As we all take the start of a New Year to review our finances, you may want look at your agency fees and decide if you still feel you are getting value for money from your agent.
What may have seemed like a good deal at the time may no longer sit comfortably within your financial parameters. Your personal situation may have changed affording you more time to focus on your property yourself.
We are all too aware of the rising costs facing landlords which in turn eat in to the profitability of your investment property.
There are options:
1. Negotiate a better deal with your agent.
2. Shop around for an alternative agent offering a better value service.
3. Take on the management of your property yourself.
Negotiate a better deal
Most agencies will have plenty of wiggle room within their fee structure. There will also be discrepancies between the level of fees individual landlords pay and depending on the agency’s motivations at the point of instruction these will rarely be the published brochure prices.
Various factors affecting the Private Rented Sector (PRS) have resulted in a reduction in the number of new rental properties coming to the market. With a lack of new properties, agents are going to be very keen to retain the portfolio that they already manage. This gives current landlords the upper hand and more negotiating power.
Your agent may be able to offer you a different level of service with a different fee structure. For example, you may employ the agent on a fully managed basis and by switching to a tenant find only or rent collection service you should get a better deal. This may mean more involvement from you and so you will want to weigh up the pros and cons.
It is always worth picking up the phone and seeing what your agent can offer you. If you don’t ask, you don’t get and there is always a deal to be done.
Shop around for an alternative agent offering a better value service.
Agency is a very competitive market place and you will likely have the choice of 2 or 3 quality agents within the vicinity of your property. These agents will be competing fiercely with each other for new stock. If you were to contact an alternative agent and explain that you are thinking of switching to them, they will likely bend over backwards to help you and undoubtedly undercut your current agent on fees. They may also adjust their fees to factor in any cost that you may incur with ending the agreement with your current agent. Effectively they would be buying your business.
The main hurdle in switching agent is going to be the terms of business you have signed with your current agent. Most agents will tie you in for the lifetime of the tenant. i.e. as long as the tenant (that they sourced) remains in the property, you will pay the agreed fee. At least this is what the terms of business will state. You will also need to give a few months notice to end the agreement, probably three.
The point that your tenant vacates the property is the ideal time to make a change. Just remember to check how much notice you need to give the agent and do it before the tenant vacates.
The reality is that you will always have the opportunity to negotiate your way out of the agreement. Again, it’s worth picking up the phone and having a conversation with your agent.
The transfer of documentation and compliance information to a new agent should be very straightforward. Your new agent will likely be very happy to take care of it all for you, however if they meet resistance from your current agent you can always request it yourself.
Take on the management of your property yourself.
At Ello Property we believe that landlords can, with the right information and guidance, easily manage their own rental property. Average agency fees for a fully managed service in the UK come in at around 10% of the monthly rent. You need to do the maths and work out whether your agent really is good value for money. An agent will spend, on average, 6 hours a year working on your property. You will also have some involvement as well.
We believe that with proper planning, tried and tested procedures and robust documentation, you will only need to dedicate a few hours a year to the management of your rental property. It’s all about minimising risk. Keep a professional relationship with your tenant and follow Ello’s clear step by step process and there is no reason why things won’t go well. If for whatever reason they don’t, we are here to help.
If you would like to find out more about how Ello Property can help you manage your own rental property and save you thousands of pounds a year then email ello@elloproperty.co.uk..