A quick guide to property management
Get the lowdown on property management, your responsibilities as a landlord, the benefits and costs of outsourcing to an agency, and how property management software could help
Managing your properties effectively is part and parcel of property development, especially if you opt for the buy-to-let business model. However, it can be hard to know exactly what is and isn’t your responsibility, and there are a wide range of businesses clamouring to help – for a fee of course – ranging from letting and property management agencies to specialised property management software.
This guide will help you navigate this jungle, explaining what property management is, what your legal responsibilities as a landlord are, and the costs and benefits of outsourcing your property management. We’ll also break down what property management software is, and how it could help your property management business.
In this guide, we will cover:
What is property management?
In essence, property management is about taking care of the properties you own and ensuring that they keep producing income from happy tenants. It usually entails the following duties:
- Screening tenants to ensure they’re suitable for the property
- Setting the amount of rent that tenants pay
- Collecting rent from tenants at set intervals (every week/month for example)
- Managing the budget for the property or properties
- Property maintenance
Of these, it’s likely to be property maintenance that takes up most of your time. The official Government page on renting out your property in England and Wales (different regulations apply in Scotland) details all your responsibilities as a landlord, but here are some key regulations you should be aware of:
- You must verify the immigration status of any adults living in your property, and check that they have the legal right to rent in the UK
- You must ensure that your property has an Energy Performance Certificate (EPC)
- You must have gas safety checks conducted every 12 months by a Gas Safe registered engineer, and provide your tenant(s) with a gas safety certificate
- If you’re offering the property as an assured shorthold tenancy (which applies to the vast majority of tenancies), you must protect the tenancy deposit in a government-approved deposit protection scheme
- You must fit and test smoke alarms and carbon monoxide alarms
- You must give your tenant a copy of the How to rent checklist when the tenancy begins (this can be by email)
- You must make sure that the wiring and electrics in your property are safe to use and have them regularly inspected
- You are responsible for the majority of repairs in the property, and must ensure that repairs are completed in a reasonable timescale (your tenant should take care of minor jobs, like changing light bulbs or the batteries in the smoke alarm). If you need to access the property to inspect its condition, you must give at least 24 hours notice in writing and arrange a suitable time for your visit
Additional responsibilities apply if you are renting out a house or flat in a House in Multiple Occupation (HMO)
Managing the property yourself vs outsourcing to an agency
Like so many business activities, property management involves a mass of red tape. As such, it’s no surprise that a host of agencies are eager to help, including dedicated property agencies and the property management departments of letting agencies.
Of course, this assistance comes at a cost, and a range of options are available depending on exactly how much of the property management work you want taken care of.
Managing the property yourself
If you have the time and expertise, you could manage your property yourself – but as the list above indicates, there is a lot of work involved. You’ll need to arrange viewings, handle deposits, check immigration status, make sure the deposits are held in the right scheme, and negotiate the amount of rent paid. Then there’s the property maintenance tasks, from making sure gas appliances are regularly tested to contacting tradespeople to make sure that anything that goes wrong is quickly fixed at a reasonable cost.
You may also need to conduct a credit check to ensure that the tenant is able to pay the agreed rent, and advertise the property to find tenants. And this isn’t even an exhaustive list… Being a landlord comes with a lot of responsibilities, and you’ll need to make sure you comply with all of them.
Outsourcing property management to an agency
Given this list of obligations, it’s no surprise that many landlords use property management agencies, or simply pay their letting agent to take care of it all. There are three basic levels of service offered by these agencies – tenant find, tenant find & rent collection, or full management.
- Tenant find
The agency will market your property, conduct viewings for prospective tenants, check their references, and draw up tenancy agreements. They may also collect the first month’s rent, handle the deposit, and for an extra fee, conduct an inventory and check-in checks on the day your tenant moves into the property.
Cost – a flat fee that’s either equal to one month’s rent, or 6-8% of the total rent to be paid during the length of the tenancy
(fees can be higher in London, and vary between agencies)
- Tenant find & rent collection
This one does what it says on the tin – the agency will handle all the tenant find services discussed above, and also collect the weekly or monthly rent payments.
Cost – 8-12% of the monthly rent (ongoing fee)
(fees can be higher in London, and vary between agencies)
- Full management
Quite what is meant by full management varies from agency to agency – some will conduct emergency repairs without checking with you, for example. Make sure to read your contract carefully to know exactly what is and isn’t included.
Generally though, as well as everything related to finding tenants and collecting rent, the agency will take care of the day-to-day maintenance of the property. This includes arranging for repairs, and returning the deposit to the tenant once a check-out inventory has been completed and no significant issues have been found.
Under a full management contract, some agencies will also conduct rent renewals and negotiate rent increases with your tenants.
Cost – 10-15% of the monthly rent (ongoing fee)
(fees can be higher in London and vary between agencies)
Property management software
Unless you’re particularly committed to tracking the properties you’re managing on an Excel spreadsheet, you’ll want to at least consider using property management software.
Rentila is bright, colourful, and if you only have one property, free. Its main features simply allow you to keep track of everything related to the properties you manage.
- Pre-filled draft rental agreements
- Simple accounting functionality
- The ability to easily create inventories, and produce electronic receipts that can be downloaded and emailed to your tenants.
- The basic version of Rentila is free, but limited to one property and two tenants.
- The Silver package covers 2-5 properties and costs £4 per month, or £40 per year.
- The Gold package allows unlimited properties and costs £8 per month, or £80 per year.
(all prices listed exclude VAT)
Targeted at professional landlords, Landlord Vision is a powerful cloud-based solution for managing your entire property portfolio. As well as the sort of features discussed above with Rentila (keeping track of expenses and payments, creating inventories and tenancy agreements etc.), Landlord Vision has some great advanced features that give you deeper insight into your portfolio while slashing admin time.
Key selling points include:
- Reports that show the comparative performance of all your properties
- Comprehensive accounting functionality that calculates your tax liability using the latest HMRC guidelines
- A mobile app that allows you to easily update figures on the go
- Excellent customer service, including unlimited phone support
A 14-day free trial is available, but the cost of Landlord Vision depends on how many properties you need to manage.
There’s an easy calculator on the website, but here are some examples:
- Up to 3 tenancies will set you back £3.97 per month
- Up to 10 is £5.99 per month
- Up to 20 is £9.22 per month (with the price increasing for every 10 tenancies after that)
(all prices listed exclude VAT)
The costs of property management should be an integral part of any property development business plan. If you want to manage your properties yourself, then make sure you’re aware of all the regulations you need to abide by – and if you want an agency to help, make sure you get a variety of quotes, and ensure you know exactly what you’re paying for. Whichever approach you take, check out the property management software products available, and weigh up the cost against the time and stress that they could save you.
Finally, always remember that the relationship you have with your tenants is vital to the success of your property development business. Good tenants can be hard to find, and will provide a steady income stream for years – so keep this in mind when negotiating rent increases or choosing between letting agents.