These are more challenging times for Landlords in Harrogate. We’re acutely aware that good quality rental property is in short supply in the town whilst strong demand has increased income (rents/yields), reduced void periods and allowed landlords to be highly selective in choosing new tenants. However, as we blogged very recently, increases in Stamp Duty on Buy To Let properties and changes to taxation under Section 24 cast a dark cloud an otherwise blue sky.
In brief “ reforms “ of Section 24 mean that PRS Landlords must pay tax ( from 06/04/17) on that part of the rent that has been paid to the Lender as mortgage interest and that the Inland Revenue will tax that money as if it was still in the property owners’ bank account. This “ reform “ reverses a longstanding fundamental in England that “ income less costs equals profit “ and it’s only the profit which should be taxed.
Sadly the above is not the end of the unsettled financial weather for landlords/ Buy To Let investors.
Due to local rents being robust, any new properties listed for sale in the town are very carefully scrutinised by any number of “good to go” Buy To Let investors. “Good Renters” in prime locations (close to railway stations/Lancaster Road & Duchy hospitals/desirable school catchment areas etc), tend to sell for strong money.
This does tend to depress short term yields in Harrogate, but our local savvy local landlords prefer to look at the bigger picture in terms of capital growth and predictable/assured income.
All the above means that it’s absolutely essential for any landlord or Buy To Let investor to choose their Letting Agent very carefully indeed. A really good agent can help put thousands of pounds into your pocket.
It is of course absolutely vital to choose the right agent as there are no statutory standards for service or for fees and your agent will be responsible for very important long term financial and legal matters. There are a good many Letting Agents in all our towns & cities and most large Estate Agencies operate Letting divisions. Below are 10 tips to help you choose the best letting agent for you.
1. Location
It makes sense to use a letting agent that is located in the same area as your rental property. Most landlords prefer to use agents who are members of a trade or professional body such as ARLA (The Association of Residential Letting Agents) as they follow strict codes of professional conduct and have proper guarantees in place to protect/insure landlord and tenant monies.
2. Service Level
Most Letting Agents offer three levels of service;
- Tenant Find – that the landlord will be undertaking the day-to-day management of the letting.
- Tenant Find + Rent Collection – the agent will find the tenant and collect the rent but all other matters will be dealt with by the landlord.
- Full Management – the agent takes care of everything to do with the letting from start to finish and will only involve the landlord if something out of the ordinary needs their decision.
For new or less experienced landlords, Full Management is often the service level of choice for peace of mind.
3. Paperwork
A competent, professional letting agency will handle all the paperwork involved in a letting. They’ll take up references on new tenants, carry out credit-checks, confirm the tenant’s employment details and check that the tenant has the right to reside in the UK.
The Agent will draw up the tenancy agreement and collate the required Gas and Electrical Safety Certificates. Agents can also obtain an Energy Performance Certificate (EPC) for the property and this must be given to any prospective tenant.
4. Marketing, Advertising & Rent
A property without a tenant will cost you money, so make sure the Letting Agent will be proactive in finding a good tenant as soon as possible after they are instructed.
Ask the Agent which local papers they advertise in. Check that they are listing properties on the main internet portals such as Rightmove or OnTheMarket . Find out if they already have tenants on their books who will be interested in your property.
In order to get you the best return, letting agents will advise on what level of rent can be expected for a property and will be able to show you details of similar properties that they have let for a similar figure.
5. Client Money Protection
Letting Agents handle deposits, rents and maintenance monies and landlords and tenants need to be certain that the money is safe. A reputable and professional letting agency will be able to demonstrate that it belongs to a Client Money Protection scheme.
In the extremely rare event of a fraud, the landlord and tenant will be reimbursed for any loss. All landlord and tenant monies should be held in a Client Account, separate from the Letting Agent’s general bank account. It is important that you ask for confirmation that this exists.
6. Deposit Law
If you choose the Tenant Find + Rent Collection or the Full Management service from an agent, they should be able to deal with matters concerning the security deposit that is paid by the tenant at the start of the tenancy.
This money, which is usually equivalent to 6 or 8 weeks’ rent, is held by the agent on behalf of the landlord as a safeguard against the tenant causing damage to the property. By law, such deposits must be registered with a government approved tenancy deposit scheme.
Ask the agent for details of the scheme they use and for confirmation that the deposit has been registered.
7. Safety Legislation
There are a number of pieces of legislation in place to protect the safety of tenants; a good Letting Agent will ensure that the landlord is in complete compliance with the legislation rules.
This is critical as the legal obligations lies with the landlord a property with a gas supply must have an annual maintenance check and a Gas Safety Certificate must be provided by a fully qualified Gas Registered Engineer.
Most agents can make the arrangements. If electrical items are provided by the landlord, they must be safety tested by an electrical engineer. Again, the Letting Agent should be able to deal with the matter. Any soft furnishings at the property must comply with Fire Safety Regulations. Professional Letting Agents will advise on compliance.
Whilst good Letting Agents will handle these matters, the legal responsibility remains with the landlord.
8. Repairs and maintenance
Every property needs looking after. Ask the Letting Agent if they carry out regular inspections to ensure the tenant is keeping the place in good order and to check if there are any maintenance issues. Letting Agents usually have a panel of tradesmen who can be called upon to make repairs, maintain gardens and carry out annual tasks such as clearing gutters.
If a Letting Agent is managing the property during a tenancy, it is usual for them to have the authority to carry out necessary repairs up to a certain value without reference to the landlord. This will be for such things as a leaking tap or a slipped tile on a roof. It is a good idea for a landlord to leave a small sum of money with the Agent as a “float” in case of any maintenance emergencies and the Agent will account for the money as it is spent.
9. Fees
At the time of instruction, the Letting Agent will ask the landlord to sign a document that details the fees that are payable for the services provided by the agency. Before signing, landlords should carefully read the document and ensure that they agree with all the possible charges.
Be clear about all possible charges for renewal of an existing tenancy, charges that may be payable if the property were eventually sold to a tenant, charges for termination of the agency and the wide variety of charges for such things as advertising, inventory preparation, periodic inspections and so forth.
10. Accounting to the landlord
Check with the Letting Agent the arrangements that they have for accounting to you for the rent received, costs, and charges and how often they will transfer balances to your account.
Naturally we believe that Myrings fulfil all the above essential requirements and much more, including a commitment to provide our landlords with a superb, dedicated and friendly service.
If you wish to discuss the above or are interested in the property market in Harrogate then please come along and see us and enjoy a free no obligation chat about the services we provide.
