About 10% of home sales these days are “buy-to-let” purchases by investors who intend to rent their properties to tenants. In addition, there are already thousands of existing “landlords” who own one or more rental properties.
“It has been estimated that there are somewhere between 750,000 and 1,000,000 rented homes in the formal property sector, and we would venture to say that most of those are in private hands and not owned by big organisations,” says Jan Davel, MD of the RealNet estate agency group.
“However, managing such properties – and tenants – is becoming ever more complex, and there are not many private investors with the specialist knowledge or time to do so. They need help from properly trained and qualified letting agents who also comply with relevant legislation and regulations.”
Depending on optional services and matters related to maintenance, such an agent is usually paid around 10% of the monthly rental but, says Davel, most landlords find that this is not a high price to pay for the peace of mind that comes from having a professional manage their leases, tenants and, if necessary, properties in their absence.
“The two major advantages in working with a letting agent are better tenant selection and better rent collection. Professional letting agents have access to systems and information that enable them to ‘pre-qualify’ tenants properly, so that there is a much lower risk of you ending up with a tenant that is a bad payer or likely to damage your property.
In addition, by hiring a letting agent, you put a buffer between yourself and the tenant. You don’t have to listen to excuses, chase down rent, or be the ‘bad guy’ if it becomes necessary to evict the person living in your property. Agents also have an advantage because tenants usually realise that they, unlike the owner, are just doing their job and are obligated to enforce the lease terms. In fact many agents say that it is considerably easier to manage other people’s properties rather than their own, for this very reason.
The real question is, then, how to select a good letting agent? A personal recommendation always helps, Davel says, but if you have to decide for yourself, you should preferably choose an agent who already manages a portfolio of rented accommodation and can provide references from other landlords.
“Next, you should make sure your agent is registered with the Estate Agency Affairs Board, has a trust account for clients’ money and only takes commissions from landlords (not from tenants). It is also preferable that the agent or agency is a member of an established national real estate group, as it improves the chances of the agent using tried and tested management systems and complying with a number of Acts and Regulations that are specific to property letting. And of course, the fact that there is a ‘big brother’ with a corporate reputation to protect is also to your benefit.”
He says that having made your choice of agent, it is likely that you will then be asked to sign an agency agreement or “letting mandate” that covers the agent’s right to let the property on your behalf and manage it during the tenancy. “You must make sure that you read this, and do not sign it if there’s any part that is unclear or that you don’t agree with.”
Similarly, you should check out the lease agreement your agent will be using. And if there are any special instructions you want your agent or tenant to follow, put them in writing, date them and keep copies in a clearly marked file. Remember that the agent always represents the property owner (landlord) and cannot and should not do anything without the express mandate of the owner.
However, once you’ve reached agreement and the agent knows what you expect, it’s time to back off and let the agent do his or her job, Davel says.
“An experienced letting agent will know how to find a suitable tenant and how to check their records. He or she will also ensure that an adequate deposit is paid and react quickly and correctly if the rent is not paid promptly or if repairs are needed. An agent can only take corrective actions in terms of your mandate and a good agent will keep you informed of all relevant matters. And that is, after all, the service you are paying for.”
This article “Why Landlords Need Professional Letting Agents” was issued by RealNet – http://www.realnet.co.za/