Tenants & landlord

[namesweb]

So I've started up a new lettings agency, and asked my local shop keeper if he charged to put flyers up. I gave him the flyer after looking at which he asked me to advertise the property above his shop.

On the same day I found a potential tenant just by phoning around, and matching people's requirements. A woman and her little girl came to see the property within the hour as she lived down the road and was moving out of her current property.

I'm pretty clued up on the official way to do things, and this is what I've put forward:

1) there will be a full tenant reference check at a cost of £31 to me, including previous landlords, employers, credit checks etc.

2) I've put together a comprehensive Assured short hold tenancy agreement.

3) I'll be using the DPS to protect her deposit. The landlord insists that on all his other properties, he does not pay for rent guarantee, and this is included in his 8% management fee (well maybe, it's still not free!), and he also says he retains the deposit himself. I said that he is liable for prosecution but he goes that's the first he's heard of this...

4) I've advised the landlord to get rent guarantee insurance.

I've mentioned in my landlord-agency contract that there is a one off charge of £49, and we're charging 5% to manage the property.

I've got a feeling that this landlord will be a right *-sehole if anything goes wrong and will blame me for it, even though I've provided the full documentation and proper advice in writing within the landlord-agent agreement, and will scapegoat me even if it's not my fault. I'm thinking he can sense in a bit new.

I've got professional indemnity insurance up to £100,000 and this will be my first contract so I'm keen to keep everything above board. I have no reason to suspect the tenant of being rogue, but you never know. But the landlord is now giving me grief, and I'm not sure it's worth it, but then it's my first contract so I'm keen to secure some business!

Any advice for a newbie to running my own lettings agency is much welcome!

 

[FirstClassVirtualOffice]

Does he know that if he doesn't put the deposit into a scheme the tenant can automatically claim back something like 2 or 3 times the deposit amount? So far as I know, that's what can result, not a prosecution. Other things are the gas safety check. One supposedly has to be done for every tenant moving in - are you going to arrange this and charge him or are you leaving that side of things to the landlord?

5% sounds low? I'm sure my uncle pays something like 10%. But anyway, you are better off charging what the local average is and then discounting it e.g. "Normally 10% but reduced until 30th April to just 5% for all new listings" until you get a feel for what you can charge. Don't undercut competitors as a start up because if they want to undercut you, they can afford to and you have no where to go after that.

You will always get grief from customers and the ones who seem picky or have attitude at the start are the ones who want to pay the least, receive the most, yet complain the most. But you can't avoid bad customers, just make sure you charge enough to make it feel worth it.

 

[Alan]

5% is too low for management. The normal starting point from memory is 10% finder only, 12% find & collect rent. 15% for find, collect rent and manage. Of course then negotiated down.

 

[namesweb]

Guys many thanks for your replies. I feel quite a bit better!

Really ive offered 5% because it's my first contract, I want to do a good job, and normal rate around here is 8% anyway. I want to do a good job and get referrals, as having 20-30 properties on my books at 5% is worth more to me than having only 2-3 take the punt @8% (General market rate here anyway) whilst I'm still new. Good point on not going in too low with nowhere to go down to though).

I think I've covered pretty much all the bases, but is there anything I'm missing here?? As for gas certs, will leave that to the landlord.

I guess you're right about bad customers, but it'd be good to get off to a positive start. Anyway 5% of £1200 pcm isn't too shabby to start!

I'll look at amending my leaflets to make my offer of 5% a more "special" than my normal rate

Thanks again.

PS if anyone has used a rent guarantee insurance that may pay commission on policies, would appreciate a nod in their direction.

 

[Bob]

My daughter pays an extortionate amount to Foxtons in London for full management but to be fair they seem to be able to get good tenants at good rents which tends to counteract their fees. Current tenants have been in 3 years. Totally agree that you must sort out Tenant Rent Deposit. Legal requirement

 

[FirstClassVirtualOffice]

And I would say if you are managing the tenancy that you should not let the tenants sign without you having been provided a copy of the gs cert which you can give to tenant in their tenant pack with everything else. Where legalities are concerned, you have to know when to turn away business.

 

[namesweb]

Thanks @FirstClassVirtualOffice I'll try and get one off the landlord later today.

I do have a prominent clause in both the AST and the landlord-agency agreement that says he must provide on demand a gas cert, electrical cert, along with a couple of other safety certificates, so I have been tempted to leave it at that... I've also said that if he can't, we'll do it for him but there is a cost for it, and it's his responsibility to ensure he's got one, or to inform us he needs one. But yeah it would be better to just have a copy on hand.

Yeah, I'm sure it'll be fine as I've toed the legal line from what I can see, and fulfilled all my obligations. Either way, good experience to get things rolling!
Thanks

 

[FirstClassVirtualOffice]

But the tenant is legally supposed to be provided with a copy...so your clause in the landlord agreement is insufficient.

 

[ethical PR]

You mention you have a tenancy agreement and landlord agreement -did you get these drawn up by a legal professional.?

Agreed about gas certificate you definitely need to have a copy to provide to the tenant when moving in.

 

[namesweb]

@ethical PR - The contracts were made using an online paid-for contract drafting service that gives legal cover in case the contracts caused liability. Only problem is I had to amend a few details to suit the tenancy, which I imagine voids the cover. I'll look into getting it proof-read by a lawyer.

@FirstClassVirtualOffice - yes you're right, I'll ensure the tenant has a copy before moving in to comply with the legislation.

Thanks guys

 

[deniser]

The other legal requirement which I haven't seen mentioned is that you have to have an EPC certificate before you market the property.

 

[namesweb]

@deniser thank you - I did get that from him in advance of marketing

Thank you all for the advice.

 

[Alfpwdp]

As an Agent you must also be registered with a Property Redress Scheme.
I don't have enough posts to Post the link at this time but if you google property redress scheme then the third result for me is the GOV uk site which mentions all of them and the legal requrement

 

[Alfpwdp]

With regard to the management percentage, then according the the Property Academy Landlord survey 2014 the most common percentage by far was 10%