All letting agents will advertise that they will actively carry out property management services. However, fees for this service can range from 5% of your monthly rental income to over 15%. So what do you get for your money and how do you know how to choose between the agents?
What we tend to find is that some agents who appranently offer very low management fees, charge a very high and multiple set up fees. When you add the two together, you might find that the company with the more expensive management fee is actually the cheaper company in the longer term. For example:-
On a property which rents out at £600 per month:-
Letting Agent One
Set up Charge = £350
Inventory Fee = £ 75
Lettings Agreement = £ 75
Referencing Fees = £ 90
8% Management Fee x £600 per month rental = £576 or £48 per month
Total cost over the year: = £1,166 per annum
Letting Agent Two
Set up Charge = £250*
12.5% Management Fee x £600 = £900
Total cost over the year: = £1,150 per annum
*Includes inventory, agreement and referencing.
So it’s essential to ensure that you add up all the fees that you might be charged and request that they are set out on one page of A4. Then compare all the fees over a tenancy agreement of say both six and twelve months. Do not just assume the ‘headline’ percentage management figure means one agent is cheaper than another. Belvoir lettings agency in Lincoln will always give you a written schedule of our charges.
The next problem with what is included in property management charges is that the level of service of what’s included in property management can vary dramatically from one agent to another. For example, some include property visits if the property is empty or inspection visits a few months after a tenant has moved in. Other agents will charge you extra for these visits. So, as with all charges, it’s essential to understand exactly what is included in the property management service before you conclude which agent is more expensive than another.
Finally, many letting agents just act as ‘Chinese whisperers’ when a tenant calls with a problem. They call the landlord and ask what the landlord wants to do about it, and if some work needs doing they’ll offer to organise it, and despite you the landlord paying a management fee, they then add a percentage on top of the work they organise and you get billed for it! What’s the point of paying for that?
Ideally the agent will either allow you to do the work yourself (or use your own contractor), and if you are paying for property management, liaise with the contractor on your behalf, or they will organise the work for you up to a certain level (for example £500) free of charge. Ideally what you should receive is a bill directly from the tradesperson (or at least a copy) to try to ensure this is happening.