1. Should landlords/letting agents be included in the Estate agents act?
Maybe the question should be what do estate agents and letting agents have in common. There is now so much legislation covering the private residential letting sector that one wonders could there be a simpler way forward.
Surely the letting agents role is more like that of a solicitor, producing legal documents, collecting and holding clients monies so would it not make sense that letting agents are regulated and operate under similar terms to solicitors.
Whilst both estate agents and letting agents market properties for their client for sale and rent, the estate agent passes the sale over to solicitors to handle the legal and financial aspects. Should this happen in the letting industry? Should you have agents who specialise in the tenant find but once the offer is accepted, the legal and financial aspects are handled by a company or department that is regulated in the same way as solicitors? Solicitors are heavily regulated, and any solicitor found to have mishandled client funds can be struck off and no longer practice. Why is it that rental income is felt not to have the same value as monies that pass through the hands of a solicitor. Surely all clients monies should be protected in the same manner. People sell their homes with absolute confidence that the financial aspects will be dealt with properly by their solicitor, and if not they have a very clear route for redress. Why is this not the same in lettings?
Private landlords should have to operate under the same terms as I believe letting agents should, particularly in the case of deposits as they are also handling other peoples money.
It would appear to me on reflection that whilst the initial finding of a tenant is very similar to finding a buyer, the agent’s roles from that point on are totally different. Letting agents should be regulated like solicitors as this would protect their clients and improve the reputation of the industry.
There is currently very little value placed on the work of letting agents and property management companies. Public perception of this industry is not high and regulation is imperative if the industry is to prosper. Being included in the Estate Agents Act is unlikely to bring that about.
2. What are your thoughts on the fact that renting costs have risen 37% in the last 5 years?
This is all about supply and demand and rents go down as well as up. The past five years have been a lot stronger for the rental market as people have been unable or unwilling to buy properties. We all know there is a shortfall of property in the UK which is not being addressed. Rental properties in the private sector are investments for the owners and they are looking to get the best returns they can, so when there is a shortage of supply prices go up.
Five years ago we were negotiating cuts in rent at renewal as there was an increase of supply over demand.
After 25 years in the rental market, I have learnt that it is a volatile market totally controlled by supply and demand. The minute mortgages become easier to access and people feel confident to purchase the market will stabilise and may even fall slightly.
3. What should tenants look for in a good landlord?
First and foremost, a tenant should look at a property paying particular attention to how well maintained it is. A poorly kept property is a big sign that the landlord might not be someone who is going to look after their tenant. Taking a close look at the decor of the property as well helps. Has it been professionally painted? If it is a DIY landlord, unless qualified, then there are going to be botched jobs throughout the property. Also, look at how up to date the property is as the overall condition can tell a tenant a lot about a landlord that they could potentially be dealing with.
Once a property has been found that a tenant would like to rent it is a good idea to speak to previous tenants if at all possible to gather some testimonials as to what the landlord is like. Finally, I would also recommend that tenants consider what agent the property is on the market with. Are they a reputable agent within the local area? This is also an effective gauge as to whether or not a landlord is a good one.
4. How can landlords minimise the risk of deposit disputes with tenants?
Landlords can minimise the risk by being professional from the start. Any landlord should be confident that they have all the correct paperwork in place, including a professionally compiled inventory and a full independent check in. Throughout the tenancy any refurbishment or replacement works carried out during the tenancy period should be noted so that at the end of the tenancy this is all available to be considered at the check out. This should also be carried out by an independent inventory clerk. It is also a good idea to do regular property visits to ensure that the property is being well maintained.
Before a tenancy comes to an end agents/landlords should discuss with the tenant what needs to be done to ensure the property is handed back in the best condition. If professionally cleaned before they move in the tenant will need to arrange for the property to be professionally cleaned when they move out. The agent/landlord can assist the tenant with sourcing a cleaner and any other contractors they may need to ensure the property is in order at check out. This also helps protect the deposit for the tenant.
One important point that many landlords don’t appreciate is that they are not entitled to betterment. A deposit is not insurance and you will not get new for old. For example, if the carpet in the property is 8 years old and the tenant damages it and it needs replacing, despite the condition the Landlord will only be entitled to the residual value of the life in the carpet, so if it is a medium priced carpet it might be considered to have a lift of 10 years therefore the tenant can only be asked to contribute 20% towards its replacement. Many landlords do not appreciate that this is the case, and this can cause a lot of resentment by all parties at the end of the tenancy.
5. What advice would you give someone who is thinking of becoming a landlord?
I would always advise them to look at every other possible way to invest their money and work out what returns they are going to get for each. The key to becoming a successful landlord is doing your homework first. Anyone thinking of becoming a landlord really does need to understand what they need from their money as it is a business at the end of the day and things like void periods need to be taken into consideration. New landlords have to remember that if they don’t like the responsibility of this new business venture then it is going to cost money to get out of it and sell the property.
So my advice to landlords is; make sure you factor in agent fees as well as the cost of stamp duty when you purchase the property. Really look at costs carefully before entering into such a commitment.
If when you look at all the costs and you think you will get a reasonable return then go ahead, but remember to be realistic.
In addition, be sure to get advice from family or friends that are already landlords themselves. Sit down and ask them what they think the pitfalls are.
Finally, don’t forget that agents will want you to buy the property. Be sceptical and take someone you trust along with you when looking at possible properties. Unintentionally, agents may be over enthusiastic about the returns you are likely to achieve, and a 10% difference in the rent you achieve could be the difference between success and failure so keep this in mind.
Also remember being a hands on self managing landlord is the same as managing your own portfolio of shares. Most of us don’t have the ability or knowledge so we use the services of professionals if we are sensible. Managing a property is a 24 hour business. Are you sure you won’t mind when your tenant rings you at 2am to tell you they have water pouring through there ceiling!
