Are you a Lancaster landlord? If so we have a simple property fact for you this week. It’s come from a couple of recent surveys conducted by both Home let and The Property Academy.
75% of renters are more likely to renew their contracts if renting through an agent.
It made us ask why?
Many tenants prefer dealing with an estate agent. It takes out the awkwardness they may feel when they report that a repair is needed. They have more confidence that the property is being looked after in terms of maintenance and they know that they can easily get hold of someone when they need to.
What is interesting is that there are still nearly half of landlords that manage their own property. Whilst we don’t doubt that many of these know what they are doing, we still weekly come across landlords who aren’t up to date with the legalities, fail to inspect their properties and have large rent arrears.
A true story
I asked an ex-landlord whose ex-rental property we have just sold why he chose to self-manage. In a nutshell – it would have cost him £72 a month (inc vat) with an estate agent like ourselves. I politely argued that it was just £72. He politely argued back that over 5 years, it was £4320. He felt this was expensive when he could do it himself. Plus he had a friend who was a plumber!
Now, this is where it gets interesting. He rented his property out at £600pcm. He never increased the rent. We rent a very similar property out on the same street for £650 pcm. The going rent for this street has been approx £650 for the past 2 years. He has missed out on a potential £1200 extra rent ( £50 x 24 ).
He had a tenant during Covid that did not pay for 4 months. He did not have a rent guarantee policy so he lost this money. £600 x 4 months = £2400 of missed rent. This is £3600 in potential lost rent already.
His latest tenant wasn’t the best. The home had some decorative damage and was left dirty. The carpets needed replacing. The small garden hadn’t been looked after. The home felt sad. The bathroom was very grubby and there was some other minor damage. This affected the overall value of the property by a possible £15,000.
Now to be fair to our client, he was willing to do work to the property to help enhance its value. The home was decorated at a cost of £2200. Approximately £1400 was spent on new carpets. A gardener charged him £200 and other small repairs totalled just under £500. Just over £4000 was spent bringing the property back up to scratch. It worked and the home was sold for the going rate of the street. Our client was and still is happy.
My point is, if the home had been fully managed and a rent guarantee was in place, this situation would have not happened. The home would have been inspected. More importantly, you can see that £3600 of potential lost rent + £4000 in repairs = £7600. Our client could have been £3280 better off by having his property properly managed.
Luckily for him, house prices have gone up considerably so a nice profit was still made but imagine had this not been the case? We also haven’t factored for any void periods he had which we believe were several as he had 4 different tenants over the 5 years.
Anyway back to our title. 75% of tenants are more likely to renew their contract when letting through an estate agent. This also means no void payments = maximum rent!
If you would like to chat about our rental services, please get in touch. At JDG we are here to help.
Thanks for reading
Michelle