In This Guide
Administration
Being a landlord
Buy to let investment
Choosing the property
Finding tenants
Letting property
Lettings agents
Levels of service
1. Levels of service
2. Let only
3. Letting and rent collection
4. Property management
5. Added value extras
6. Cost comparison
Preparing the property
Problem tenants
Tenancy
Levels of service
Property management
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Property management involves the protection and maintenance of a property to more or less the standard it was in at the beginning of a tenancy, fair wear and tear excepted.
Many landlords are happy to play an active role in the management of their property. In fact many people prefer it. But for a variety of reasons, this can sometimes be difficult if not impossible. Managing a property can take up a lot of your time, and if you don't think you're up to it because of geographical location, health or work, you may be better using an agent.
We wouldn't recommend that the running of your property is left to friends or relatives in your absence. Tenants can be quite demanding at times and you may find that your friends or relatives are not prepared for that level of commitment.
You have to be prepared to pay for this level of service. Full management of your property can cost you anything up to 20 percent of the rental income. This is no small price to pay and it really means you have to be generating a superb gross yield on the property, else you will be running your investment at a loss.
This level of service does not normally cover management of the property whilst it is untenanted, unless agreed previously in writing. There would normally be an additional fee for this.
The role of the property management company usually includes all the activities included in the lettings and rent collection service, plus:
Property management normally involves a quarterly or four monthly
visit to the property in order to check on the general condition
that the tenant is maintaining. If the property manager is not
satisfied, he or she will generally inform you in writing of their
concerns, the suggested course of action and when they plan to
make a further and final visit. There may or may not be a charge
of £20 or £30 for the Inspection report.
The property manager often proves to be a focal point in negotiations
between the tenant and landlord. They must monitor problems and
ensure their swift resolution. This means that they often act
as a buffer and (often unjustly!) the focus for complaint from
both landlords and tenants. Liasing with all parties involved
with the property and mediating in disputes is an often thankless
but key role of the property manager.
This is one of the most important roles of the property manager
and is where they really earn their salt. The property management
company will respond to any disrepair reported in writing by the
tenant and to arrange for any work to be carried out by independent
contractors. They will also attend to any routine repair work
that is highlighted as a result of the property inspection.
Periodic maintenance and redecoration will also take place if you remain a client of the company for a long enough period. Under your instruction, they will supervise refurbishment and redecoration, any other major or minor works you wish to have done, as well as mundane tasks such as renewing gas safety certificates.
The last area of responsibility concerns emergency repairs. They will respond to emergencies by taking whatever measures are considered appropriate. However, in order to comply with certain professional regulations, the company may not carry out works on the property unless your property management float account with them has sufficient funds to cover the cost of the works. This holds true for routine maintenance and other repair work as well. The property manger will normally contact you about all work on the property, particularly when expenditure is above a set level. However, in cases of emergency where your property would be put at risk by a lack of action, the property manager may act without your consent.
All property management companies have their own preferences in
terms of contractors. They have useful experience of who is reliable
and economic and who is not. Furthermore, they normally have the
ability to achieve competitive prices due to economies of scale
and the amount of business they can direct to a particular contractor
or trade business.
Property management normally involves a greater level of ongoing
administration than does a let-only service. They must negotiate
tenancy renewals and rent increases, prepare renewal agreements,
arrange check outs, allocate deposit returns and serve the appropriate
notices on tenants. However, with full property management, they
would also normally pay bills and other routine outgoings on behalf
of the landlord, incorporating this into the statement of accounts.
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