To manage it or not to manage it? That’s the question posed to private landlords who have just let their property.
Landlords are tasked with many responsibilities when investing in a rental property, some of which they need to undertake themselves; while others they can pass onto a property management company.
The purpose of a property management company is to remove the burden from private landlords by dealing with everything from managing contracts to handling maintenance repairs. Yet, some landlords prefer to manage their buy-to-let without any professional help.
Whether or not they should self-manage their rental property or employ the services of a property management company comes down to several factors. Everything from a landlord’s permanent residence to time and availability should be factored in when making a decision.
If you’re a landlord, you might be split between the decision to self-manage your buy-to-let property or instruct a property management company to take on the responsibility.
In this article, we’ll help you decide by looking at the differences between self-managing and hiring a property management company to maintain your buy-to-let.
Property management companies exist to make the life of a landlord easier by looking after the property and managing the tenants. But what exactly does managing a buy-to-let entail, and which aspects of property management do professional companies cover?
Some property management companies exist as part of a letting agency. This means the lettings department takes on the responsibility of finding tenants, with the property management division taking over once the property is rented.
As part of the tenant-finding service, most management companies conduct tenant referencing and then draw up the rental agreement. The landlord gives their final approval on tenants and signs the tenancy agreement.
Property management companies are the go-to contact for tenants as they deal with all the particulars, including day-to-day contact. They will act as the managing agent and deal with general questions from tenants.
A key issue tenants face is handling maintenance issues relating to appliances, the heating or fixtures. Even excellent tenants who take care of the property may need repairs scheduled from time to time. A property management company takes responsibility for maintenance requests and finds the right tradesperson to fix the job. Sometimes they may even have a pre-agreed budget with the landlord, fixing issues in a specific price range without liaising with the landlord. However, for larger jobs, such as boiler replacements, the managing agent will require sign-off from the landlord.
Property management companies collect rental payments from the tenant and then release the funds to the landlord. The amount the landlord receives is minus the company’s fee, as well as any agreed funds for repair costs.
Professional checks should be carried out on the condition of a rental property while the tenant is in situ. Property management companies assume the responsibility of making sure the tenant is looking after the rental. Most companies check the property quarterly, though some check once every six months.
All smoke and carbon monoxide detectors should be in working order, while gas and electric certificates need to be up to date. Property management companies can arrange to have appliances checked for safety standards, though it’s up to the landlord to confirm all relevant certificates and checks have taken place.
Many landlords will have some kind of cover like building insurance in place before a tenancy begins, but property management companies will notify them when they are up for renewal. The company can even go as far as arranging new cover.
The fees a landlord can expect to pay for a property management company vary. Companies typically offer their services for around 15% of annual rental income, which would mean paying around £3,000 for a yearly rental income of £20,000.
However, fees are often negotiable, and it is possible to get the price down. As a general indicator, landlords who are thinking about hiring a property management company should expect to pay between 10-15% of their rental income to the management agent.
Convenience is the primary reason why landlords hire the services of property management companies. Landlords with large portfolios treat it more as a business and truly prefer professional help. Accidental landlords, or those with just one buy-to-let, may have a full-time job and therefore don’t have the time to manage the property.
There are also occasions where landlords prefer to have limited contact with tenants. Using a property management company is one way to achieve this, as the managing agent will liaise with the tenant directly and manage day-to-day issues.
Location also plays a role, as many landlords (especially in London) are overseas investors, and managing their buy-to-let isn’t feasible if they are based in another city or country. Essentially, managing a property is a big task. Landlords might find the responsibility of maintaining their buy-to-let daunting and wish to hire professional help so that everything runs smoothly.
Good tenant relationships are a key aspect to a successful tenancy, and communication goes a long way to smoothing over any issues. However, some landlords prefer taking a hands-off approach and leave the managing agent to communicate with tenants.
Many tenants prefer using a managing agent, as the property management company becomes the sole point of contact. This means tenants can expect efficient responses from the agent during working hours. Property management companies also have out-of-hours contact numbers in case there is a pressing issue, such as a tenant misplacing their keys.
If a landlord decides to self manage, they need to make themselves available to the tenant. That means responding to issues within 24 hours and making sure maintenance repairs are taken care of. The approach is more hands-on, which involves increased communication with the tenant.
Not all landlords go down the route of using a professional property management company. Some prefer to take on the responsibility themselves. This is especially true for landlords who might only have one property and live fairly local to their buy-to-let.
Self-managing may also appeal to landlords who like to be more involved and actually enjoy the management tasks involved. Their responsibilities will be the same as a professional company. Except for the fact they’re the only one required to make sure everything is running smoothly in the property.
Once a landlord enters a contract with a tenant, they are providing a service. Landlords that self-manage need to behave and act like they’re running a professional business at all times. That includes everything from tenant communication to dealing with issues in the rental property. However, if a landlord prefers to take a more passive approach, it’s worth getting a property management company to act on your behalf.
Blueground provides an extensive property management service that covers everything from tenant referencing to property maintenance. Meaning, as a property owner who has leased your place to Blueground, all you have to do is sit back, relax, and collect your passive income.
We rent the property from landlords directly. Then, our interior design team outfits your space with high-quality furnishings and modern amenities. After your apartment has been transformed, we take it upon ourselves to source and vet high-calibre, professional tenants.
Best of all, even if your property is empty (perhaps your in-between guests or there is just a market slump) you will still get your monthly rent, as Blueground is technically your tenant - and is one that always pays on time!