When it comes to property investment, some landlords pay property management fees and instruct a professional to oversee the running of a rental property, while others prefer to self-manage.
Whether or not you choose to have a property manager depends on a number of factors, and the decision shouldn’t be made based on your profit margin alone; when you look at the services rendered it becomes clear that having a property manager can provide landlords with numerous benefits.
Types of rental agent fees
As of changes to the law that took place in 2015, letting agents now need to clearly publish their fees inclusive of VAT both on the website and in any physical locations. This is to help landlords clearly budget without incurring any unexpected or unadvertised costs. Generally speaking, fees will fall under two categories:
Sometimes known as a leasing fee, this charge covers only the cost associated with letting your property. For this fee, the agent may carry out tasks such as advertising and listing the property, arranging viewings, staging (if required), managing applications and undertaking tenant screening, drafting an Assured Shorthold Lease agreement, managing deposit collection and placing money into a TDS, and preparing the property for new tenants. Leasing fees can amount to 75-100 per cent of the first month’s rent, but the provided services can save landlords a huge amount of time and hassle particularly if there is more than one property turning over at a time.
Full management fees
If you want to completely hand over the reign and leave your property manager in charge, they can levy a monthly fee to provide full management services. These services might include dealing with the financial side of things, such as collecting rent and chasing any rent arrears, and handling deposits, and then there are property inspections along with ongoing property maintenance and emergency repairs to consider as well. It may be that you don’t live near enough to your rental properties to deal with late-night callouts or emergencies, or it could be that you simply don’t have the time or the desire to deal with these kinds of DIY issues yourself. Having a property manager absolves you of having to deal with these issues directly and yet ensures tenants still receive prompt and professional service. Full management fees can cost anything from seven to 10 per cent of the monthly rent collected.
Depending on your letting agent, there may be other fees applicable as well. Some will charge a fee even if your property is unoccupied, known as a vacancy fee. Others will charge a fee each time these lease is renewed, or if the eviction of a tenant is necessary, a flat fee may be applied and charged onto you as a landlord. It’s important to make sure you have a clear idea of what you will be charged along with the services that are and are not included, so you can adequately budget for each property.
Professional management can save time, reduce hassle, ensure your properties are compliant at all times – and of course, letting agent fees are tax deductible. Whether or not you choose to have a property manager is a question of personal preference, but many landlords find it highly beneficial.