One of my big clients has just dis-instructed themselves from 131 tenant-find only properties that used to bring in fee income of just over £50,000 per annum. They have been planning to do this for three years and they have finally done it. Are they mad? Well, let me try to explain their logic.
Their view is that these properties represented less than 1% of their income and yet were the cause of nearly 15% of all their complaints. Time after time, let-only landlords would ring up and ask for advice on what to do to recover unpaid rent. The accounts team would try to explain that they could not advise because they were not being paid to collect the rent but the landlords would fly into a rage and say “Well, you put them in there so it’s your job to sort it out”.
This is a no win situation. It is not reasonable for let-only landlords to expect to receive advice that they have not paid for but if you refuse to give it, they will never use you again.
Advice on recovering lost rent is not the only service that these landlords will expect to get free of charge. When they have a plumbing problem, they will ring and ask you to refer a plumber. If you don’t, they fly into a rage. If you do, you are giving help that you are not being paid for and you run the risk of being unable to find a plumber for your managed landlords because they are all too busy doing jobs for the let-only ones.
You also regularly get complaints from the tenants about repairs that are not being carried out or repairs that have been done to a poor standard. If the property manager tells the tenant that they are not managing the property and therefore cannot help them, they get a mouthful of abuse. But they can’t actually help because they have no authority or money to do so. As a consequence, you just end up being piggy in the middle.
All too often, the problem escalates to the extent that tenants start leaving poor reviews on social media. A handful of 1-star reviews can do terrible harm to your reputation and it seems so unfair to get these for things that were not your fault.
Perhaps the greatest battleground, however, is the deposit disputes. You are not responsible for preparing the history, you did not check the tenant in, you have never carried out a periodic inspection and you did not deal with the check-out. Nevertheless, both landlords and tenants of let-only properties still hold you responsible for their deposit dispute and expect you to intervene. If you do, you waste hours doing something that you are not paid for. If you don’t, you end up with abuse and damage to your reputation.
The potential problems can be even more serious. Even if a property is let on a let-only basis, you cannot, as the agent, wash your hands of all responsibility for compliance and safety matters. Without regular contact with the landlord and regular inspections, it is all too easy to miss a dead battery in a carbon monoxide detector or an overdue gas safety certificate and guess who will end up taking the blame if a tragedy occurs?
Far too many letting agents take the line of least resistance and end up giving their let-only landlords almost the same service as their managed and part-managed clients at half the cost and this is neither fair nor sustainable.
The worst problem, however, is that let-only tenants often stay in the same property for two, three or even ten years. As an agent, you receive little or no money for the period after the first twelve months and yet these landlords and tenants continue to use up your time, money and resources.
For these reasons, my prediction is that more and more letting agents will follow my client’s lead and refuse to take instructions on a let-only basis. As a consequence, landlords will become increasingly polarised between those that deal with the letting and all the follow-up administration and management functions themselves and those that pay a fair monthly fee to retain the services of a professional letting agent.
Adam Walker is a management consultant, business sales agent and trainer who has worked in the property sector for more than twenty-five years.