Once you’ve decided to rent out your property, you need to decide how to manage it. This can make a huge difference to the success of your buy-to-let.
Property management is a crucial part of any buy-to-let investment. Your options are either to manage it yourself, or pay a company to do it for you.
According to a recent survey by the National Landlords Association, self-management by landlords is on the rise. It found that around 43% of private landlords were running their own lettings in the last quarter of 2019. This was a rise of 7% from 36% the previous quarter.
The increase could be down to recent changes to tenant fees. Since June 2019, agents have been banned from charging tenants certain fees, such as for reference checks, inventories and administration charges. Before the ban came in, many speculated that some agents would pass these costs onto landlords instead, which could lead to more landlords deciding to go it alone.
The importance of good property management
From ensuring a smooth move-in, to carrying out swift repairs and keeping in regular communication with tenants, property management is hugely important. It makes up a major part of the tenant’s experience of your property, so success in this area should give you a better relationship with your tenants. This could make them more likely to stay for longer, keep up with rent payments, and look after the place better.
HomeViews conducted a study looking at how property management affects tenants. It questioned 5,000 tenants across both build-to-rent and build-to-sell accommodation.
For the majority of tenants, the most important thing is responsiveness to issues and problems, the survey found. Good communication and a quick turnaround for repairs were also key. It also found that tenants in the top-rated developments were happy at the condition and upkeep of communal areas and gardens.
Properties rated the lowest in the study were found to have a number of issues with recurring problems within their buildings.
While the study only looked at build-to-rent, the same theory applies to buy-to-let houses and flats, including HMOs. Landlords should see tenants as their customers, and reputation management is important.
The perks of self-managing
Since some agents increased their letting fees for landlords, self-managing has been more tempting for some. According to one NLA report, letting and management fees rose by around 59% in the 12 months to December 2019.
There is also some evidence that tenants in properties that are managed by the landlord are happier. This will only be the case where the landlord takes their responsibilities seriously, however.
Dan Wilson Craw, interim director at Generation Rent, said: “The English Housing Survey looked at satisfaction rates for tenants who had paid a fee at the start of the tenancy and those who hadn’t.
“We might assume that those who hadn’t paid a fee aren’t renting through a letting agent… and they were more satisfied with their tenancy by about eight percentage points.”
For those who want to do it, it can be rewarding to have a relationship with your tenants. Some tenants may prefer to be able to contact the landlord directly about issues. It can also make landlords feel more in control and informed of what’s happening with their letting.
John Stewart, policy manager at the RLA, said: “Self-managing a property can be a very positive experience, allowing landlords to build relationships with their own tenants and service providers.”
“It enables landlords to retain full control over all major decisions from referencing to cost of maintenance, as well as saving money on agents’ fees.”
Opting for a letting agent
It is important to note that not all letting agents upped their charges after the tenant fees ban. Many were well-prepared for the change so they didn’t need to pass the costs onto landlords.
There are also huge benefits for those who appoint a managing agent. While it comes at a cost, most landlords treat it as a necessary business expense. Especially for those with multiple properties, or buy-to-lets in different locations to where they live, an agent can be invaluable.
Letting and management companies will also take full responsibility for keeping up to date with regulations. The buy-to-let landscape is constantly evolving, with new rules and standards emerging regularly. This can avoid you running into any legal issues down the line.