There are many different types of landlords out there. Some people want to invest in property as a business and decide on a hands-on approach. Others want to build a property portfolio without having to spend time managing tenants. And yet more and more people are becoming landlords without really planning to, perhaps because they have inherited property, gone abroad for a job or moved in with a partner and held on to their previous home.
Deciding whether to go for a fully managed or let-only property management service is an important decision, as managing a property yourself can be more work than you think. In this article we will break down the pros and cons of both options to help you make the best choice for your situation.
What is a Let-Only Service?
A let-only service is the most basic option offered by letting agents. The agent will find a tenant for your property and let out the property for you as a landlord, but are not involved in any other way in the ongoing management of the property. The services offered under this option will vary depending on the quality of the letting agent, but should include:
- Advice on how much rent can be charged on a property
- Full marketing and advertising
- Arranging and carrying out viewing with potential tenants
- Full tenant reference, credit and Right to Rent checks
- Drawing up and signing of tenancy agreement
- Collection and forwarding of first month’s rent and deposit
What are the Pros of a Let-Only Service?
One of the biggest benefits of using a let-only service is that it is the cheaper option. You will usually only be charged a one-off fee that is either fixed or relates to a percentage of the first month’s rent (at Hopewell we always charge our clients a fixed amount).
Fully managed letting services also charge ongoing fees, which is usually between 10-15% of the monthly rent. This is payable for the whole period of the tenancy. Some letting agents (not us, we should point out) include a setup fee paid at the beginning of the process.
Another benefit of a let-only service is that it makes life simpler for landlords who prefer to take a hands-on approach. Rather than having to communicate with their tenant through a third-party, the landlord can speak with them directly, enabling both parties to quickly note and rectify any problems with the property or the tenancy. It also allows landlords to carry out repairs or maintenance themselves where possible, which can save time and money.
What are the Cons of a Let-Only Service?
The biggest difficulty that comes with using a let-only service and dealing with the day-to-day management of a property yourself is keeping up with industry legislation and regulation.
There are over 100 rules and regulations that landlords need to be abreast of in order to let a property legally, and they are being changed and added to all the time. Taking full legal responsibility means knowing when new legislation is coming in and understanding how it can affect the properties you rent out, and the tenants that live in them. By putting your properties in the hands of a professional letting service you can avoid this stress, as well as any prosecution or fines resulting from mis-management.
Another downside of a let-only service is that there is no one to take up the reins of looking after your property should you need time off for any reason, such as illness or going on a long trip. Managing a property can be harder work than you think so having someone to do it for you can make a huge difference.
What is a Fully Managed Letting Service?
A fully managed letting service does everything a let-only service does, plus a whole lot more. It means you can sit back and forget about your property whilst the letting agent handles all aspects of managing it for you, including:
- Management of tenants
- Rent collection
- Safety compliance management
- Property inspections
- Management of property maintenance
- Assistance in any disputes
What are the Pros of a Fully Managed Letting Service?
Having a fully managed letting service removes the stress from the experience of being a landlord. There is plenty of scope for worry and difficulty when it comes to letting out property, such as dealing with unhappy tenants, trying to collect unpaid rent and managing tradespeople should maintenance problems arise. Placing all of these issues in someone else’s hands removes the hassle and frees up your time to concentrate on other things.
Another big plus point in having a fully managed letting service is that you can relax in the knowledge that you are fully compliant with all the relevant legislation and laws. It is invaluable to have experts on your side who are fully up to date with any changes that could affect your property, and are able to offer advice that is easy to understand and free of confusing legal jargon.
What are the Cons of a Fully Managed Letting Service
The biggest downside of choosing a fully managed letting service is the price. Around 10-15% of the rent you collect from a property will go to the letting agent, which will make a bit of a dent in your profits. However, if you consider the amount you could lose from fines if a property is mismanaged, it may feel worth paying for the peace of mind and security of knowing your tenants and property are properly taken care of. On top of this, the costs of a letting agent can be off-set against your tax liability, meaning you can claim back some of the costs at the end of every tax year.
Choosing a let-only or fully managed letting service is a personal decision that needs to be based on your particular situation. If you’re still unsure, get in touch with us at Hopewell to talk through your queries and choose the perfect letting service for you and your property.