Options that influence your daily life and profit margins

When renting out a property, many landlords find themselves at a crossroads: Should they go alone as a private landlord or enlist the services of a letting agent? This decision should not be taken lightly, as it can significantly influence your daily life and profit margins.

PRIVATE LANDLORD

As a private landlord, you control every facet of your rental property. This means having the final say on everything from tenant selection to rent pricing. However, this level of control comes with its own set of challenges. Being a private landlord means being available around the clock. You are the go-to person for any emergencies, repairs or tenant disputes that may arise.

LETTING AGENT

On the flip side, letting agents offer a hands-off approach to property management. They handle the lion’s share of landlord responsibilities, freeing up your time for other pursuits. They’ll care for finding and vetting tenants, addressing maintenance issues and collecting rent. However, this convenience comes at a monetary cost.

PERSONAL CIRCUMSTANCES DICTATE YOUR CHOICE

Ultimately, the right choice depends on your personal circumstances. Both options have pros and cons, and what works best for one landlord might not suit another.

To help you make an informed decision, we delve into the roles and responsibilities of private landlords and letting agents. We also hear from landlords currently managing their properties, either independently or through agencies, to gain insight into the advantages and disadvantages of each path.

LET’S CLARIFY SOME TERMINOLOGY

Before we dive in, let’s clarify some terminology. Who is a private landlord? In essence, a private landlord is an individual who handles property letting on their own, without the aid of a letting agent from property management firm.

Private landlords can be divided into two types: professional and accidental. Professional landlords typically manage a collection of properties and consider the rental process a business operation. On the other hand, accidental landlords become landlords due to unforeseen circumstances, such as inheriting property or relocating, leading to a more casual approach to managing their rentals.

UNDERSTANDING THE ROLE OF LETTING AGENTS

What is the role of a letting agent? Letting agents are employed to oversee properties on behalf of private landlords. These landlords pay them to ensure all legal responsibilities towards tenants are satisfied. As such, letting agents are contractually bound to prioritise landlords’ interests.

A good letting agent can significantly ease the burden on private landlords by taking over tasks like rent collection and property inspection, ensuring everything runs smoothly.

WHICH ROUTE TO CHOOSE?

Choosing between being a private landlord and hiring a letting agent depends on several factors. Being a private landlord can be rewarding if t ime, familiarity with property laws and direct tenant interaction are not issues. However, hiring a letting agent might be the best action if these aspects seem daunting.

THE ROLE OF A PRIVATE LANDLORD

Regardless of the type of tenancy, private landlords have several legal obligations when renting out their properties.

PROMOTING THE RENTAL PROPERTY

The landlord’s tasks begin with marketing the property. This involves advertising the rental property and arranging viewings for potential tenants.

VETTING POTENTIAL TENANTS

Next up, it’s the private landlord’s duty to find and reference tenants. This process may include background and financial checks and character references from previous landlords or current employers. Additionally, in England or Wales, landlords must verify the right to rent and the immigration status of tenants – and those over 18 living with them – by obtaining copies of passports or other accepted official documents. Failure to do so can lead to criminal charges.

SETTING THE RENT

Landlords are also responsible for determining the rental price, payment frequency and whether service charges are included within it. They oversee rental increases and follow up if the rent isn’t paid on time.

CRAFTING LEGALLY COMPLIANT TENANCY AGREEMENTS

If there is a tenancy agreement in place, it must be fair and legally compliant. It’s recommended that landlords provide tenants with a copy of this agreement before move-in.

SAFEGUARDING TENANT DEPOSITS

For assured shorthold tenancies, landlords must place a tenant’s deposit in a government-approved tenancy deposit protection scheme within 30 days of receipt. Non-compliance could result in substantial fines.

PROVIDING ESSENTIAL TENANT INFORMATION

Private landlords are legally Private landlords are legally obligated to provide tenants with certain information at the start of a tenancy, including their full name, address, contact details, a copy of the property’s Energy Performance Certificate, Gas Safety Certificate and, if applicable, a copy of the government’s How to Rent guide.

PROTECTING TENANTS’ PERSONAL DATA AND ENSURING HEALTH AND SAFETY

Since landlords handle tenants’ personal data, they must comply with the General Data Protection Regulation (GDPR). They should provide potential and new tenants with a privacy notice outlining how their information will be used.

Regarding health and safety, tenants have the right to live in well-maintained and safe properties. Landlords are required by law to ensure their properties meet certain standards.

FACILITATING REPAIRS AND MAINTENANCE

Landlords are responsible for the general upkeep of their rental property and arranging any structural repairs. Regular property inspections, timely updates and prompt resolution of tenant issues are crucial to maintaining tenant satisfaction.

FOLLOWING LEGAL PROCEDURES FOR EVICTIONS

Lastly, landlords must adhere to strict legal procedures when evicting tenants to avoid accusations of illegal eviction – a criminal offence. In most cases, landlords must obtain a court order and provide tenants with a Section 21 notice before proceeding with eviction as outlined in the tenancy agreement.

THE ROLE OF LETTING AGENTS

Letting agents are professionals who bridge the gap between landlords and tenants, facilitating the rental of a residential property. They provide various services, varying from simple tenant-finding to comprehensive property management. It’s crucial to ascertain that your chosen letting agent is a member of a professional organisation like Property Mark, the Association of Residential Letting Agents (ARLA) or the UK Association of Letting Agents (UKALA).

These affiliations ensure adherence to specific rules and regulations, providing more protection for landlords. Remember, legal liability in the landlord-letting agency relationship always rests with the landlord, even if the mistake lies with the letting agent.

LEVELS OF SERVICE OFFERED BY LETTING AGENTS

Typically, letting agents offer two or three tiers of service:

LET-ONLY SERVICES

In a let-only agreement, the letting agent handles the marketing of the property, advises on setting rent levels, collects deposits, finds tenants, conducts reference and credit checks, drafts tenancy agreements and oversees inventories. However, once the tenancy commences, the landlord is responsible for the property’s day-to-day management and the ongoing relationship with the tenant.

RENT COLLECTION SERVICES

Under a rent-collection service, letting agents not only find tenants but also collect rent from them – even chasing up any late payments – each month. But, all other aspects of the rental relationship fall under the landlord’s purview.

FULL MANAGEMENT SERVICES

As the name suggests, a full management service means the letting agent takes care of all aspects of the rental property. This includes everything from marketing and finding tenants to collecting deposits, creating a tenancy agreement, conducting inventories, moving tenants in, collecting rent, chasing late payments, performing property inspections, arranging maintenance, and handling tenancy requests, rent increases, tenancy renewals and contracts ending.

Don’t forget, our professional friendly advisors are on hand to support you and can help you explore all of your options.