Rental agent vs private landlord: the pros and cons

Many first-time buy-to-let investors spend a good deal of time considering whether a rental agent is the best option for managing their property, or if they could successfully handle the letting of their investment on their own.

While there are pros and cons to both options, Jacqui Savage, National Business Development Manager for Rawson Rentals, says the benefits of using an experienced and trustworthy rental agent will, for the majority of landlords, far outweigh the self-managed alternative.

“Managing a property yourself is not only extremely time-consuming,” Savage explains, “but requires a great deal of knowledge of some quite complex laws and regulations put in place by the Rental Housing Tribunal. South African law tends to err on the side of protecting the tenant, not the landlord, and if your contracts and communications with the tenant don’t fall 100% within the rules from day one, you can quickly find yourself on the wrong end of an expensive dispute.”

“As a private individual, it can be much more difficult not only drafting a solid lease agreement to protect everyone involved, but performing the necessary background checks to distinguish between good tenants and bad,” she says. “Credit checks, for example, are absolutely vital, but can be difficult to action as a landlord in your personal capacity. High-risk tenants are often aware of this fact, and are not above taking advantage of it when they can.”

By using a reputable rental agent, Savage explains that you have access not only to their tried and tested lease agreements, but also their stringent background checks, processes, and hard-earned experience that dramatically reduces the likelihood of signing a delinquent tenant. In the event that you do end up with a less-than-stellar lessee, however, your agent will also be able to help minimise the impact by streamlining the collection and, in extreme cases, eviction processes.

“Trust and reliability is the biggest concern we see from landlords who are considering using a rental agent to manage their property,” Savage admits. “Handing over responsibility for one of your largest assets is understandably daunting, and you can imagine why landlords might be nervous about trusting a stranger with something that important.”

“Fortunately,” she continues, “there are ways to mitigate your risk when contracting a rental agent. Word of mouth referrals are invaluable – a successful track record speaks volumes of a rental agent’s experience and dedication – but the most important thing to do is to check their credentials.”

All rental agents are legally required to have an annually updated Fidelity Fund Certificate (FFC) in order to trade, and must be registered with the Estate Agency Affairs Board (EAAB). “If your rental agent can’t provide proof of both, walk away and find one who can,” says Savage. Costs are the other main issue raised by landlords considering the services of a rental agent, and many question whether the time and effort saved are worth the extra expense. “What landlords might not realise,” Savage explains, “is that part of the rental agent’s responsibility is to run your property in the most efficient and profitably way for you. With the right tenant management, maintenance, and rental escalations, your property will generate more income under a good rental agent than it would under your own care. 

Add to this the decreased likelihood of non-payment and subsequent litigation costs, and that small monthly agent fee suddenly seems like a very good deal!”All signs certainly point towards using a rental agent for your investment property but, should you have any doubts, Savage recommends talking through your options with a few short-listed candidates. “Ask all the questions you need to, and take your time making a decision. The right agent makes all the difference, so make sure they tick all the boxes you need to feel completely comfortable and confident in their skills and dedication.”

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