As a new landlord - bypass letting agent?

solidpro

Hi All

I'm about to become a landlord for the first time - of a 2 bedroom flat. I have run a successful Ltd. company for 10 years though, so I have some good experience in managing book keeping, staff and payroll, accounts and billing (including direct debits).

I am also an IT engineer who often has to get his hands dirty and have a reasonable understanding of basic electrical repairs, best practice and some other experience of owning property for 15 years (when it comes to some basic plumbing, troubleshooting and so on).

Ultimately we are now running a property company and I have the time to invest in managing our lettings - and keeping that important 8% monthly fee for ourselves, however I wonder if it's a shrewd investment in the initial tenancy - to use an agent for the first tenancy term, because the 8% fee will get us some assisted experience, hopefully a good tenancy agreement to use as a starting point, some free advertising and perhaps some contacts in the area as far as repairs, or is money down the drain and whilst a new experience, something which can readily be tackled without paying that 8%, if we assume a 12 month tenancy, which works out at £912.

We have an important asset of being able to setup a direct debit, and manage that process in-house. We do not have any kind of tenancy agreement or relationship with tradesmen in the area. We also will be living about 2 hours from the property itself, but I am reasonably mobile and practically always available to go there if need be.

We have vetted 5 letting agents in the area who provide some assurances that part of their service also guarantees collection of the rent, or insurance against a default. We understand though that it's prudent to have separate landlord's insurance to cover various risks involved in either having the place lay dormant (if that even exists) or trouble tenants.

Could I ask if anyone has any advice or thoughts on whether they have had the same choice, and experience?

thesaint

I am a bit confused.
Do you have one property(2 bed flat)that you are about to let out and you don't have any experience?

solidpro

I guess also (if it's allowed) can anyone recommend any other good forums or websites to do with smaller landlords, sharing knowledge and good ideas?

solidpro

I am a bit confused.

Thanks for your input, but I'm confused why you're confused? Unless you're just a troll and then your post makes perfect sense. Until I feed you. Bah!

Pixie5740

Why is the ability to collect direct debits important to you? Is more usual, and actually better for you, to have the rent paid by standing order. You don't want a tenant using the direct debit indemnity and claiming all their rent back for you to then go to court to try and get it back.

Once you have a letting agent in place you might find it expensive to terminate the contract. If you're looking for a tenancy agreement and contacts for trades people you're probably best joining a landlord association and posting your own adverts on Zoopla, Rightmove via UPad or similar.

See Letting Agents for further information.

G_M

See


* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

both from:

* Tenancies in Eng/Wales: Guides for landlords and tenants

solidpro

Why is the ability to collect direct debits important to you? Is more usual, and actually better for you, to have the rent paid by standing order. You don't want a tenant using the direct debit indemnity and claiming all their rent back for you to then go to court to try and get it back.

Once you have a letting agent in place you might find it expensive to terminate the contract. If you're looking for a tenancy agreement and contacts for trades people you're probably best joining a landlord association and posting your own adverts on Zoopla, Rightmove via UPad or similar.

I would have thought most letting agents use direct debit over standing order, but that could be a naive assumption, as I am mainly used to business to business transactions rather than with individuals.

The ability to direct debit I felt was important because it streamlines an otherwise troublesome process that the letting agent may often use as a reason for them to exist.

Yes, the tenants are covered, but whilst we can do our best to protect ourselves from unscrupulous individuals, we also have to assume that people are good payers and the direct debit process is a useful asset to us as a business.

Most of the agents we vetted said their involvement is as long as the initial tenancy, and then the contract expires and goes directly between us and the tenant. Is that likely to be untrue?

Thanks!

G_M

solidpro wrote: »

Thanks for your input, but I'm confused why you're confused? Unless you're just a troll and then your post makes perfect sense. Until I feed you. Bah!

With that attitude

a) I regret posting help for you and
b) I pity your futue tenants

It was a fair comment seeking clarification, since you rambled on about your experience including a property company, so it was unclear if you are a complete newbie, or an estanblished lanldord with surprisingly little understanding.

HappyMJ

Does the 8% include VAT? Most agreement are 8% plus VAT making it 9.6%.

What is your time worth?

The £912 is an expense you can use to reduce the tax payable on your profit. If you're a non taxpayer it's going to cost £912 and most probably well worth doing it yourself.

If you're a 20% taxpayer the net cost to you might be £729.60.

If you're a higher rate taxpayer the net cost would be £547.20 and well worth considering outsourcing the task to someone else as you can earn more doing what you normally do.

If you get a call at 8AM do you have the time during the day to leave your place of work and go to the property to see what is wrong. 2 hours away an hour there and 2 hours back might cost you more than asking someone else to do it for you. What would your client say about you leaving with no notice at all? Waiting until 5PM to visit the property to determine what the problem is won't enable you to call an engineer the same day if the problem is beyond your capability to fix and your tenant will be without heating or hot water for another night.

You should visit the property at least twice per year just to check it's being kept as a proper residential property and being looked after to a reasonable standard. That's about 5 hours twice a year out of your time.

Pixie5740

I have never paid rent using direct debit, it was always standing order. If you polled people on the forum I think standing order would be the number 1 way rent is collected. If you are determined to use direct debit though then knock yourself out.

I can't read the letting agency contracts from here so you'd need to read them yourself and see if there are any clauses about terminating the contract and how much it would cost you.

Wassa123

I've never paid rent by DD... always standing order.

All Estate agents really do:
- add your property to rightmove and their mailing list
- wait for someone to be interested
- charge prospective tenants holding fees and reference check fees.
- print off standard contract with address and names changed
- pay another company to do the inventory
- give tenants keys
- charge landlord their fee
- go quiet for 11 months
- try and threaten tenant with fees for signing a new tenancy (maybe landlord too)

Most of it you can do yourself.