HOUSING |
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RENTING YOUR PROPERTY OUT
Renting your property can be both time consuming and expensive. There are a number of options and these are discussed in some detail below
Letting Agents
Do it Yourself
Housing Associations
University
Council
Letting Agents. Letting and property management agents provide a number of different types of services to landlords. The level of service will very often determine the amount they charge. Charges are usually commission, based on the annual rental income of your property. You should therefore discuss and compare the charges of different agents in your area. Typically rates vary between 8% and 15% plus VAT. Some agents deduct the commission upfront whilst others make a deduction as they collect the rent.
Introduction Only. The introduction service offered by letting agents very often gives landlords the most basic of all services available. It consists of finding suitable tenants for your property, applying for references, preparing the tenancy the tenancy agreement and collection of the first month's rent and deposit. The letting agents charges are deducted from the first month's rent and deposit. As landlord you will be responsible for the deposit and for all future property management issues.
Rent Collection. The rent collection service includes all the services offered under the introduction only service, together with a rent collection service. Once rent is collected the letting agents rent collection commission is deducted and balance is paid to the landlord. The landlord is expected to arrange to inspect the property and deal with any repairs under the terms of the agreement. The issue of notices to quit are normally dealt with by the letting agent but the landlord will need to make his or her own arrangements to deal with all aspects of the tenant moving out.
Full Management. The fully managed service offered is the most comprehensive and deals with almost all the issues of property management required on a daily basis. Urgent repairs will be undertaken as needed by the letting agent and quotes will be obtained for other non-essential matters. The payment for any expenditure will be deducted from rents collected before any payments are made to the landlord. For landlords who working or living abroad this service is essential as all matters are left in the hands of the letting agent.
Do it Yourself. The cost of using letting agents can be very expensive and with a little dedication and effort the majority of landlords should be able to deal with the proper management of their properties. Property management involves the following steps:
Find Tenants. Letting agents advertise in the local papers and this is the place to start. Choose a paper that has a large property to let section. If you look at this section you will see both letting agents and landlords advertising. The small box adverts normally relate to landlords who rent out their own properties and the content of these small adverts will give you an indication of what you need to advertise. In the majority of cases all you need to do is telephone the paper with the details you wish to advertise and pay by credit card. The cost of these adverts is relatively small. Prospective tenants will need to be shown your property. If they wish to rent the property you should ensure that you apply for several references to include current employer, bank and one other from a previous landlord or friend. Once satisfactory references have been obtained a tenancy agreement needs to be prepared for signature. A solicitor can draw up a standard Assured Shorthold Tenancy agreement or you can use pre-printed stationery. If your property is furnished you should prepare an inventory list and this should be checked and signed by the tenant at the time he moves into the property. This list will also need to be checked when the tenant vacates the property to assess the extent of any claims for damages.
Collecting the Rent. Rent collection can be made easier by arranging for payment to be made by standing order or by collecting post dated cheques. You should check your bank statements to ensure that standing orders are received on the due dates. If payment is not received you must contact the tenant immediately to see why payment did not go through.
Deal with day-to-day matters. During the tenancy period you should inspect the property to ensure that the property is being maintained in a tidy and proper fashion. Any matter that requires action from the tenant should be advised in writing as a form of permanent record. If necessary you should follow up an inspection with a further inspection. Repairs should be undertaken as and when required and all expense invoices retained for taxation purposes. Any repair work undertaken by third parties should be checked before payment is made, although is some urgent cases this may not always be possible.
Arranging Tenant to Vacate. You should write to the tenant a month or so before he is due to vacate to explain the procedure and arrangements to vacate the property. Include the date, time and indicate that the property should be left in a tidy manner otherwise you may need to make a claim against the deposit held. The inventory list should be checked when the tenant leaves and missing or damaged items should be identified. The deposit should be returned as soon as possible once the extent of any claims has been established. You should be fair and reasonable with your claims and have sufficient evidence to support the amount of your claim. The section 21 notice to quit is a very important document and this must be served at least 2 months before the end of the tenancy. All important documents should be sent by recorded delivery. The slip may be needed to demonstrate that the required notice to quit was served and served at the correct date.
Housing Associations. Housing associations can be used as a good alternative to property rental. The property is usually rented to the housing association who make all the arrangements to find tenants for the property. They are responsible for the tenancy and they enter into individual agreements with the tenants. You have little say in who the housing association rent the property to. In many cases the rental periods are longer and in some cases last up to three years. Rent is normally paid monthly or quarterly in advance.
University. Some universities now run special schemes to provide student accommodation. As with housing associations the tenancy agreement is with the student scheme operators and not the individual students. However, landlords do get to see the students and can be more selective. The Scheme operators who often deal with any claims for damages hold deposits or security for damages. Each university has it's own rules and landlords should contact the relevant department to discuss the scheme in detail. Many landlords often feel that the tenancy agreements are one sided and more to protect the University scheme operators. Provided landlords are aware of the tenancy obligations the schemes offers them a real alternative with rental certainty during the year. The disadvantages include in some cases the uncertainty of the University finding tenant students and that the property may remain empty for up to three months during the summer vacations.
Council. Some council's also offer special housing schemes similar to the housing associations. They will usually enter into a 3-year agreement with the landlord and will house tenants in any way they think fit on a short-term basis. Once again the landlord has no say in the way the property is occupied but the council is liable for repairs and any damage caused to the property. Rent is normally paid quarterly in advance and the council will often contribute an agreed sum to the landlord for furnishing the property at the outset.
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