Investment in buy-to-let property continues to be a popular choice, particularly for people looking to achieve better returns than those available in low interest savings accounts. And it can be an excellent way to make money, but many people appreciate that becoming a landlord or expanding a property portfolio comes with added responsibility.

Effective support for the tenant is essential, but it can be time consuming especially for part-time or temporary landlords. A lack of professional organisation can leave tenants paying high rental prices for poor quality housing and an inadequate property management service.

Tenants demand a better service

However, times are changing and fewer tenants are now prepared to put up with bad housing conditions or poorly managed properties, especially in light of record high rents, with the latest HomeLet rental index showing that the average cost of renting a home in England and Wales now stands at £777 per month, up 3.9 per cent year-on-year.

Most tenants, we find, particularly professional tenants prefer professionally managed homes.” Sarah Rushbrook Rushbrook & Rathbone

“As rents continue upwards it is no surprise that more tenants are now demanding better quality homes that are clean and presented in good order,” said Adam Feather, Head of north London based Robert Anthony estate agent.

With a growing number of people living in rented property, there is now added pressure on the private rented sector to supply not only better quality housing but also, an improved letting experience; a fair landlord plus a well maintained property should equal a happy tenant and a long tenancy.

“Most tenants, particularly professional tenants, prefer a professionally managed property. They like the third party between them and their landlord. Also professionally managed properties have access to 24-hour services which may not be available when a landlord manages the property themselves,” said Sarah Rushbrook, Founding Director of Rushbrook & Rathbone.

A professional service

An increasing number of buy to let landlords are taking their residential investments far more seriously by adopting a professional approach to renting. Consequently, many landlords appreciate the benefits of providing their tenants with a professionally managed property service, partly because they recognise that a property is a major asset that must be carefully managed in order to maximise returns.

Some landlords, unable to sustain a high standard of service, will simply find that their tenants move on and find an alternative property to rent, leaving them with unwanted void periods without rental income.

A management service makes the landlord’s life easier as they don’t have to be ‘on call’.” Robert Nichols Edmund Cude

This is why many investors, particularly those based overseas, opt to use a managed rental service. Sarah Rushbrook continued, “Most landlords find that managing at a distance is impossible and therefore use the services of a local agent. Sadly many people come to us for management after they have had their fingers burned. The legislation surrounding a tenancy is now very restrictive and the penalties for even a minor error can be severe. It is becoming harder to self-manage successfully.”

At a typical management fee (on top of letting and rent collection) of around five per cent of the monthly rent, it may seem attractive to an agent to carry out all their work in-house. But the cost of employing qualified and competent staff means that unless a firm has a significant managed portfolio it is unlikely to be worth their time, physically and financially, which is why Sarah Rushbrook believes that many agents should consider outsourcing this work to a specialist professional property management firm.

Property management

Liaising with utility suppliers and arranging repairs, maintenance works and safety reports on your client’s behalf, as well as organising payment of outgoings such as ground rent and service charges, handling of day-to-day maintenance issues and regular visits to check the property, are just some of issues that the experts can manage during the tenancy on the client’s behalf.

Robert Nichols, Director, Edmund Cude, said, “A structured property management service can make life a lot easier for landlords who often don’t have the time or technical expertise to deal with repair issues. The least cost effective repairs are the small jobs which if outsourced can often be very expensive and there are no guarantees in terms of quality of service. With a property management service landlords have the peace of mind that they won’t get a call at 2am because a tenant has locked himself out.”

It is paramount that the inventory check in and out are done by an independent operator.” Mason Brooks Hurford Salvi Carr

With the ever changing legislation, landlords can easily be caught out with their obligations, with the right to possession of their property, should they require it for any reason at the end of the term of an Assured Shorthold Tenancy, one of the very few laws on their side, according to Nichols.

He added, “The tenant on the other hand has a raft of legislation, the OFT, the Environmental Health, Shelter and many others looking out for them. It is a one sided relationship where it is assumed that the power is with the landlord but in reality a clever knowing tenant can swing the relationship completely in their favour.”

A property management firm will ultimate manage a property throughout the lettings process; from organising inventories and arranging for properties to be cleaned pre-tenancy, right through to handling deposit negotiations once the tenancy has come to an end; which is a crucial part of being transparent.

Wear and tear

A shocking report from the Association of Independent Inventory Clerks (AIIC) shows that a growing number of landlords and letting agents are attempting to add new damage to check-out reports, which were never recorded at the check-in. This is generally part of cheeky attempts to keep the deposit and charge tenants for additional costs to repair or decorate a property, without any photographic or written evidence to support it.

Pat Barber, Chair of the AIIC, commented, “We have seen many cases where the landlord or letting agent has not bothered to read the check-in inventory, so when it comes to the check-out, they are up in arms over issues, which they believe should be included in the check-out and charged to the tenant.

According to the AIIC, the most common damage found in rental properties includes iron burns on carpets; cigarette burns; soiled marks on baths and UPVC window sills and frames; heat damage to polished wooden furniture; and stiletto heel imprints on wooden floors and vinyl.

“The best way landlords and agents can ensure that the property’s condition is fully recorded, is by having a comprehensive inventory in place at the start of any new tenancy, and that a thorough check-in and check-out report is completed.”

Outsourcing Inventories

In order to act in the client’s best interests, letting agents should always outsource inventory work to an independent operator, according to Mason Brooks, Associate Director, Hurford Salvi Carr. Hurford Salvi Carr, like many agents, relies on third-party operators that offer services such as cleaning, referencing and inventories.

Without evidence of the state of the property pre and post tenancy, in the form of an independently compiled detailed inventory, any subsequent disputes that arise at the end of a tenancy are almost impossible to resolve fairly, in which case the landlord can forget about trying to dispute the condition of a property with a tenant. If there is no schedule of condition at the beginning of the tenancy you cannot make a comparison at the end.

Brooks said, “To protect our clients’ interests and to offer the most transparent of services it is paramount that the inventory check in and check out are arranged by an independent operator. Our client will then avoid any risk of the tenant accusing the report of being one sided, and should the deposit ever go to dispute, an adjudicator will be able to see that the report is completely independent.”

It is vital to substantiate a claim with written and, if appropriate, photographic evidence. It is extremely difficult to argue against the evidence contained within an independent and impartial inventory, helping protect all parties involved – landlord and tenant.

Why cut corners on inventories for the sake of a relatively small amount of money?” Tom Lees Live Letting Exchange

Tom Lees, Operations Manager at Live Letting Exchange, commented: “It’s essential that an inventory is accurate and impartial and by compiling it themselves, agents can place themselves in a risky position, should it fall short in terms of its content or accuracy.” Lees points out that outsourcing inventory work is not expensive and enables agents to free up their staff to focus more on their core activities.

He added, “Why try to cut corners for the sake of a relatively small amount of money? Live offer inventories and check in/outs from £60. Given that most tenancies last 12-18 months that works out at around £3 per month over a tenancy to a landlord. Compare that to the potential costs if damage is caused in the property and it cannot be proven? I certainly wouldn’t take the risk.”

Summary

Whether conducting inventories or handling wider property management services, only you know how much time you and your colleagues can spare to deal with telephone calls from tenants and the resulting work on behalf of your clients; the landlords.

But if in doubt, consider outsourcing the work, because aside from aiming to maximise the value of their property, peace of mind is also a valuable asset for landlords, especially with all the legislation that is now in place.

Furthermore, by ensuring that your landlord gets the highest level of professionalism in all aspects of their let will enhance your reputation as an agent and give you the edge over competitors.

Contacts

• Association of Independent Inventory Clerks
  www.theaiic.co.uk
• Live Letting Exchange
  www.live-lx.com
• Rushbrook & Rathbone
  www.rushbrookrathbone.co.uk
• Robert Anthony
  www.robertanthonyestateagent.com
• Edmund Cude
  www.edmundcude.com
• Hurford Salvi Carr
  www.hurford-salvi-carr.co.uk