolved.
Deposit scheme
Most landlords will take a security deposit from tenants – typically 4 to 6 weeks rent. For ASTs landlords are now obliged to join the government backed Tenancy Deposit Scheme. This means, as landlord, you must nominate an authorised company with which to deposit the deposit and lodge the money within 14 days of the beginning of the tenancy. For the duration of the tenancy the deposit remains with the scheme. All of the recognised schemes are accessible to private landlords.
Legal checks
As a landlord there are a number of legal requirements and checks that you must carry out. While the list may sound onerous, it’s not that difficult to arrange these yourself. Checks include obtaining a gas safety certificate, an energy performance certificate, ensuring furniture complies with fire safety regulations and that electrical appliances on the property are safe.
After the let, what about management?
Once the property has been let, there’s the question of who deals with ongoing issues like maintenance and repairs, rent arrears and other potential breaches of the tenancy agreement.
Many landlords will opt to use an agency to deal with these problems but you should always consider managing the property yourself - there are now incredibly useful and comprehensive online resources to help you with this like Landlord Property Investment. If you take out landlords emergency insurance, you will be covered for emergency repairs, boiler breakdowns and locksmiths (typically £300 to £500 per claim). Best of all, it costs just a few pounds a year and the tenant can liaise directly with the insurer - you don’t even need to get involved. Find out more.
More: Insurance for landlords | Choosing the right tenant | Economics of being a landlord