The Pros and Cons of Property Management Agencies

Property management agencies are more often than not associated with letting agents i.e. the letting side rents the property out for you and the property management side runs things from there on. This management service is a godsend if you don’t want to be a hands-on private landlord, or if you have several investment properties with tenants, but what exactly does the service include and how much does it cost?

The pros of using a rental property management agency

Not every private landlord wants to be a hands-on landlord. Some like to stay in the background solely as a property investor and this means leaving any problems that arise to someone else…their chosen rental property management agency.

Among other things, you as a private landlord can expect your chosen agency to complete all of the following with regards to your investment property:

The search for suitable tenants – letting agents have the advertising means to find tenants quickly, and this is imperative when the mortgage needs to be paid.

  1.  Reference checks – each prospective tenant will need to provide references and undergo a credit check. This process can take up a lot of your valuable time, and if the credit check or references come back with bad news it turns into wasted time.
  2.  A tenancy agreement – tenancy agreements for a rental property need to cover every eventuality, and it’s a safe bet you’ll miss out a few if you attempt it yourself. You can buy tenancy agreements but they are generic and may not cover everything you want covered.
  3.  Property maintenance – this is one of the most beneficial services offered by property management agencies. Any damage to the property, both internal and external, is fixed without you raising a finger. Similarly, things like landlord certificates, gas appliance checks and annual inventories are all carried out on your behalf.

The cons of using a rental property management agency

Probably the biggest drawback to being a backseat landlord is the cost. A run-of-the-mill residential property management contract will normally cost between 8 and 10% of the rental amount per month e.g. you rent your property for £1000 per month and pay between £80 and £100 for it to be managed. This may not be a problem if you are seeing a healthy profit from your investment property but if your income from the property is only slightly more than your outgoings it could be disastrous.     

The other thing to consider is the free rein that the property management agency has with regards to your money. For example, let’s say the tenant in your property investment complains about a dripping shower. It might only cost you a few pounds to put right if you did the job yourself but you could get stuck with a plumber’s bill for several hundred pounds because the job was in the hands of the management agency. You can of course ask them to inform you when repairs etc. need doing but this means you no longer get to take a backseat.

Whether you use a rental property management agency or not is a personal choice. The services they provide are very useful but they do come at a price…the question is do their services justify their fee?