As you are no doubt aware, being a landlord has changed a fair bit over the last few years. Tax changes, tightening regulations, and increased penalties have all been hitting the headlines lately, and there’s more on the way. With all this negativity in the media, you’d be forgiven for thinking that buy-to-let is dead, but the truth is somewhat less dramatic.
While there’s no doubt that being a landlord is completely different today to say, twenty years ago, there’s still plenty of life in the old dog yet. Money can still be made in the private rental sector, but you do need to be a little shrewder with your investment choices, and how you manage them.
Management options for landlords
Most landlords will be faced with three options for managing their rented accommodation. These are:
For some, being a landlord is their main source of income and they like to handle all of the day-to-day matters that are part and parcel of handling a property portfolio. Everything from marketing the property and finding tenants, through to staying on the right side of the law and collecting the rent is their responsibility, so it’s a full-time job and not suitable for everyone.
Let and rent collection service
Many agents offer landlords a simple let and rent collection service which does pretty much what it says on the tin. The agent will help you, the landlord, market your property, find a tenant, and collect your rent for you, leaving you responsible for the maintenance side of things.
This option is attractive to those who have the skills, or contacts, required to carry out day-to-day maintenance tasks and also have the time to do so.
Finally, there’s full management. As the name suggests, full management is a hands-off way to run your buy-to-let empire and it’s a viable option for anyone, regardless of whether you have one property or 100.
With full management, your letting agent will handle everything for you. That means putting your property in front of a plethora of potential tenants, finding the right renter for you, handling the rent collection, keeping you and your investment safe from changes in regulations, and so much more.
Full management gives landlords peace of mind, and as the buy-to-let market has changed so much in recent years, this is often something you simply cannot put a price on. There are, however, a few practical reasons why it makes sense as well, and that’s what we’re going to take a look at now.
Reason #1: Compliancy made simple
We’ve already touched upon the changes made over the last few years to many of the legal aspects associated with being a landlord, but it’s so vital we’ve made it our number one reason too. The legal responsibility that you have as a landlord is vastly different today than it was a few years back, and you better make sure you know your stuff if you want to avoid crippling fines that could turn your buy-to-let dream into a nightmare.
The worst thing about legislation is that it is constantly changing. Keeping up to date with all of the in and outs can be challenging to say the least, so having a group of experts by your side is invaluable in today’s ever-evolving environment. A good letting agent will stay abreast of any changes that may affect your property investment and lay out your options in a way that is easy to understand.
This removes the need for you to be constantly checking for legislative changes, and it also takes away the headache of working out whether or not they actually apply to you and your buy-to-let business. Taking the legal aspect out of the equation is one of the key reasons for opting for full management. Both national governments and local authorities are clamping down on landlords at present, so being compliant is essential if you want to remain in business.
If you’re comfortable with handling your own legal affairs, fine. If you’re not, however, having experts in your corner who know their stuff makes a whole lot of sense.
Reason #2: Finding tenants isn’t as easy as it once was
Another thing that has changed drastically is the tenants themselves. While there’s still competition for good quality accommodation in many areas, tenants are no longer willing to accept substandard property or poor service from their landlords, and rightly so. Rental costs take up a large chunk of people’s salaries these days, so why should they put up with anything less than what they deserve?
Then there’s the fact that many people are finding buying property increasingly difficult, and this is having a knock-on effect in the rental market. Tenancies are becoming longer, with many lasting for four years or more nowadays. This means that tenants are more invested in their decision to take on a property, so being professional is essential if you want to attract the best renters.
Providing you choose a reputable letting agent, full management means you’ll be represented by a well-known name that tenants can easily put their trust in. This can make a huge difference when it comes to finding the right tenant to fill your property and it’ll also mean you’ll have experienced valuers and negotiators working to get you the best price for your rental as well. A clear win win.
Reason #3: Full management prevents landlords from being taken for a ride
Many landlords, especially those who have a single property or are new to the private rental sector, are simply unaware of the line between their responsibilities and those of their tenants. Contrary to the nasty landlord meme that is often bandied about, the vast majority of landlords are extremely conscientious...almost to a fault.
This can lead to landlords being taken advantage of by demanding tenants. As a general rule of thumb, a tenant must treat a property as if it is their own, which includes them taking on the same jobs around the property that they would if they were the owner. So, things such as changing light bulbs and minor repairs are down to the tenant, whereas major works like a leaking roof, for example, are for the landlord to sort out.
Therefore, the day-to-day running of the property is your tenants responsibility, not yours, but if you don’t know that or are unable to articulate it to your tenant, your rental relationship can quickly deteriorate. It’s not uncommon for us to be approached by landlords who have self-managed their investments but have found the task has made their life a misery.
Now, this isn’t to say that the tenants are in the wrong; often they simply don’t know where they stand, just as the landlord may be unaware of rules. Employing a letting agent removes any grey areas and puts a professional in front of your tenant, which is often enough to get things back on track.
Reason #4: It’s a business expense
It could be argued that full management is an investment rather than a cost anyway, but even if you do take the opinion that it’s an expense, it’s one that you can put down to your business. The fees that you’ll incur from opting for a full management service are tax deductible, so you can lob a hefty 20% to 40% off of your fee depending on which tax bracket you fall into.
Not only that, opting for full management will likely save you money in other areas too, especially legal fees, so it’s important to see the bigger picture over the amount you pay your property management company or letting agent.
Reason #5: Less stress
Being a landlord is one of those jobs you have to do to know exactly how stressful it can be. Many who haven’t handled property before will often shrug their shoulders and mutter, ‘How hard can it be?’, but the reality is that it can be a tough business, especially if you’re not suited to it.
Collecting rent, dealing with repairs, appeasing unhappy tenants...the list goes on, and all of these things need you to be a certain type of person if you are to pull it off and take things in your stride. For many landlords, stress can something that ruins what would otherwise be a sweet deal.
Taking on a full management service removes all that aggravation from your life. No more fretting about missed payments from that awkward tenant or worrying whether or not you’ve covered every eventuality legally. In short, a good agent will have your back.
Reason #6: Professionally conducted inspections
Quarterly inspections are essential if you want to ensure that your property is being kept in good order and your tenant is sticking to the tenancy agreement. The problem is, quarterly inspection are far from fun to conduct.
Spotting signs of subletting can be difficult to the untrained eye and not everyone will be comfortable with having awkward conversations over who’s responsible for what when it comes to the maintenance issues mentioned in Reason #3.
Taking on a fully managed service removes all of these hassles and keeps your property investment safe.
Reason #7: You’re buying the unbuyable
It’s our most valuable commodity, and yet so many of us fritter it away without so much as a thought. What are we talking about? Time, of course. Being a landlord can be an extremely time-consuming business, which clearly doesn’t suit everyone.
Consider the amount of man hours required to keep a property investment in good shape. Do you really have the time to perform all of the tasks required of you as a landlord? What about when you want to go on holiday? What happens then if your boiler decides to give up the ghost? Do you really want to spend your downtime finding a heating engineer?
Many people get into the buy-to-let business purely from an investment standpoint and while they’re willing to put their cash into property, their time is something they’d rather keep for themselves.
Full management allows you to do just that. Your letting agent will handle all of the marketing, the paperwork, the phone calls, the collections, the repairs, and the maintenance...all of which will buy you time. Now that’s an investment!
Got a property or portfolio you’d like managed in Wanstead, Buckhurst Hill, or any of their surrounding areas? We’re here to help! Simply get in touch with our dedicated lettings team to find out more about how we can help you become more hands-off with your investment.