Landlord/letting/finders/management fee question/advice.

[Mottie]

With the MIL now full time in a care home, mrs Mottie, her brother and sister are thinking of letting out her home to go towards the costs. The Brother had a letting agent round yesterday to test the water. This is what he got sent.

To confirm, I would suggest a Rental figure of around £1900 - £2000 pcm. As discussed you can advertise for higher but we want to ensure we get plenty of interest as to be able to choose the best quality tenants.

I can also confirm if you decide to take up the management service the fees I quoted are at £666.67 plus vat ( tenant find fee ) which equates to £800 inc vat, with a monthly management fee of 8.3% plus vat ( 10% inc vat ) and to include the rent protection and legal cover. This will be renewed every year.

I have attached the information I gave you in person to this email which explains the Rent Protection and Legal Cover that we include within our management fee if you choose our management service, just for ease. This is included free of charge and not an extra cost.

We do not charge extra for tenancy re-signs, check in, check out, deposit registration, deposit negotiations and the service of notices. We also carry out regular ‘in person’ inspections and never charge extra or commission on top of contractor invoices like many agents do. There are no hidden add ons at all under this package.

We are also ARLA registered Agents with all Directors and our Lettings Manager having the ARLA Qualification which we hope will give you peace of mind that we strive do things properly.

Do those fees seem about right? Any other things to look out for? Don’t really want the hassle of doing it ourselves but don't want to pay over the odds for someone else to do it.

 

[motorbiking]

Nah

You don't want the management fee -they just get expensive trades in who kick back and charge you a fee on top.

What you actually need is : Tenant-find / Let-only service
find a tenant and do a background, reference and credit check.
arrange the viewings
take and secure the deposit on your behalf
maybe draft a AST, but to be honest these are not hard to create.

for a 2k PCM you should be able to get someone to do all that for 8-10% of the contract value (so 12 months rent).

You'll meed an EPC, electric condition report and any gas safe checks - but these are easy enough to find.

The whole re-signing thing is a scam, when your AST ends if you are happy with your tenant you do absolutely nothing and it converts to a rolling tenancy.

 

[Notch7]

Personally I think being either a renter or a landlord is a horrible situation these days.

Clearly in your situation it makes sense just be very very careful

 

[motorbiking]

The other thing to ask is what fees they charge the perspective tenant.

Agents do like a double bubble.

 

[Mottie]

for a 2k PCM you should be able to get someone to do all that for 8-10% of the contract value (so 12 months rent).

But isn’t that what they are saying - 10% inc vat?

find a tenant and do a background, reference and credit check.

How easy is that to do?

maybe draft a AST

What’s an 'AST'?

 

[motorbiking]

But isn’t that what they are saying - 10% inc vat?

I can also confirm if you decide to take up the management service the fees I quoted are at £666.67 plus vat ( tenant find fee ) which equates to £800 inc vat, with a monthly management fee of 8.3% plus vat ( 10% inc vat ) and to include the rent protection and legal cover. This will be renewed every year.

no he's charging you £800 inc vat for a the tenant find fee - this should include everything I said you want. But this is a discounted option on the basis you have the monthly management fee which is an additional 10% of fees per month for the duration of the contract.

So let's assume you get £1,900pm - you should be able to get a tenant find/let only service for 8-10% of the contract value:So £1,824-2,280. for a 12 month contract.

What he is offering is £800 + £190 per month. but then he is going to charge you every time a trades person is called.
So if your tenant stay 3 years you are paying £7,640 in fees.

Rent protection and legal cover = Standard Landlord insurance for around £250 per year

How easy is that to do?
Standard tenant find service should cover:
- find the tenant
- reference checks
- showing the property
- securing the deposit in the deposit scheme

What’s an 'AST'?
Assured shorthold tenancy agreement

here is one you can modify, I take no responsibility for it - let me know when you have downloaded and I will delete

 

[Doug99]

Remember to check who is responsible for cutting the grass

 

[Mottie]

here is one you can modify, I take no responsibility for it - let me know when you have downloaded and I will delete

Downloaded. Thanks.

Just looking for ideas/options at the moment. Mrs Mottie, her sister and brother are going to have a meeting in a week or two to decide what to do. FWIW, Mrs Mottie doesn’t want to do anything for a month or two until she is happy that her mother is settled in the home. The brother seems to be keen to rent/sell and clear all her stuff out and she's only been in the care home for two weeks. Only Mrs Mottie and her sister have the power of attorney for health & finance, not the brother so they have the final say.

Another option is to rent to the council - it’s a 4 bed detached - obviously that will bring in less but would be less hassle too although Mrs Mottie is not keen on that as the council might chuck a problem family in there and she wouldn’t want that to upset the neighbours who she knows and gets on well with. Her reasoning is she wouldn’t like it done to her so she doesn’t want to do that to others. Another option is to sell and invest the money - roughly 5% return on the sale will bring in as much if not more in interest as she would get in rent without the hassle. This a real headache.

 

[motorbiking]

Did you account for property growth, in the return?

It will take a month or so to get everything ready to rent. I would avoid local council housing, they will put problems in and they are professional renters who know how to exploit the landlord.

 

[blup]

Ten per cent seems to be the going rate. One factor is labour say they will bring in a ban on no fault eviction, there would be exceptions but it is something to consider. The advantage of an agent is that they relieve you of the hassle of dealing with issues during the tenancy. Read the small print, you can get hit if you end the arrangement with the agents and “introduce” a tenant yourself or through another agency. Regarding return on investment, you will get capital appreciation of the asset, whereas interest rates are going to drop, its a no brainer to keep property if you've got it imo. Getting a good tenant who will stay and pay is ideal, a good agent helps with this, and managing the tenancy gives them more of an incentive.

 

[gas112]

Most agents around my way load a fair percentage on to tradesmens invoices even asking them to provide two invoices one they show cust and one the agent pays told to many tradesmen that they are nuts for doing that and are leaving themselves wide open to VAT man but your agent is specifically saying they wont ask them a few more questions regards it see how they answer.
Sparky check last 5years but the usual fiddle with that is they will tell you new fuse board is required as it has to be metal , not strictly true .
And gas check specifically ask for service to be done at same time and not just a basic check .
As for councils they promise you will get the house back in same condition you let it .....Dont believe them seen too many shyte holes

 

[Diver Fred]

Join the NRLA!

They have lots of useful information including documents and advice on letting.

Be careful if you use an Agent, as others have commented they can cost you a lot of money for little return.

Before you let you will need the following documentation,
EICR,
Landlords Gas Certificate,
EPC - at least a marking of 'E' but a 'C' will be better.
Insurance.

If you use an agent read very carefully what you are signing up for and for your tenants. An AST does not have an 'End Date' as such unless written into the contract - that is a favourite of Estate Agents. An AST after the initial period can 'Roll=over' into a Periodic Tenancy. If it doesn't then that means the agents you signed unto can claim additional fees every years for resetting the AST, something which is not necessary.
Check for Get-Out clauses in your contract with the agent.

As for the prices quoted - it doesn't seem to bad. If you do go for an Agent you do need to know what they do for setting up the Tenancy, how often they visit and they do report to you on the results of the visit (3-4 times per year).

 

[diy_fun_uk]

The only time I'd advise LLs to go down the fully managed route is if, for whatever reason, they can't or don't want to have anything whatsoever to do with the rental property or the tenant.

What you come to realise, as has been touched on above, is fully managed is usually poor value for money. Take just one month, if that month comes and goes with nothing out of the ordinary happening (which is what you hope for) what have you paid the letting agent for? In reality, nowt.

 

[gas112]

amazing how many tenants think their landlord is a greedy **** by putting rents up each year but in reality it is the agents pressurising the landlords so their overall take from all the houses they manage goes up . Some do it without even informing landlords , i have got a few mates when they noticed extra in account tell them to get the rent back down and refund the tenant the money as they are happy with what they are getting

 

[matlob]

I rent several properties and would never use anyone to find a tenant or manage the property.

Take a look at openrent. I use them to advertise the property and set up the contract. For about £60 it's all done for you and you can also do credit checks through the site. Once you have approved a tenant it's all done online and they have to supply references, salary proof etc through openrent and pay thier fist payment via the site.

You would just need to register the deposit online which is really easy.

Meet the tenant yourself, credit check and use your gut. For a 2k rental they are going to need 4k upfront so that should show that it is affordable.

A management company doesn't care who they get in as long as they are paid. In my experience you are paying them to collect money and forward it onto you. If there is something wrong at the property they just call a plumber/spark which you can easily do yourself.