Property management companies support residential landlords with their rentals. The exact responsibilities of a property manager vary based on the service package, the price, and the type of property being managed. Property management typically covers marketing the property and finding tenants, tenancy administration, rent collection and legal compliance.
Not every landlord wants or needs help with managing their rental. The term ‘property management’ is often misconstrued as an ‘either/or’ situation. You either go for it, hand over your keys and have no control, or do everything yourself. However, the reality is that management of a property is much more varied than this, with a range of services, fee structures and levels of involvement to choose from.
In this article, we’ll cover everything you need to know about property management companies and the management of residential lets. Including what it is, the services that are typically covered, what you can expect to pay and how to decide whether management is right for you.
- What is property management?
- What does property management include?
- Are there different types of property management?
- Do I need property management?
- How to choose the right property management service
- What are the benefits and drawbacks of property management?
What is property management?
Put simply, property management is the overseeing of real estate and physical property. In the private rental sector, a property manager is a person or organisation that looks after a property on a landlord’s behalf and supports them through the tenancy process.
The main purpose of having property support is to make a landlord’s life easier. It’s there to ensure all necessary administration is taken care of and legal obligations are met. This could mean assuming all responsibility or reminding the landlord what needs doing when, while being on-hand to give expert support. The property manager’s level of control and responsibility depends on the landlord needs and what the company offers.
What does property management include?
Typically, most property management companies help with initial tenancy setup and legal necessities. Services vary between companies, but typically include:
- Property advertising
- Holding deposits
- Tenant referencing
- Tenancy agreement drafting
- Deposit registration
- Rent collection
Many management services are more extensive, but these are the basic features to expect. Additional services, either available in more comprehensive plans or as added extras, include:
- Conducting viewings
- Legal certificates and property inspections
- Rent protection or insurance
- Legal expenses cover and eviction support
- Home emergency cover or property maintenance
- Property administration, accounting and taxes
Are there different types of property management?
There are a few different forms of management with varying payment structures and benefits.
Property management charged as a percentage of rent
Most high-street property managers operate at a percentage rate. This means their charge is a percentage of the monthly rent. The rate varies depending on the level of service provided. For example, a “tenant-find” service rate can be as low as 6%, whereas “fully-managed” can be 10-15%. If you’re getting a quote from a property manager, make sure you are aware whether VAT is quoted within the percentage or in addition i.e. 10% + VAT.
Landlords can also get property support on a fixed-fee basis. This is a set fee every month, regardless of the rental amount. Fixed fee services, such as LettingaProperty.com, are extremely cost-effective for landlords with higher rents. Landlords letting in the South and London areas often find fixed fees to be much more economical.
Find out how much property management would cost you with our Letting Fees Savings Calculator.
Rent to rent property management
Rent-to-rent property management is when the management company has total control of the property. The company will agree to pay the landlord a fixed rent and will sublet the property for a higher amount. The difference between these rents is kept as their management fee.
This is a good option for landlords who don’t want to be involved with their property at all. They will get their rent every month, but it’s likely to be lower than the market rent.
Do I need property management?
Opting for management is a personal choice. It really depends on the problems you need to solve, your budget, and what you want from a property manager.
Some landlords want to hand over the keys, relinquish control, and simply get their rent paid every month. Other property owners prefer more involvement, but still need support with the legal aspects and administration, like tenancy agreements, rent protection and deposit registration.
Ultimately, it’s down to individual landlords to determine what kind of support they want or need.
5 things to consider when comparing property management companies
If you’re thinking about property management for your rental, here are some considerations to help you make your decision.
Firstly, what is your budget? Taking into account your expected rental income, what fee can you realistically afford? Think about the cost and convenience of doing these things yourself vs paying for expert help.
Make a list of the services you really need and compare the prices of at least five different companies. Use our savings calculator to find out how much you’d pay with LettingaProperty.com vs a high-street agent.
How much of your time is being taken up by your rental property? Are you working part-time or retired, with time for your landlord responsibilities? Or do you struggle to balance these with other commitments?
Thinking about how much time you can actually dedicate to your property will help you decide what level of service you really need.
#3 Level of service
What parts of rental management do you find difficult? Take a look at the services offered and consider whether you really need it all.
If you live far away from your rental, you’ll need some help with viewings. But if you’re in the area you could easily do it yourself, so why pay for it?
Similarly, some management includes maintenance and repairs, but if you know local tradespeople already, or you’re pretty handy, it could be easier (and cheaper) to do it yourself.
It’s wise to compare the features of different services to figure out what you want. Knowing exactly what you need when researching what’s included (and what you’d have to pay extra for) will make your decision much easier.
When considering property management, you need to think about how much control you want of your property and tenancy.
If you’d like a say in who lives in your property and want to be involved in key decisions, a “hand over the keys and forget about it” service probably isn’t right for you. Consider the level of involvement you’re comfortable with and don’t forget to read the terms and conditions so you know what you’re responsible for and what decisions (if any) can be made without you.
Comparing fees and services is essential, but the best way to find out what a company is really like is to hear it from the customers themselves. Checking out reviews on Google and Review Centre will show how other landlords and tenants rate their experience and help you decide whether it’s the right fit for you.
What are the benefits and drawbacks of rental management?
Like everything, property management services have their pros and cons. Confidence in legal compliance is a huge benefit for landlords. With over 150 laws impacting the property sector alone, landlords can be overwhelmed by their legal responsibilities. The support of experts that know the ins and outs of the rental industry is a huge help.
Rental management relieves stress and hassle for landlords. Knowing that reference checks, tenancy agreements, deposits and everything else is being taken care of puts their mind at ease and frees up their time. Some landlords are grateful for services that require minimal involvement, but others may view this lack of control as a negative.
The cost of property management is what puts most landlords off. Percentage rates can be extremely expensive, while rent to rent can mean landlords receive way less than market rent. Perceived value for money entirely depends on your monthly rent and your budget.
There are of course financial benefits to property support. Rent collection makes receiving rent payments much easier, and rent protection – rent paid in full every month regardless of whether your tenant pays – gives you financial security and peace of mind.
Get rent protection, legal cover and tenancy support with the Complete Plan.
Is property management right for you?
So, is property management what you need? Perhaps you’re already with a company, but now you’re reconsidering the service you’re paying for. It could be time to switch letting agents, or at least shop around to see if you could save money elsewhere.
What’s your experience with property management? Share your thoughts in the comments below.