By Mike White, of Martin & Co lettings agents in Norwich.
As in life generally, the answer is……….it depends!
If the agent is passionate about their business and displays a real commitment to meeting your needs, not theirs, then most likely you’re onto a good one. Make sure you question them about their professional accreditations, their client money bonding arrangements and ask to look at their client charter. Talk to them about what they actually do for their money; anyone seeking to charge you a lot of money should be able to explain very specifically why it’s going to cost you so much.
But why use a lettings agent in the first place – isn’t it easy to do your own advertising and take out references yourself? Why pay a lettings agent so much and for what? Why do you need a lettings agent to draw up the AST Agreement when you can download one from the internet? “At Martin & Co, we hear these questions and more, from landlords. They’re all valid but if you don’t utilise all the resources available to a professional agent, you’ll only be able to do half the job. Why gamble with your hard earned property investment when a good agent has access to very powerful credit referencing tools. So, it seems looking at a prospective tenant’s bank statement or getting an employer’s or bank reference is, sadly, just not enough anymore. Ask the agent which company undertakes their referencing, precisely what it includes and whether that company is willing to back their judgement by underwriting a rent guarantee. These are an extremely useful weapon in the fight to protect your cashflow. Not taking out a rent guarantee could easily cost you over £3000 in lost rent and eviction costs. If the referencing is done properly the rent guarantee ought to be superfluous but what happens if your tenant loses their income or splits with a rent contributing joint tenant? Do you want to be left to pick up the financial pieces?”
OK, so perhaps we can see why an agent might be useful for checking out the prospective tenants and that might save money down the line but the upfront costs are so much; why is that? A good agent will have invested heavily into the infrastructure of their business and be able to offer their clients the best possible method of attracting good quality tenants. Yes, the amount you pay an agent upfront is a lot of money but you will get very good value for it. If you let privately, the odds are stacked against you finding a tenant quicker than an agent – lets say it takes you six weeks to find a tenant, an agent should be able to do it in two/three weeks. At a rent of £600 pcm, that means you’re already up by £400 and because a lettings agent can attract a much wider audience, they will have every opportunity to push up the rent. Using this example, let’s say an extra £25 pcm is secured, that’s another £150 you’re up assuming a six month let. So, before the agent’s fee, you’re up £550. Is the agent going to cost that? Unlikely but even if it does, you’re still in for free in respect of the credit referencing and a bang up to date AST agreement (which should be included in the agent’s fee). Remember, you usually pay nothing until the tenant has been found and checked.
So there it is – letting agents are worth employing; not only will they improve your cashflow over time but they have all the tools to help you protect your investment asset.
*Mike’s on 01603 766860.