Need to rent out flat - should I use an agency to manage it?

london1990

Hi there,
I have owned a flat in London for 2.5 years.  I am moving in with my girlfriend and we'll be renting together for a bit before hopefully buying together in the next few years - definitely want to rent together first to experience living together, but it's not practical for her to move into my flat for various reasons. 
I do not want to sell my flat at this time but the quickest way to allow us to move in together is to rent out my flat.  I am not looking to make a profit.  I know that the general advice on here is not to become a landlord.  I don't have a choice though and renting out my flat is the only option right now because of our circumstances.  Yes, we could wait another year before moving in, yes it would be much easier if she got a job nearer where I lived and moved in with me, but we've been doing the living separately thing for 2 years and I can't make her leave her job just because I own the flat and I want us to be living together now.  The flat is a big issue to sort out. 

What I'd like to know is whether I should use an agency to source a tenant and manage the property or I should just try to do this myself?  I work a City job full time and don't really feel I will have the time to manage the rental alone.  However, the agency will take 13% of the annual rental income which is huge.  As I said, I'm not looking to make a profit - it's purely for convenience of being able to move but not have to sell and I would probably only rent it out for 1-2 years max.  But is it worth having an agency manage it?  Is it practically that much work doing it yourself?  The agency will also, for a fee obviously, take on a huge amount of the pre-rental administration such as ensuring gas safety certificate is in place, inventories, tenancy deposit etc.  To be honest, I really can't be bothered with all of that and don't think I would have the time.

I did the math and worked out that using an agency, the rental yield would cover the mortgage and service charge by a few hundred £ even after tax, insurances etc, and leaving some room for repairs.  Without an agency, I'd probably make a profit of around £600 per month, which in the grand scheme of things, doesn't feel worth it to put myself through running the whole thing alone. 

Just curious on thoughts on a practical level on what most people in this situation do?  I've no experience in this area. 

Thanks

London 

notrouble

To help you decide, read:

* New landlords (1):advice & information :see links in next post

* New landlords (2): Essential links for further information

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

flashg67

From personal experience, as you have a full time job, unless you have endless patience, are happy to have a tenant contact you for whatever, whenever, then use an agency! For me, there are too many pitfalls and things that eat into your time, unless you want to devote a chunk of your free time to it.. Others will disagree though.
Do some research on their fees, especially with repairs - repair limits, emergency call out etc.
Also, make sure you have consent to let if you have a mortgage (and aren't changing to a buy to let mortgage)
This site has been a useful (and humorous) source for me in the past - www.propertyinvestmentproject.co.uk

london1990

flashg67 said:

From personal experience, as you have a full time job, unless you have endless patience, are happy to have a tenant contact you for whatever, whenever, then use an agency! For me, there are too many pitfalls and things that eat into your time, unless you want to devote a chunk of your free time to it.. Others will disagree though.
Do some research on their fees, especially with repairs - repair limits, emergency call out etc.
Also, make sure you have consent to let if you have a mortgage (and aren't changing to a buy to let mortgage)
This site has been a useful (and humorous) source for me in the past - www.propertyinvestmentproject.co.uk

Thanks very much for the practical view, appreciate it.  Yes, I need to apply for consent to let.  I thought about doing it closer to the time of renting it out as I believe my lender typically only agree to two year maximum consent to let and I'd like to maximise that time.  I assume if I'm still renting it out at that stage, they'd force me to switch to a buy to let? 

AlexMac

In your circumstances, the agency seems the best bet if you really want to keep the flat rather than sell now.
I started off, almost by accident, as a small landlord of one property, as I bought it to accommodate a family member and her new baby, and when they moved on, I started to let it.  At first I only used and agent to find, reference check and set up the AST; thereafter I mananged it myself.  Which meant that if the boiler, fridge or washing machine failed, you had to have the nous, contacts and cash to immediately repair or replace, as otherwise your tenants won't stay (treat em right and they will- reducing voids and fees).  On one occasion, I commissioned a boiler replacement from Italy, as that's where I was when the (delightful) tenant rang to say; freezing here!
So unless you have the ANC& C (attitude, nous, cash and contacts) , maybe best to pay someone else to do it.
Over the past 20 odd years I've saved a mint by learning how to do the lot myself (even reference checking tenants with their Bank, Employer and past Landlords...)  but you're not in it for the long term.... So delegate and pay an agent so it becomes their problem.  Just don'y get precious if a tenant tarshes your former lovely home- it's business now,.

coachman12

Having used agents in the past, I feel strongly that they are "the way for you to go" in your circumstances. Notroubles' earlier posting links are very helpful.
But I would advise you not to give the agents carte blanche to act as they please. They can give your tenants a hard time and ruin their enjoyment of their stay in your property if they are over-zealous in a place which people are calling their home , no matter for how long.
Set out exactly what you want from the agents who are acting on your behalf-----eg. the depth of per-rental financial and other checks to make, how often you want the property inspected etc etc. The other things to look at are the legal aspects already touched on in this thread and the formal rental agreement ,from annual rent increase % to pets allowed or not. Also, are you renting out as furnished or unfurnished? All the best to you and your girlfriend on your new venture. 

london1990

coachman12 said:

Having used agents in the past, I feel strongly that they are "the way for you to go" in your circumstances. Notroubles' earlier posting links are very helpful.
But I would advise you not to give the agents carte blanche to act as they please. They can give your tenants a hard time and ruin their enjoyment of their stay in your property if they are over-zealous in a place which people are calling their home , no matter for how long.
Set out exactly what you want from the agents who are acting on your behalf-----eg. the depth of per-rental financial and other checks to make, how often you want the property inspected etc etc. The other things to look at are the legal aspects already touched on in this thread and the formal rental agreement ,from annual rent increase % to pets allowed or not. Also, are you renting out as furnished or unfurnished? All the best to you and your girlfriend on your new venture. 

Hi, thanks very much for your advice, it confirms what I had suspected.  I would absolutely want to ensure the agent treats the tenants well to encourage good use of the property.  I know that I will need to make sure the commercial terms between me and the agency accurately record what I expect from the agency and I will need to take a close look at the rental agreement with the tenant - I will take the time to mark them up.  In some ways, I would quite like to remain involved as a 'friendly face' for the tenants - I wouldn't want to be dealing with them every day, but I would want them to be able to discuss any concerns or issues with me personally so I have some control over the relationship and it isn't left entirely to the agency - not sure if that happens much in practice, but it's my first ever home that I am renting out and I want to reduce the chances of it being trashed. 

annetheman

You don't sound like you want to manage it yourself at all, I think you have your answer already 

coachman12

london1990 said:

Hi, thanks very much for your advice, it confirms what I had suspected.  I would absolutely want to ensure the agent treats the tenants well to encourage good use of the property.  I know that I will need to make sure the commercial terms between me and the agency accurately record what I expect from the agency and I will need to take a close look at the rental agreement with the tenant - I will take the time to mark them up.  In some ways, I would quite like to remain involved as a 'friendly face' for the tenants - I wouldn't want to be dealing with them every day, but I would want them to be able to discuss any concerns or issues with me personally so I have some control over the relationship and it isn't left entirely to the agency - not sure if that happens much in practice, but it's my first ever home that I am renting out and I want to reduce the chances of it being trashed. 

You're very welcome, london. You sound as though you already had the same views without my contribution, especially the "caring landlord" aspect which agents, though necessary, are not good at. Cheers.

coachman12

london1990 said:

coachman12 said:

Having used agents in the past, I feel strongly that they are "the way for you to go" in your circumstances. Notroubles' earlier posting links are very helpful.
But I would advise you not to give the agents carte blanche to act as they please. They can give your tenants a hard time and ruin their enjoyment of their stay in your property if they are over-zealous in a place which people are calling their home , no matter for how long.
Set out exactly what you want from the agents who are acting on your behalf-----eg. the depth of per-rental financial and other checks to make, how often you want the property inspected etc etc. The other things to look at are the legal aspects already touched on in this thread and the formal rental agreement ,from annual rent increase % to pets allowed or not. Also, are you renting out as furnished or unfurnished? All the best to you and your girlfriend on your new venture. 

Hi, thanks very much for your advice, it confirms what I had suspected.  I would absolutely want to ensure the agent treats the tenants well to encourage good use of the property.  I know that I will need to make sure the commercial terms between me and the agency accurately record what I expect from the agency and I will need to take a close look at the rental agreement with the tenant - I will take the time to mark them up.  In some ways, I would quite like to remain involved as a 'friendly face' for the tenants - I wouldn't want to be dealing with them every day, but I would want them to be able to discuss any concerns or issues with me personally so I have some control over the relationship and it isn't left entirely to the agency - not sure if that happens much in practice, but it's my first ever home that I am renting out and I want to reduce the chances of it being trashed. 

You're very welcome, london. I think you already felt all the same thoughts I expressed so my posting was probably not necessary at all, but thanks. All the best.

brianposter

Is it no longer possible to find tenants who will do the property management themselves ?