A Beginners Guide to Managing Agents
In this article we will be providing you with information on what happens if you need to employ a managing agent. If you are a residential or commercial landlord that currently deals with everything yourself but are wanting someone else to take over, then this guide is for you. As with everything, there are always advantages and disadvantages to having a managing agent take over the running of the building. This guide will explain these and then you can make a decision on whether it is best for you or not.
What is a managing agent?
You may know what a managing agent is, or you may have never heard of it before. As a brief outline, a managing agent is a person, or it could be a company who is appointed by the freeholder of a property, to manage that property and look after it on a day to day basis.
Their role will be to manage the property in accordance with the terms of the lease and statutory requirements. They will be legally responsible for the property and their specific role can be quite complex. Some of the things they will need to complete their role as a managing agent are as follows:
- Knowledge of the law
- Knowledge of health and safety regulations
- Basic accounting skills
The agent’s duties may include:
- Collecting rent and service charges and taking steps to recover any unpaid amounts and advising on what action should be taken if tenants do not pay.
- Adequately insuring the property and attending to any insurance claims.
- Ensuring the property is kept in good repair and taking action if repairs are necessary.
- Liaising with tenants generally, including ensuring any tenant’s covenants are enforced.
- Keeping up-to-date records (including budget reports of cashflow and income and expenditure).
Why use a managing agent?
A lot of landlords use a managing agent as there are many benefits for doing so –
Some of the benefits are:
- They will handle the paperwork – Great if you are a busy landlord struggling to complete it all.
- Rent collection – You will not have to remain in contact with your tenants as the managing agent will do this.
- Property management and maintenance – If there is an issue with the property, you will not be contacted, the managing agent will.
- Responsible for dealing with legislator requirements – The managing agent will know exactly what needs to be complied with and what needs to be completed, you will not need to worry about any of the legal aspects of the property.
- Dispute Resolution – Should any issues or disputes arise between you and tenants, they will be able to help.
- Evicting Tenants – There is a strict process to follow if you are intending on evicting tenants such as serving the correct notices. Your managing agent will know which to provide and ensure the notice is valid.
Why not to use an agent?
There are also many reasons why people do not use a managing agent. Some of the disadvantages are as follows:
- Letting agents are not free, they will come at a price – There is likely to be a set-up fee and they will receive a percentage of the rent. Before you commit to using a managing agent, it is crucial you understand what services are being offered, if you need some of the services and precisely, at what cost.
- Other Admin Fees – It is not unlikely that agents may charge you additional, administration fees for various pieces of work. For instance, you may also be liable for paying the agents in addition to professional costs incurred on work such as repairs.
How to appoint an agent
If you decide you would like to appoint a managing agent then you need to be careful and ensure you pick the one that suits you best. Prior to appointing a managing agent, you should decide exactly what the managing agent will be doing and talk to a number of different managing agents before you decide on who to appoint.
You will need to do your research, check websites and if you know other fellow landlords, speak to them and see what their honest reviews are of any managing agents they might have used.
You should also confirm the managing agent’s professional indemnity insurance. If the agent is a member of a professional or trade association, professional indemnity insurance will be an automatic condition of membership. However, the existence of the cover, and its extent, should be checked.
Once you have decided which managing agent you wish to use, you will need a contract. You can either instruct a solicitor to draw up the contract or you can use a template from a professional body.
It will also be helpful if when you decide the agent that you are going to use that you are clear with them on the following:
- what responsibilities and authorities the agent will have;
- how much service charge money they can spend without your authority;
- response times and other timescales for action; and
- the authorised lines of reporting and communication.
If you are clear about the above, then you should prevent any issues from occurring. You must make sure that both you and the agent know what is being done.
Wanting to change agents?
You might be unhappy with your current agents for whatever reason you are using and want to change. This is possible, however, you must consider what the contract notice period is. You must also consider exactly what the financial position is. Is there any rent owing? Any service charges? You might not be aware of this so ask your current agent and make sure they account to you for all the money they have collected before they are replaced.
When you decide on your new agent, they may do most of the handover work, but you should make the new agent aware of any issues you do know about.
If you currently are a landlord and are wanting to get a managing agent then it is advised that you do some research and ensure you find an agent which is suitable to you and what you require. Once you have found one seek legal advice on the contract that you will require. Many landlords who are renting out more than one property tend to use managing agents as it makes it easier for them to handle the workload and comply with everything.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.