It is widely thought that anyone with an interest in property and business can set up a property management company or a lettings agency. But, are there pitfalls in the process for new letting agents?
Over the last few years, the UK media have run countless news stories about letting agents failing their landlord clients and closing down, taking hundreds of thousands of pounds of client funds with them.
Many landlord investors seem to think that all lettings agents in the UK are equal, but is this the case? Does it take a certain kind of person to make a property lettings business successful?
A Good Letting Agent needs to be:
- A Good communicator – Must be able to speak to investors and landlords as well as tenants
- Customer orientated –both landlords AND tenants are your customers, so you need to find a happy balance
- Analytical –Especially if you are dealing with the rents
- Systematic – Capable of following systems and dealing with problems
- Sales driven – you need to sell your services to prospective landlords and tenants to generate business.
Unless the business is in the fortunate position of being able to employ staff, with the relevant skill sets needed, from day one, then you as the business owner will need to be master of all of the above skills, or at least be competent, otherwise you will lose business as a result of your failings.
When starting any type of new business, you need to know what the main aims and objectives of the venture are and what niche will it operate in. If you don’t, how can you expect to be able to push the business forward and in the right direction?
There are already thousands of UK letting agents managing Billions of pounds (GBP) worth of property out there, so what separates you from them? Why should landlords and property investors choose your letting agency instead of anyone else’s? Are you a HMO specialist, do you manage top end properties? Do you deal with LHA tenants?
New letting agents often spring up and disappear again within 6-12 months because the business owners did not know enough about the local property market, the lettings industry in general, the niche market of the area they were operating in or even the demographic of their client base, in other words they did not have enough forethought to be able to survive and profit.
If information and responsibility is not handled correctly, it can be a very steep and expensive learning curve for a new property lettings business, leading to a host of financial and legal issues that interfere with your client’s expectations and obligations. Such matters could also force the closure of the business, costing your landlord clients dearly.
Landlords with an ill advised or ill equipped letting agency, who have been forced to close because they failed to move with the times, can find themselves with no tenancy agreements, (AST), no gas certificates (CP12), no rental income, no deposit and no fallback plan.
In fact, in some cases reported by the media, some failing letting agents had stopped paying rents to Landlord clients several months prior to closing, meaning that the landlords ended up falling foul of the law and many thousands of pounds out of pocket.
To be successful in property lettings, as with any business, you have to have knowledge and experience, not only the practical side of property management but also on the legal side, and keeping up with the latest government legislation, including all welfare reform changes and their impact on landlord clients, can be a minefield at times, but knowledge is power and only the strongest survive.
In business, failure to plan is planning to fail and monetising your skills and knowledge is not a crime. Knowledge and experience are the keys to success so business owners need to realise where their knowledge is lacking and plug the gaps with employees or other members of a support network, such as solicitors, insurance brokers, mortgage advisor, builders etc. Letting agents can also get help is by joining the National Approves Letting Scheme (NALS) and/or the Association of Residential Letting Agents (ARLA).
If you have property for rent anywhere in the North of England or Wales contact Castledene Property Management Head Office on 0191 527 4000 who will be more than happy to help!
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