start and run a residential letting agency (small business starters)

START AND RUN A

Residential Letting Agency

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howtobooks smallbusinessstart-ups

START AND RUN A

ResidentialLetting Agency

Steve Martin

Published by How To Content, A division of How To Books Ltd, Spring Hill House, Spring Hill Road Begbroke, Oxford OX5 1RX Tel: (01865) 375794. Fax: (01865) 379162 [email protected] www.howtobooks.co.uk How To Books greatly reduce the carbon footprint of their books by sourcing their typesetting and printing in the UK. All rights reserved. No part of this work may be reproduced or stored in an information retrieval system (other than for purposes of review) without the express permission of the publisher in writing. The right of Steve Martin to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. © 2010 Steve Martin First published in electronic form 2010 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 978 1 84803 382 5 Produced for How To Books by Deer Park Productions, Tavistock Typeset by Kestrel Data, Exeter NOTE: The material contained in this book is set out in good faith for general guidance and no liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the book. The laws and regulations are complex and liable to change, and readers should check the current position with the relevant authoritie before making personal arrangements.

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Contents

Acknowledgements xPreface xi

1 Background to the Property Letting and Management Business 1 A brief history of letting and renting in Britain 1 The current market and future trends 1 The role of a letting agent 2 The competition 4

2 Where Do I Start? 6 Assessing your suitability 6 Gaining relevant experience and knowledge 9 Researching the market 11 Choosing an area 13 Choosing a specific location and premises 13 The local market and rental levels 19 Assessing the competition 19 Tips for choosing a franchisor 22 Useful resources 24 Pre-set up summary and checklist 25

3 Setting Up the Business 26 The business plan 26 Calculating start-up and operating costs 27 Business banking 29 Financing the business 31 Choosing a name 32 Company formation and legal structure 33 Insurance 35 Corporate identity and branding 37 Promotional material, stationery and business documents 38 Launching a website 42 Leasing or buying premises 50 Office equipment, furniture and fittings 51 Agency database software 52

S T A R T A N D R U N A R E S I D E N T I A L L E T T I N G A G E N C Y

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Services to offer 54 Setting your fee levels 56 Professional accreditation 57 Useful resources 58 Business set-up checklist 58

4 Marketing 60 Marketing overview 60 The marketing plan 60 Who are my customers? 61 Where are my customers? 62 Where to advertise on the internet 62 Press advertising 63 Public relations 64 Word of mouth 67 Networking 67 Leaflets and flyers 68 To Let boards 70 Cold calling 70 Promotions and special offer ideas 71 Direct mail 72 Paper directories 72 Radio 73 Vehicle livery 73 Pre-launch marketing 73 The big day – opening for business 74 Marketing budget and measuring results 75 Useful resources 76 Marketing checklist 77

5 Business Finance 78 Finance overview 78 Operating costs 78 Setting and monitoring sales targets 80 Predicted turnover 81 Cash flow 81 Profit and loss 83 VAT 83 Income tax, National Insurance and corporation tax 83 Payroll 84 Other financial obligations 85 Keeping a record 85 Bookkeeping and accounts 86 Systems and software 87

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C O N T E N T S

Useful contacts 88 Finance checklist 88

6 Staffing your Business 90 Assessing your requirements 90 Finding applicants 93 The interview 94 Choosing the right candidate 97 Your responsibilities as an employer 98 Paperwork 99 Salary, commission and bonus levels 100 Minimum wage levels 101 Management skills 101 Staff assessments 102 Staff training 103 Subcontracting 104 Useful contacts 105 Staffing checklist 105

7 Customer Service and Exceeding the Customer’s Expectations 106 Customer service is everything! 106 Telephone and email – the first point of contact 107 Communication and feedback 108 Dealing with complaints 108 Building a relationship with the landlord 110 The internal customer 112 Testing customer service levels 112 Training staff to adopt the customer care approach 113 Customer service checklist 113

8 Business Legal Requirements 114 Health and Safety at Work etc Act 1974 114 The Accommodation Agencies Act 1953 115 The Trade Descriptions Act 1968 116 The Data Protection Act 1998 117 Money Laundering Regulations 2007 118 Discrimination 120 Useful resources 121

9 Complying with the Latest Letting Regulations and Legislation 122 Housing Acts 122 Safety regulations 123


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Tenancy deposits 128 Energy performance certificate (EPC) 129 Houses in multiple occupation (HMO) 130 Stamp duty land tax (SDLT) 132 Unfair Terms in Consumer Contracts Regulations 1999 (amended 2001) 132 Changes in legislation 133 Useful resources 134 Complying with the regulations checklist 135

10 The Letting Process 136 Registering landlord, property and applicant details 136 Property valuations and appraisals 138 Consents to let the property 140 Advice on presentation of the property 141 The sales pitch 141 Information to record 142 Photographs 144 Creating eye-catching adverts for properties 145 Storing keys to the property 146 Service agreements 146 Property details form 148 Verifying ownership of the property 148 Registering potential applicants’ details 149 Viewings 150 Safety and security 154 Processing applications 156 Inventory and schedule of condition 159 Tenancy agreements and types of tenancy 162 Executing the tenancy agreement 167 Other documents 168 Check in process 170 Post check in procedures 171 Serving notice and notice periods 173 Grounds for possession 176 Useful resources 182

11 The Property Management Process 184 Property management overview 184 Rent collection 185 Dealing with late payments 186 Property inspections 187 Maintenance and repairs 189 Qualifying suitable contractors 192

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C O N T E N T S

Planning for maintenance work 194 Major works 195 Paying contractors 196 Tenancy renewals 196 Rental increases 197 Check out process 198 Claims for dilapidations 199 Returning the deposit 201 Dealing with problem tenants and other issues 202 Useful resources 203

12 Client Accounting Procedures 204 Handling clients’ money 204 Administration fees 205 Holding fees and deposits 205 Rent collection and agency fee deductions 206 Contractor payments 206 Overseas landlords’ tax payments 206 Useful resources 207

13 Additional Income Sources 208 Insurance 209 Mortgage referrals 209 Utilities 210 Sales referrals 210 Contractors 211 Advantages of passive income 212 Useful resources 212

14 The Next Step – Expanding and Diversifying 213 Buying a competitor or portfolio 214 A second branch 216 Franchising 217 Sales/Estate agency 218 Commercial property agent 220 Block management 221 Overseas sales 222 Mortgages and financial advice 223 Useful resources 224

Index 226

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Acknowledgements

I would particularly like to thank my partner Cathy for her unwavering support. Not only during the book project, but also for encouraging the initial leap into the unknown world of running my own business, from the steady comfort of a 9-5 job. Thanks also to my family for their support, especially my mother, Jean, for her dedicated attention to detail in proof reading the draft of the book.

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Preface

There are many books available to guide you through the process of starting and running a business. Until now, however, there has not been a book specifically aimed at starting and running a residential letting and management agency (referred to as letting agent or agency throughout).

The aim of this book is to help you set up a letting agency business and to guide you through its day-to-day operation. It will help you to decide if the business is right for you, to find a good location and to choose the type of agency. It will also help you decide whether to start from your own home with a very low budget or, with a larger investment, launch straight onto the high street amid much fanfare!

Like most businesses, there are several ways to start a letting agency. With the right knowledge, one can start from home with little more than a laptop and phone. Buying a franchise licence is a popular route into the business and it is also possible to buy an existing business as a going concern. The specific guidance in this book is aimed towards starting from scratch, although some guidance on choosing a franchise is given.

Franchises can be an excellent way to get a good head start into running any business and banks often look favourably upon business plans, which are aimed at purchasing a franchise licence. The process of buying an existing business is a complex process in itself and is beyond the scope of this book.

The book covers the broader, generic aspects of starting a business and focuses on the specific areas that affect letting agencies. It then covers the day-to-day operations in terms of the letting and management process. Throughout there are handy tips and checklists as well as references to industry resources. The book will be a useful resource, whether you have previous experience of the property letting industry, or are from a different background. It is a step-by-step guide to starting and running a successful letting agency, but I strongly recommend that you seek additional training if you are new to the business. There are courses and exams available from professional bodies that will give you an excellent start and also provide relevant qualifications (see Chapter 2).

The legislation regarding letting of property is updated regularly and all regulations


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and legislation referred to in this book are subject to change at any time.

You are probably reading this book because like me you are, or were, working in a regular nine to five job, possibly in an unrelated industry. For me it was manufacturing and engineering. I dreamt of starting my own business and spent a lot of time thinking and planning a business that I could excel in – one that would initially give me a good income, but with no limit to the size to which the business could grow or the money it could make. I had a passion for property and was a buy-to-let landlord. I had used letting agents to let my own properties and had also rented from several in the past. I had seen various degrees of skill and professionalism along the way and strongly believed that I could provide an equivalent, if not better service than most. I knew I had relevant transferable skills from my previous project and senior management roles and a good layman’s knowledge of property letting and management. I just needed to learn the legal aspects and specific knowledge relating to running an agency.

A book like this would have been invaluable to me at the start, as I spent a lot of time researching and obtaining information from various sources as well as taking appropriate qualifications before launching the business.

Martin Property Management was launched with very little start-up or working capital and no prior experience of starting a new business. After starting completely from scratch without a single property on the books the company was cash flow positive in the first year.

From a monetary point of view this is not particularly impressive. It was 18 months before I could take a penny out of the business. It is not a dot com business that will make you a fortune overnight and I certainly won’t be retiring any time soon! However, it shows what can be done with very little investment and relatively little knowledge. It is very possible that, with a higher initial investment, your business could grow even faster. Plus, there is no limit to potential future earnings. There are many agencies that have grown into multi-branch or national operations, so if global domination is your goal then the opportunities are there.

I hope that you find this book a useful resource. The aim is to give you a comprehensive overview of starting and running a successful letting agency and, where necessary, to point you to further sources of information.

If you decide to start your own letting agency then I wish you every success.

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1

BACKGROUND TO THE PROPERTY LETTING AND MANAGEMENT BUSINESS

In this chapter:

A brief history of letting and renting in Britain•

The current market and future trends•

The role of a letting agent•

The competition•

A brief history of letting and renting in BritainLetting and renting property is not a new phenomenon. People rented land and property in Britain during the Roman occupation, and no doubt even before that. In fact, owning your own home is a very modern trend. In the early 1900s, up to 90% of the population in Britain would have rented from a few wealthy landowners. This trend began to change with the introduction of the first Rent Act in 1915. A series of legislation followed that made it less profitable for landlords to rent property and gave security of tenure to the tenants.

The percentage of people renting kept falling until the early 1990s, when changes to legislation began to redress the balance between the rights of landlord and tenant. The Housing Act of 1988 and the introduction of the assured shorthold tenancy has made letting property less arduous for landlords while giving tenants a sensible level of security of tenure.

The rise in property prices and the introduction of buy-to-let mortgages in the 1990s has meant a significant increase in people investing in property specifically to let as a medium to long-term investment.

The current market and future trendsAt the time of writing, the property boom appears to be well and truly over, at least for now. We are currently in a recession and although the Bank of England has slashed interest rates to an all time low, lenders have not been quick to pass the rate


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cuts on to borrowers. Plus, mortgage companies are demanding higher deposits, which prevent first time buyers from joining the market. House prices have begun to fall (although not at an alarming rate). Most experienced investors are buying more selectively or are waiting to see what happens. We have not seen a rush from investors to part with their existing properties. With the market downturn, there has been an increase in people whose homes have been for sale and on the market for some time who are now thinking about letting instead. The benefit of this should be a better supply of a broad range of properties coming to market, rather than an oversupply of one and two bed apartments that has been the recent trend.

The rental market remains buoyant and demand for rental property remains high, if not higher than before. As the sales market slows, the rental market inevitably picks up pace. There are also many modern trends, which mean the number of people now renting instead of buying is increasing. These include:

First-time buyers unable to afford to get on the property ladder

More transient workforce

High divorce rate

Influx of European immigrants

Whatever happens to house prices these current trends indicate the rental market will remain a growth industry for the foreseeable future.

The slight increase in supply and increase in demand should mean that rental values remain fairly stable. If property prices continue to fall or stabilise in the short term, then rental property should still make a good medium to long-term investment and confidence should also return to the buy-to-let market as investors see potential bargain properties on offer.

The role of a letting agentThe Oxford English Dictionary’s definition of an ‘agent’ is ‘a person who provides a particular service, typically liaising between two other parties’. In the case of a letting agent the liaison is between landlord and tenants, or prospective tenants. A letting agent usually provides a range of letting (and management) services to property owners. They also match properties to the requirements of people looking to rent a home.

B A C K G R O U N D T O T H E P R O P E R T Y L E T T I N G A N D M A N A G E M E N T B U S I N E S S

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Many landlords successfully arrange their own tenancies but a large percentage prefer to use the services of a letting agent to take advantage of the agent’s marketing and advertising facilities, knowledge of the regulations associated with letting, credit checks and to act as an intermediary for rent collecting and repairs during the tenancy. Advertising in particular is becoming very focused towards the internet and the larger property portals do not allow individuals to advertise. Many of today’s landlords lead busy lives and may have a portfolio of properties that they let. They do not always have time to arrange viewings, stay up-to-date with current legislation and deal with issues during the tenancy.

The specific service offered by letting agencies varies, but typically includes:

Market appraisals

Advice on compliance with the latest legislation

Marketing of the landlord’s property

Arranging viewings

Credit and reference checking of prospective tenants

Recording inventories

Tenancy documentation

Rent collection

Arranging repairs during a tenancy

Arranging check in and check out with the tenant

These are often offered under the three main service titles of:

Tenant Finder (or Let Only)

Tenant Finder plus Rent Collection (or Let plus Rent Collection)

Full Management

The business model of a letting agency is typically to have a portfolio of properties that are managed – providing a guaranteed monthly income – and to receive further income from letting non-managed (let only) properties. The number of managed properties builds up over time and many of the let only properties can be let time and again, assuming a good level of service is provided.


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Rent is typically collected monthly in advance by standing order from tenants. Fees are normally deducted from the rent, which is paid on a specific day every month, before passing the balance to the property owner. This means an excellent cash flow stream can be generated as there are few suppliers to pay and you rarely have to invoice customers and wait for payment.

The competitionThese days there are letting agents operating in, or near, the high streets of most towns. Briefly, the main competition comes in the following forms:

Independent letting agents

Franchise operators or licensees

Estate agents with a lettings department

Larger corporate (PLC) owned chains

These competitors may come in the form of familiar high street brands, or may be small operations working from a side street or serviced office, or even from home. There is also competition from specific websites, which offer landlords a means to advertise their own properties.

INDEPENDENT LETTING AGENTS

Generally, the smaller independents promote ‘the personal touch’, flexibility and fast response to changes in the market but they may not have large advertising budgets.

FRANCHISE OPERATORS OR LICENSEES

Franchises offer national branding while retaining the flexibility of being able to make business decisions at branch level. Their prices may be high, however, to cover prominent shop front locations and franchisor fees.

INTERNET OR ‘VIRTUAL AGENCIES’

The internet-based agencies can offer the same flexibility, have lower overheads and are able to offer lower prices while spending more on internet advertising. They may, however, suffer from the lack of brand recognition.

B A C K G R O U N D T O T H E P R O P E R T Y L E T T I N G A N D M A N A G E M E N T B U S I N E S S

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NATIONAL CHAINS

The larger chains have huge marketing and branding budgets but may be slow to respond to enquiries and to make decisions. They generally also have higher fees.

Of course the above statements are generalisations. The size, levels of service, spending power and prices, will vary by individual agency rather than type. There are many independents that started with one branch and now have several in the area, or even nationwide, that may now have the same issues as larger corporate chains. Conversely, many national chains have bought up smaller branches whose management and staff are allowed to remain fairly autonomous as long as they keep making money for the corporate owners.

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2

WHERE DO I START?

In this chapter:

Assessing your suitability and relevant experience •

Gaining relevant experience and qualifications•

Carrying out market research•

Choosing a location and premises•

Assessing the local market•

Looking at the competition •

Tips for choosing a franchisor•

Assessing your suitabilityA letting agency is very much a customer-focused and people-orientated business. To do well you must be very good at dealing with people. The job, at ground level, requires high levels of diplomacy, communication and people skills. On good days you will be providing one happy customer (the landlord) with a suitable tenant, while at the same time satisfying another customer (the tenant) with a place to live. On a bad day you may get a call from an irate tenant to say the heating is not working in the middle of winter and they want something done about it now (Sunday evening!). Or an equally irate landlord insisting that the ‘perfect tenants’ you found are playing their music too loud and he is getting complaints from the neighbours. You may be lucky enough to employ staff at the beginning, or early on, to man the ‘front line’ but you are unlikely to be able run an agency without contact with customers. Plus, you will still need people skills when dealing with suppliers and staff.

You will of course need specific and up-to-date knowledge of residential letting and property management, which is outlined later in the book.

W H E R E D O I S T A R T ?

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Knowledge of other aspects of running a business is vital, including:

Bookkeeping and accounts

Tax and VAT

Employment law

Health and safety law

IT and websites

Marketing

You can employ subcontractors and consultants to advise on most aspects of running a business but it is difficult to succeed without at least a little knowledge of most of the aspects listed above.

All of these subjects can be learned or picked up along the way. Later chapters deal with each in more detail. There are courses and books available to teach everything in the above list and specific resources are also referred to later in the book.

In essence you need to be jack-of-all trades but know when to employ specialists if required. As well as a broad depth of knowledge there are specific skills and qualities that relate to running a letting agency. As a letting agent you will need to be:

A good communicator (and active listener)

Diplomatic

Organised

Self-motivated

A proficient user of computers and the internet

Able to lead by example

Positive

Enthusiastic

Good at decision making

Not averse to taking risks

Calm under pressure


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A good problem solver

A goal setter

Ethical

If you have most of these skills, then running a letting agency will not be too difficult.

Not everyone excels in all areas but, once you start employing people, it is worth evaluating if you are weak in a particular area and then hiring staff who offer those particular abilities.

Running any business can be stressful and can be a roller coaster of emotions, with extreme highs and lows. You will need to work long hours if necessary. Certainly, in the early stages of the lettings business ‘opening hours’ will be an unknown phrase. With modern technology it is possible to forward calls and email to home or mobile phones. To be successful, you must be prepared to answer the phone and respond to emails during evenings and weekends as this is a great way to impress both your customer sectors – landlords and tenants. Saturday is a normal working day for letting agents and may well be your busiest day for viewings. To stay ahead of the competition you may also need to consider opening on Sundays.

In addition, you should always be on the lookout to promote the business, whether that is via formal networking or just in conversation with someone at the local pub.

I would advise anyone considering going self-employed, to make sure they are fit and healthy, both physically and mentally. Having a good support system around you is essential. It helps a great deal if your partner, family and friends support your decision to start the business.

IS PREVIOUS EXPERIENCE NECESSARY?

Experience in the lettings industry is not essential but of course it gives you a head start. Lettings franchises (and franchises in general) often encourage people from different backgrounds to apply because essentially they want people that are motivated to succeed. The franchisors know they can pass on the relevant knowledge required to run the specific business, if they have the right applicants.


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If you already work in the lettings business, then you have an advantage. You only have to decide if you really want to take the big step into self-employment, running your own business and to learn the business skills required. Estate agents also have a lot of the required knowledge and skills.

Gaining relevant experience and knowledgeIf you do not have a background in the letting sector it is possible to gain some experience by applying for a job at a letting agency. It may be difficult to apply for a full-time position without the necessary qualifications or previous experience in the field. You can, however, apply through a temping agency and ask them to find you a job in a relevant company, maybe to provide holiday or maternity cover in a junior role in the office. Ideally, it would be at a company in the area you are aiming to open. Although this may not seem particularly ethical, as long as you are not aiming to walk away with their list of clients there should be no real issues. Of course you could apply directly to an agency outside your area and explain openly your reason for applying. You may have friends or family who work in or know someone in the sector that they can put you in touch with. Of course this would mean prolonging the time before you launch but preparation and planning are key to a successful business.

If you are a young person, possibly just choosing a career path, then you have no need to rush. You could spend several years working for a good company, or even several companies, learning all you can about the business before striking out on your own.

TRAINING AND QUALIFICATIONS IN RESIDENTIAL LETTING AND PROPERTY MANAGEMENT

There are a couple of sources of academic training available, providing relevant qualifications. These vary from basic competency tests to diplomas.

Whether you are new to the sector or already have experience, continuous training will be a benefit. Most of the training is available as distance-learning courses and can be carried out at home, in a few weeks or months.

Two of the main courses are provided by the National Federation of Property Professionals (NFOPP). Details of the main courses available are discussed below. Details of where to apply are given in the Useful Resources section at the end of this chapter.


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Technical Award in Residential Letting and Property Management

This is a distance-learning course, which is split into four modules covering:

Health and safety

Legal aspects of letting and management

Residential property letting practice

Residential property management practice

The examinations are in the form of multiple-choice questions. The exams last 30 minutes and can be taken separately.

Diploma in Residential Letting and Property Management

This is a more advanced course consisting of five modules:

Legal Aspects of Letting & Management I

Legal Aspects of Letting & Management II

Letting & Property Management Practice

Business Promotion and Organisation

Letting & Property Management Agency project covering a cross section of topics within the syllabus

The first four units are assessed by three-hour exams for each and the final unit is in the form of a 6,000-word project.

The technical award is an excellent way to gain a vast amount of industry specific knowledge and I personally found it sufficient to give me the confidence to start out on my own. It took me about nine months of study at home while still in full-time employment. I spent a year planning the business before launching and the course fitted well in this timeframe as part of my overall preparation. For very little investment it also helped me decide that the business was right for me.


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The exams can be taken one at a time but aim to finish them all before your intended agency opening date. You will have enough to do once you open for business! Book the exam dates early, ideally as soon as you apply for the course material, as they fill up quickly.

It is a good idea to encourage all members of staff to take these exams as part of an ongoing training and development programme.

Researching the marketThis is a very important part of the planning stage and it will help you decide the following:

General location of the business – i.e. what town?

Specific location of the business – i.e. what street?

Customer base and demand

Fee structure

Local competition

Where to advertise locally

The following resources will give you a lot of relevant information:

Local press

National press

Internet sites

Local university, college and hospital accommodation offices

Local letting agency websites and literature


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Most towns have a local area newspaper that is either free or fairly cheap and will be available weekly in local shops. A lot of these papers have a specific property section, listing properties to rent from both agents and from private landlords. From this you can glean a wealth of information on the competition such as the number and types of property available, local rental values and how many local landlords are currently advertising privately. There may also be articles on the local housing market by both journalists and local experts. Commercial property agents will also be listed and their adverts will give you information on available retail or office units in the area and the rental prices.

The national press is a good source of information on overall trends in the housing market. Look for articles about area hotspots, economic factors and general transport and population trends.

You will constantly need to monitor the news, both nationally and locally, for economic factors that may alter trends in letting or buying and selling. Look for:

Changes in interest rates

What products banks and building societies are offering

Government proposals for new towns and housing in your area

What companies may be relocating or investing in your area

If there are changes to transport networks, e.g. new railways or a new main road, which may connect your area with a major town or city

The internet is an invaluable tool for all types of data and statistics about the market, the customer and the competition. There are hundreds of websites dedicated to property in the UK and all serious letting agents will have a website where you can compare their services, fees, market and style. Property portals such as rightmove.co.uk are an invaluable source of information on local rental properties and rent valuations. Later you will also need to look at their fees for marketing your own client’s properties.


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The Association of Residential Letting Agents (ARLA) also publishes a quarterly report from its members’ findings.

Local college and hospital accommodation offices may give you information on where students and student doctors live in the area. Often there are specific areas within towns that attract these demographics, with good bus routes to the colleges and good amenities and nightlife.

Choosing an areaThe geographical area for locating the business is vital. Ideally, you would look at the whole of the country, pick the area that is most likely to see a growth in the rental market over the next few years and that has the least amount of competition. In reality, the time you would need to visit, research and then move to the location and get to know the area would be daunting and expensive. Like me, however, you will probably choose an area near where you are currently living, where you have lived in the past, or know well. Most people are unlikely to up sticks, move a long way and then start a business in a new area (unless perhaps you are taking over an existing business). Therefore, you may be restricted to an area within a few miles of where you currently live, and the research will be to see if a letting agency in that location is a viable proposition.

If you are considering a letting agency as a suitable business, then it is quite likely that you have seen a gap in the market, or have noticed that the rental market was thriving in your area. Perhaps it is a university town with lots of student accommodation or there are lots of companies recruiting, with professionals moving in and out of the area on a regular basis.

Traditionally estate and letting agents have opened a branch in, or near the high street of a town and marketed within that town and the immediate surrounding area. Many have then expanded by opening other branches in nearby towns and larger villages. If your business plan is to expand and open several branches it is worth considering what other areas surround your initial location choice. Economically you can only cover an area within about 20 minutes drive from each office location. Any further, and viewings, property inspections and so on become too time consuming and uneconomical.

Choosing a specific location and premisesOnce you have chosen a geographical area to cover, you will then need to choose a specific location and premises for the business. There are several options available and your choice will depend upon your business model and budget. The general


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places to locate the business are listed below and are discussed in detail, along with the pros and cons of each, further on:

Home-based office

Serviced office

Office or shop on a side street

Shop front on the high street

Office in another business premises i.e. an estate agent’s that does not offer a lettings service

HOME-BASED OFFICE

With today’s technology it is no longer necessary for a letting agency to rely on people visiting the branch to take away a list of properties and glossy brochures. As letting agents do not have a stock of products or need a lot of equipment, it is possible to start from home with little more than a computer and a mobile phone. The online presence of the company can also be just as big, whether you work from a swanky office in the city or your broom cupboard. Most paperwork associated with the letting process can be done at the rental premises or by fax, post and email and there is no need to maintain a shop window full of property details.

Pros and cons of working from a home-based office

Pros:

Low capital outlay

Extremely low overheads

No long-term tie in to leased premises

Easier to work longer hours or weekends, etc. when necessary.

Cons:

Customers with a fixed idea of where a letting agency should be may not take you seriously

Nowhere to receive customers

No room to expand (extra staff, etc.)


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Interruptions (family, etc.)

No brand presence, shop front or passing trade

Some letting agents have started from home initially and then expanded. It can be difficult to get off the ground and find customers but if you have your own portfolio of buy-to-let properties that you intend to manage as full-time business, or perhaps friends or a large network of people that trust you to manage their properties, then it will help you get a foothold.

SERVICED OFFICE

A serviced office is a great alternative to working from home. It has the advantage of giving you a viable business address and a place to receive customers while maintaining relatively low start-up and operational costs.

Pros and cons of working from a serviced office

Pros:

Low capital outlay

Fairly low overheads

No long-term tie in to leased premises (normally flexible terms)

A genuine office environment to receive customers

Often have receptionist and photocopy/fax/post facilities available for a low fee

Not necessary to keep the office open when you are on viewings, etc.

Cons:

Some customers may still have a misconception that you are not a viable company

Little or no brand presence, shop front or passing trade

SIDE STREET SHOP OR OFFICE

This is a step up from a serviced office and there are multiple options for locations, types and sizes of office. Essentially this category covers anything that does not have a shop window on the high street. You could choose an office on the main


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road but on the first or second floor above the shops. Or it could be a shop front or office situated near but not on the main thoroughfare.

Pros and cons of working from a side street shop or office

Pros

Usually larger premises than the previous two categories (ideal if you are starting with staff or need to expand)

Easier for customers to find, may have some passing footfall or traffic that will spot signage and, therefore, some brand presence

Reasonably low rent and rates

Cons:

Higher capital outlay

Medium operating costs

Typically needs staff immediately to man the office

Can be a higher expense for little extra reward if the balance between costs and brand presence are not achieved

HIGH STREET SHOP FRONT

We have all heard the term ‘location, location, location’ and it is still true today. The best way to get brand recognition and a good footfall of customer traffic is to locate to the busiest high street in the area. With this comes almost instant brand recognition and the acceptance of an established business, but this needs to be balanced with the higher costs associated with the location.

Pros and cons of working from a high street shop or office

Pros:

High footfall of potential customers

Branding (signs, property details displays, etc.)

Instant acceptance as a viable business


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Cons:

High capital outlay

High operating costs

Need to hire staff immediately just to man the shop (may be doing very little else in the early days)

Will always need more admin staff (more updates to printed property details and display materials required, holiday and weekend cover to keep shop open, etc.)

Have to deal with more time wasters (people popping in for a chat while they wait to pick up their dry cleaning!)

OFFICE WITHIN ANOTHER BUSINESS PREMISES

This can be an ideal compromise when starting the business. If you have contacts with an established estate agent, solicitor or mortgage broker, then it is possible to form a good partnership and provide mutual business referrals. It can be a good balance between starting in the best location while maintaining fairly low overheads.

Pros and cons of working from within another business premises

Pros:

Low capital outlay

Medium operating costs

Instant acceptance (if you are part of an established business, then their customers should be comfortable in using your services too)

May get instant referrals (estate agents are often asked if they provide letting services)

Cons:

Only functions if the working relationship with the office owner remains strong and they do not close or relocate

If operating from an estate agent, they may decide that they want to operate their own lettings department (especially if the sales market takes a downturn)


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You may only have a desk and little room to expand

It may be difficult to differentiate your brand from theirs

TIPS FOR CHOOSING AN OFFICE OR SHOP FRONT LOCATION

If you do have the budget and decide to operate from one of these two types of premises then it is worth spending time researching the best location. Most main shopping areas will have a specific road or corner where the majority of established estate and letting agents are located. The best way to see if any location is viable is to visit the area and observe the footfall of people. If there are other agencies located there, watch how many people stop and look at the window display and how many go in.

It is a good idea to monitor the following:

Number of people passing

What side of the road do they walk on?

Does the road layout mean they naturally avoid a certain area or have to walk a certain way?

Do they browse the window?

Are they looking at property for sale or rent?

Do they go in?

Do they spend time inside or leave quickly with a brochure?

Visit the area at different times of the day and different days of the week. If you only visit at lunchtime or a Saturday morning, you may get an inflated view of the overall numbers of shoppers.


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My company started in a serviced office with no footfall traffic and nowhere to display a sign visible to the street. There is no doubt that we would have grown quicker on the high street and that we suffered from people not knowing we were there, but we benefited from extremely low costs and little need for borrowings. I personally believe, however, that the best balance would be to choose an office near the town centre, preferably with a window prominently visible to the public on a busy road (with parking!). This means benefiting from fairly low rent in comparison to a prestigious location, little chance of “time wasters” popping in, the ability to lock the door if you are on a viewing which means that no one is employed just to keep the shop open, and yet having a permanent advertising sign which will massively increase customer awareness. In this situation the aspect and position of the signage would be extremely important.

The local market and rental levelsAgain, the local property paper and internet property portals are the best sources of information. The portals are by far the quickest way to gather information because you can usually search by specific postcode, type of house and number of bedrooms. There will also be plenty of photographs, which will show the internal state of each property. You will quickly establish whether there are predominantly flats and apartments, family houses or perhaps student accommodation in your area. You will be able to see roughly how many are on the market and who is advertising them.

If you search by town and open the search criteria to all properties, at all prices, you will very quickly see the size of the market and how it is distributed amongst the existing companies. If there are only a handful of properties amongst several agencies then you may need to rethink the location.

The paper is a good place to see if the properties hang around very long. If the properties that are advertised are in there week after week it may not be a good sign.

Assessing the competitionGathering information on other agencies in the area will be an invaluable exercise. It will give you an insight into:


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The number of competitors

The size and type of each company (i.e. independent, franchise or large corporate)

Where specifically they are located

If their website is user friendly

The services they offer

Their fees

How long they have been in business

How many staff they have

Their opening hours

How many properties they have advertised

Whether they specialise in one area, e.g. student accommodation

First it is a good idea to make a list of all the local agents. This will show you how many competitors you are likely to have and whether there is room for another one in the area, or perhaps help to spot a niche area of the market that is not covered. A list can be drawn up easily by searching on the internet and the property section of the local paper. There will be few, if any, that do not have a website.

The best way to find agents’ websites is a quick search for local agents through one of the larger property portals such as www.rightmove.co.uk, www.propertyfinder.com or www.primelocation.com, as most agencies will be listed on one or more of these. Cross-reference these with your list from the newspaper and you will likely have found most of them.

It is worth keeping a spreadsheet of information on each agent, as there will likely be a lot of information to retain. You can also keep and add to this in the future; it will help you spot and react to any new initiatives that competitors may introduce.

www.rightmove.co.uk

www.propertyfinder.com

www.primelocation.com



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Most agents will openly display the services they offer but not all openly display their fees. The reason for this is to encourage people to phone, so that they have an opportunity to get phone numbers of potential clients and present the full sales pitch before releasing the information about their fees. I personally do not like this approach and, if I am shopping online and can’t find the price of a product I am looking for, I move on to the next site very quickly. I believe that for today’s modern internet shopper this is probably quite common. A lot of people use the internet to save time calling around companies and asking the same questions of each one. Therefore, my philosophy is to openly display the company’s fees on the website and let the browser make a choice whether or not to call. However, until more agents follow this approach, you may have to pick up the phone and call them. You will of course have to pretend you are a customer in need of their services. It is a good idea to ask for their landlord information pack. This exercise will also allow you to assess the telephone manner, level of professionalism and customer service of each company.

Information to look for and record includes:

Telephone manner – was your call answered promptly and courteously? Was it answered by a person or an automated service?

Knowledge of the person you spoke to – did they have the information you required or did they need to refer to company documents or someone else?

Did they ask for your details and show an interest in your exact requirements?

If they promised to send the information to you – did you get it promptly, or indeed at all? Was it exactly what you asked for or did you have to call again?

Was the literature that you received a cheap photocopy or a glossy brochure?

Did they have a good knowledge of the area and the local market?

Eventually you will have drawn a good picture of the local competition. You should be able to assess if they have a large advertising budget, if they spend a lot on branding, if their website is up to date and user friendly, and if their staff are well trained and informed. Hopefully you will be able to take the best points of all of them and maybe spot areas they are lacking in, which you can improve upon or take advantage of.


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Tips for choosing a franchisorBecoming a franchisee is an excellent way to start a business. It is the route I initially considered before deciding to go it alone. The benefits of becoming a franchisee are:

Following a proven business concept

Support and training from experienced business owners

Faster initial growth

Marketing, IT and other systems in place

National (and often recognised) branding

Banks often look favourably upon established franchise models

The downsides are:

High initial outlay and capital costs

Ongoing franchise management fees (usually between 8–12% of turnover)

Sales targets are often set by the franchisor

The geographic territory may restrict future growth

You may feel as though you do not have 100% control of the business

I seriously considered the franchise route as a way to start my business. A large percentage of new businesses fail within the first three years and franchising has a much higher success rate, typically as the business model has already been proven several times over. I firmly believe it is a good entry route. The two reasons I did not pursue this were the initial investment required and the fact that one of my aims was to have 100% say in every aspect of the business.

If you are considering this type of business, it is worth spending a lot of time investigating all the companies that offer franchise licenses. They all provide an information pack detailing all aspects of their proposition. The literature will allow you to narrow down the list. Most offer similar levels of back up and so on, but

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they vary from being new to franchising to more established brands. Plus, their franchise and license fees will vary.

The second step is to check if the territory that you have decided to work in is available. You may have picked a certain town, but the franchisor may already have an operative in that town or one close by that has a claim on that area already.

The next stage is normally to meet with the franchise owners. This allows you to get to know them and them to get to know you (as they will have their own criteria for applicants as well).

It is worth having a list of things that you expect or would like to see from a franchisor so that you can compare them all. For example, look for:

Do they have a proven track record?

Are they members of the British Franchise Association (BFA)?

What amount of initial training is given?

What amount of ongoing support is given?

What systems and literature will be included?

What are the franchise and management fees?

What are the expected set-up costs?

What is the size of the territory?

What are the possibilities for expansion?

How long is the license for and what are the renewal costs?

What happens if you do not hit their targets i.e. is there a clause for them to claim back the franchise?

As you have gone through each stage you may have narrowed down the list even further. However, it is worth carrying out more due diligence before making your final decision. This may include:

Looking at the accounts of the best and worst performing licensees

Asking how many have succeeded and failed

Visiting one or two franchisees


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If possible, see franchisees that you pick (the franchisor may only suggest the best performing ones). You may consider seeing a high performing and an under performing one, or a new one and an established one

It is worth asking the franchisees if:

They got the support that was advertised after they signed up

The franchise met their expectations

Their earnings are close to the predictions from the franchisor

The British Franchise Association website has a lot of useful information and guidance, including a list of member companies that offer letting agency franchises. Franchisors with BFA membership demonstrate an ethical code of conduct and the BFA offer an arbitration service in the event of a dispute.

Useful resourcesMarketing data

Property portals:

www.rightmove.co.uk



www.findaproperty.com

Industry report

ARLA – www.arla.co.uk

Franchises

British Franchise Association – www.thebfa.org

TrainingTechnical award and diploma:

National Federation of Property Professionals (NFOPP) – www.nfopp.co.uk

www.rightmove.co.uk



www.findaproperty.com

www.arla.co.uk

www.thebfa.org

www.nfopp.co.uk


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Pre-set up summary and checklistHave you assessed your suitability and skill set?

Are you convinced you will enjoy working for yourself and the property letting business?

Are you confident you can handle the long hours, stress and hassle associated with starting your own business?

Have you gained experience, training and qualifications or started appropriate action?

Have you carried out thorough market research?

Have you located a specific area to start and locate the business?

Have you assessed the local market, rental levels, property types and the competition?

Have you decided to go it alone or buy an existing business or franchise licence?

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3

SETTING UP THE BUSINESS

In this chapter:

The business plan and financing the business•

Company formation and legal issues•

Creating an identity, branding and marketing materials•

Systems and IT•

Services and how much to charge for them •

Professional accreditation•

The business planA business plan is normally required if you need to borrow money to start up or expand. It will be an important tool to persuade banks or investors that you have a viable proposition. It is, however, equally important even if you do not need to raise any capital. It will help structure your thoughts, ideas and plans into a formal strategy, as well as outline your financial forecasts. Therefore, it will need to be updated regularly.

There are many ways to write a business plan, depending on whether it is an internal document to forecast growth over the next financial period or a document outlining the requirement to borrow money to fund the new business. As a minimum it should include:

Executive summary – include all the key points of each section of the rest of the plan (usually written last)

Overview of your business sector – market analysis, competition, who your customers are

S E T T I N G U P T H E B U S I N E S S

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Marketing strategy – market size, how you will attract customers, what your unique selling points are (this forms part of or references the full marketing plan)

Risk analysis – strengths, weaknesses, opportunities and threats (SWOT), market trends and potential changes in the market

Premises and operation – location, type of premises, freehold or leasehold, IT systems

Management and staff – number, experience, skills

Financial forecasts – cash flow, profit and loss, borrowing requirements

Personal expenditure

Sample business plans, templates to follow and software to help with financial forecasts are available from most of the larger high street banks. These are useful if you have never written a business plan before.

Remember you will also need to support yourself for at least the first year, possibly longer, before you can draw a salary, so minimising your outgoings before starting is important. Make sure you have additional money set aside to cover this on top of the business outgoings.

Calculating start-up and operating costsThe costs will vary depending on your business model and will consist of a mix of capital and operating costs.

Capital costs may include:

Deposit, initial lease and legal expenses for premises


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Shop or office signage, fixtures and fittings

Office equipment and furniture

Website design

Promotional material: headed paper, business cards, leaflets, brochures, etc.

Property management software

Accountancy and other software

Franchise licence fee

Training material and exams

Operating costs may include:

Rent

Business rates

Utility costs

Marketing and advertising (internet, press, flyers)

Office stationery and supplies (ink, paper, consumables)

Salaries

Tax and VAT

Vehicle fuel

Software licences

Professional membership fees

Networking meeting memberships

Ongoing staff recruitment and training

Accountant’s fees

Insurance policies

Franchise management fee

For some of these costs, it will be easy to obtain accurate figures based on quotes received from suppliers or their advertised fees. Others, such as petrol and utility


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bills, will be estimates based on the amount of mileage you may need to cover and how much electricity prices may rise in the foreseeable future. Accurately predicting the future costs becomes easier with practice and experience but you should always include a contingency for unforeseen expenditure.

Business bankingYou may have had a personal account for a long time and already have a good relationship with your bank. However, the business banking department of each bank is separate from the personal banking section and different banks will offer various accounts and fees. Therefore, it is worth setting up a meeting with the business account managers at two or three different banks to discuss your requirements.

Most banks offer new businesses a period of one year or 18 months of free banking and will then charge various fees for cashing and writing cheques and so on. They will also have different loan and overdraft rates.

As well as discussing possible lending, you will need to set up some different accounts once you have chosen a bank to use. You will need:

A main company bank account for general payments and receipts for the company

A separate bonded client account for receiving rent on behalf of clients

A separate bonded client account for receiving deposit monies

You will inevitably need the ability to write cheques from the main account and it is worth having a debit card to withdraw petty cash from time to time.

As you will be transferring a lot of money back and forth between accounts and as most companies have a direct payment method for accepting payment for goods, it is worth making sure you have the ability to bank online. In fact, it would be very difficult to work without this facility!


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Client accounts are required to keep clients’ money separate from the company’s. When you receive rent from a tenant, for example, the money does not belong to your company, it is a payment due from the tenant to the landlord and you are just acting as an agent for its transfer. Therefore, the company must never use this money to pay its own debts. Your bank needs to be informed and needs to agree to ‘ring fence’ the client accounts. Any banking fees owed due to transactions on these accounts must be taken from your main account and not directly from the monies in the client accounts.

If you decide to join one of the professional bodies discussed later in the chapter, they will require a copy of a letter from your bank confirming the activation of the client accounts and agreeing not to take fees from these accounts. To cover yourself, I would suggest you write to your bank asking for confirmation of this in writing even if you do not have a professional membership.

You will need to take money from the client accounts to cover your fees and to pay contractors that have worked at clients’ properties. This is allowed provided you have permission from clients (this is covered in the terms and conditions of the service agreement covered later in Chapter 10).

ACCEPTING DEBIT AND CREDIT CARD PAYMENTS

The ability to accept debit and credit card payments will be expected by most of your applicants. This is a far easier method of payment to accept than cash or cheques, as cheques may bounce and, if you have to deal with large sums of cash, you run the risk of accepting counterfeit notes or having the security issue of carrying cash to the bank.


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If you can take a card payment for the holding and application fees manually, as soon as an application has been made, it will prevent a lot of people backing out. Before we accepted cards, we had a lot of people who said they wanted to apply and then delayed bringing payment in or the application forms back and then found somewhere else to rent.

The machines to accept card payments are usually operated by organisations outside of the bank and there is normally a monthly rental charge for the machine as well as for the consumables, such as the receipt rolls.

Financing the businessThere are several ways to finance the business and the initial amount of finance required will depend on your business model. The most common forms of raising capital are:

Your own savings and assets

Borrowing from friends and family

Sharing the cost with a partner or partners

Borrowing from banks

Borrowing from venture capital companies or business angels

Government enterprise grants

In reality, for a letting agency, you will probably have access only to the first four forms of capital. Venture capital companies probably won’t find the business exciting, new or unique enough to invest in – although that will depend on whether you have a unique or niche idea, and is worth a try!

It is unlikely you would be able to start a business or persuade someone to lend you any capital if you do not have, or are unwilling to put, your own cash into the business. Most banks will, at most, only lend you the same amount that you are able to put into the business.


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Although you will probably meet the local bank business manager in person, they are not normally empowered to make any decisions about lending. They are usually just a ‘meet and greet smiley face’ and tend to pass on all the paperwork to the decision makers behind the scenes. This can be frustrating and just serves to delay any funding requests. It is therefore a good idea to make sure your business plan is comprehensive, well presented and has a good executive summary with lots of facts to back it up.

From experience, it is a good idea to get a personal credit check from one of the credit reference agencies such as Equifax or Expiran before applying for any credit. The first thing the banks do is to check your credit rating. When I applied, my credit rating had been affected by a mistaken link to another person with a similar name who owed money. It took a while to clear the error and held up the launch of the business.

Choosing a nameLetting agencies tend to be named either after their founder or founders, or they incorporate the words ‘Lettings’, ‘Lets’, ‘Rentals’ or ‘Property Management’, or they are a combination of the two. For example: ‘Martin Lettings’, ‘Smith and Jones Property Management’, ‘Let Quick’, ‘Rent2U’. The possibilities are only restricted by your own creativity. The difficult thing is to come up with a name that has not already been used and registered. This is especially true if you want to include one of the obvious industry terms in the name, such as ‘lettings’.

When choosing a name there are some things to avoid such as:

Using a name that already exists (check the Companies House register – further information is provided in the following section)

Using a restrictive name if you want to expand – for example, ‘Brighton Lettings’ will not work well if you expand into another area later

Using ‘cheesy’ names such as ‘Cheap and Cheerful Rentals’

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Ask friends and family for ideas or to comment on any names you have already short-listed.

Although it may be difficult to find a name that has not been used and which incorporates the terms ‘lettings’ or ‘rentals’, it is worth persevering as using these terms can gain your website an instant high search engine ranking. The reasons for this are explained in later sections.

Company formation and legal structureThere are a number of different ways to legally structure your business. These are:

Sole trader

Limited company

Partnership

Limited liability partnership (LLP)

Public limited company (PLC)

It is unlikely you would start the company as a public limited company, that is, with shares being issued in the company and being listed on the stock exchange, so we will consider the first four categories.

Even if you enter a franchise agreement, you will still need to structure the company in one of the above formats.


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Seek advice from your accountant or solicitor on the style of company that will suit your circumstances.

SOLE TRADER

This is the easiest route for setting up a new business and involves the least amount of accountancy and legal administration. As a sole trader you are liable for any debts associated with the company and the business income is counted as your own personal income. You will need to register as self-employed with HM Revenue and Customs and fill out a self-assessment tax return.

LIMITED COMPANY

A limited company, its assets and income are seen as a separate entity to the owner and the owner is not responsible for the company’s debts. In reality, when borrowing money for a limited business the lender will require a personal guarantee from the directors. There are stringent accounting procedures required for a limited company and both the company and its annual accounts must be registered with Companies House.

A limited company must have at least one director and they will be an employee of the company for tax purposes.

PARTNERSHIP

A partnership is similar to a sole trader but for two or more people. The partners will usually share the responsibilities and the profits. The partners should register as self-employed.

LIMITED LIABILITY PARTNERSHIP (LLP)

This is a fairly new company definition and is basically giving limited status to a partnership. The rules and accounting practices are similar to a limited company. The partners will need to register as self-employed and register the company at Companies House.


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If you are entering into any form of partnership with someone, it is a good idea to have a solicitor draw up a partnership agreement outlining your individual roles within the company and what happens if one partner wants to leave, sell or dies.

InsuranceAs a home and car owner you may be used to insuring your property and possessions but as a business owner you will need to consider the following forms of insurance:

Buildings and contents

Business interruption

Professional indemnity

Public liability

Employer’s liability

Key employee

Client money protection

Vehicle insurance

BUILDINGS AND CONTENTS

If you are leasing the premises then the landlord will probably have buildings insurance in place, so it is worth checking the lease carefully. If not, or if you are buying a property, then you will need to arrange this insurance.

The contents insurance will cover all your assets and possibly the fixtures and fittings. Policies vary so it is worth choosing carefully whether you want new for old, how much excess you want to pay, and so on.


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Insurance companies offering buildings and contents cover may want to know the age and fabric of the building as well as the types of lock, alarm and other security measures, so have this to hand before applying for a quote.

BUSINESS INTERRUPTION

It is possible to insure against loss of business, for example if there were a fire at the premises and it increased your costs or resulted in lower profits.

PROFESSIONAL INDEMNITY

As a letting agent you will be providing advice and services to your clients. Professional indemnity insurance offers protection if you or your employees inadvertently offer negligent advice or fail to provide the service you agree with your clients.

PUBLIC LIABILITY

This type of insurance covers you if a member of the public (not an employee) makes a claim for suffering loss or injury as a result of your business activities. For example, if a member of the public hurts themselves by slipping on something in your office.

EMPLOYER’S LIABILITY

This is similar to public liability but will cover against claims made by employees for injury or illness sustained at work. As you are responsible for the health and safety of your employees, it is mandatory to have this type of insurance as soon as you employ anyone.

KEY EMPLOYEE

Key employee insurance offers protection if the business owner or an important employee falls ill or dies and the business suffers. Small and start-up firms may suffer greatly, for example, if one of the partners or directors were incapacitated for any reason.

CLIENT MONEY PROTECTION

This protects your clients’ money and allows claims if the funds were misappropriated in anyway. It is a positive thing to advertise that you have this cover in place and if


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you intend to become a member of the Association of Residential Letting Agents or National Approved Letting Scheme, they will require you to have a policy in place.

VEHICLE INSURANCE

If you are using your own car during the working day for conducting viewings etc. you will at least need to inform your current insurer that the car is being used for business purposes. If it is a company car then you will need to take out a company car insurance policy. Don’t forget to add any named drivers or members of staff to the insurance if it is being used as a pool car. If you are lucky enough to eventually need a fleet of company cars then there are specialist fleet insurance policies available.

Corporate identity and brandingChoosing a logo, fonts, colour scheme and possibly a tag line can be as difficult as choosing the name for the company. Again it is useful to discuss your choices and get ideas from as many people as you can and to look at the designs other agencies have chosen. Look for the ones that stand out, what works, and what doesn’t.

Like the business name, the corporate identity can have a good or poor impact and is difficult and expensive to change once the company has started trading.

PROFESSIONAL DESIGNERS

If you are creative and can use some of the excellent design packages available, then there is no reason not to at least draft a few ideas yourself. This can save you money and time spent with a professional. Unless you are very artistic, however, it is definitely worth paying a professional designer to produce the finished scheme. As well as design, they will have excellent knowledge of which colours work and which don’t, and they will also produce the design in the different formats you will need.

Certain colours look different online than they do when printed on white paper. Before signing off on the final design, especially the colours, make sure they have the same, or similar appearance on paper as they do on a computer screen. Also look at them on different resolution screens, as internet users will have different equipment.


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Promotional material, stationery and business documentsThe corporate identity will need to work and fit on the following marketing materials:

Business cards

Headed notepaper

Invoices

Receipts

Compliment slips

Landlord and tenant information brochures

Property details for shop window displays

Office or shop signage

Press advertising

To Let boards

Your designer should be able to advise and produce samples of all the formats required and get prices for print runs.

BUSINESS CARDS

Business cards are a very important promotional tool and are worth spending some time on to get right. Look closely at the following:

Is the text big enough to read?

Have you double and triple checked that the spelling, contact numbers, etc. are accurate before ordering a large quantity?

Have you ordered enough? You should give them out to everyone you meet. You can leave piles of them in meeting places and at network meetings and will use them up quickly


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Make sure you print something on the back of the card – it is not too much more expensive and you can use the back to tell people what services you offer. A blank space is a wasted opportunity! You may also consider printing your photograph on the card, as this helps people to remember you.

STATIONERY

You can either have standard items of stationery pre-printed, or with today’s colour inkjet printers you can print the documents as and when you need them. In reality you will probably use a mixture of both.

It is worth having a stock of pre-printed headed paper, as this needs to look sharp and professional and should be printed on a decent grade of paper. You can also print a lot of the other stationery, such as invoices, receipts, etc. straight onto the headed paper.

The headed paper should include the logo, business name, address, registered office and contact details as well as business and VAT registration numbers.

LANDLORD AND TENANT INFORMATION BROCHURES

You will need to provide a variety of promotional and service information for landlords and tenants. Landlords will need a list of your services and fees and information on the letting process. Tenants will want to know what the application fees are and how to apply for a tenancy.

Your duty of care to both types of client requires you to inform them about certain legislation and regulations associated with letting and renting property. It is useful to combine this information with the sales promotional material in one booklet or brochure. By providing it in written form and having a working procedure to issue a copy to every client, you will then have some proof, if ever needed, that you have given the required legislative information to your clients.

As a minimum you will need ‘Information for Landlords’ and ‘Information for Tenants’ brochures. These two documents can simply be printed and photocopied, or produced in a booklet or professional glossy brochure format.

The legislative material you should include information on is covered in Chapter 9.


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Make sure you have an electronic copy of these brochures in PDF format. You will then be able to email them to clients or they will be able to download them from your website.

SIGNAGE

Unless you work from home, or lease an office within a larger building, you will need some sort of sign and branding outside the premises to tell people that you are there. For passers-by, this will be the first they see of your business and it is, therefore, very important to get it right.

Make sure any artwork that you have in the window is removable so it can be changed and that it does not obscure the whole window or any property details display stands that may also be presented in the window.

EXTERNAL SIGNBOARDS

As well as signs and artwork, which can be read as customers look directly at the shop front, it is also useful to have a sign orientated so that it can be seen by pedestrians and traffic coming down the street.

Use a professional sign maker and pay close attention to the position, lighting, orientation and size of the signs.

You will need to have any external signs, colour schemes and lighting approved by the local authority planning office, and possibly the developer, if it is within a shopping precinct. A local sign maker should have some knowledge of what is acceptable in the area and what they may reject. If not, looking at other shops in the area will give you an indication of the style of signs that are acceptable.

The style of the sign should reflect the image of the business, for example if you have a contemporary image, then a modern trendy sign will work well. If you have a more traditional image then an old fashioned sign may compliment it better. You should also consider how it fits within the area and with the building you are occupying.


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A lot of businesses also use an A board which can be placed on the pavement outside the premises during opening hours.

TO LET BOARDS

Boards erected outside the properties available to let can be a great form of marketing. As you get more properties on your books you will be able to place more and more branded boards on more and more roads in your area. Hundreds of people may drive past daily and, even if they are not interested in the property, they will gradually become more and more familiar with the company logo and name.

The design should include:

Large text

To Let and Let slips should stand out

Contact number

Website address

It may also be useful to include an email address on the To Let board, but this should be easily found from the website and keeping the information on the sign to a minimum will allow the text that is there to be larger.

There are specific rules for the size of To Let boards and the size of the text written on them. Current town and country planning law states:

Only one sign is allowed at each property (in the case of multiple agencies advertising the same property, only the first board erected is allowed).

Boards are only allowed to remain for 14 days after the property has been let.

A new board cannot be added to say the property is let but an addition can be added to the existing sign (i.e. with a Let Slip).

The area of the board should not exceed 0.5 square metres.

The board should be placed at the lowest level of the property that is reasonably practical (and not more than 4.6 metres high).


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If attached to the building, the sign must not project more than 1 metre.

No character or symbol can be more than 0.75 metres high.

Fly boarding is not allowed i.e. boards cannot be placed if the property is not actually available to let.

Illumination or reflective materials are not permitted.

Note: Some towns have conservation areas where For Sale and To Let boards are not allowed.

There are agents in most towns that offer a sign-erecting service. This service normally includes a fixed fee for placing the sign, going back to add a Let Slip and a final visit to remove the sign.

The sign may look readable from the other side of the office but make sure the text on it is readable from a much bigger distance and so that drivers can easily read it at speed.

For all your promotional material, it is very important to check every detail of your designs and work closely with the designer and printer. Insist on draft copies of everything before ordering. Due to a communication error between my stationery designer and the printer, our first run of boards were printed the wrong colour. These are one of the most expensive items of marketing material and it was a costly error!

Launching a websiteIt is a rare case to find a business these days that does not have its own website. Websites vary from a single page, showing just the company contact details, to virtual online shops where you can order any of the company’s products from the comfort of your home.

For letting agents, an online presence is an absolute necessity. It is essentially an online shop window. For some agencies, their website will be the main marketing

‘’


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tool, replacing the shop window displays of the past, and helping reduce the amount of press advertising required. For others it is a compliment to the traditional forms of marketing.

The steps to launching a website for your business are:

Register the domain

Create the template design

Add content

Arrange a hosting plan

DOMAIN REGISTRATION

The domain name is the address of the web page that you type into your internet browser to visit a website, e.g. www.lettingagents.com

It is advisable to think about and register the domain name early on in your planning or you may find out, too late, that the name you want is already reserved and you may have to re-think the company or domain name.

Ideally the domain name should match the company name. Therefore, it makes sense to consider it at the same time that you are thinking about the name of the company. For example, if your company is called ‘Smith Lettings’ then the domain name would most likely be: www.smithlettings.com or www.smithlettings.co.uk etc. Domains are cheap and easy to register and you do not have to have the website design ready or have any specialist knowledge to reserve the domain.

The two common domain types are .com or .co.uk, although there are other variations available. You can check if the domain name is available and register it at websites such as:

www.seem.co.uk

www.domainmonster.com

www.freezone.co.uk

www.lettingagents.com

www.seem.co.uk

www.domainmonster.com

www.freezone.co.uk

www.smithlettings.com

www.smithlettings.co.uk


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You normally have to pay a fee every two years to retain the domain name. Although the registrar should contact you when re-registration is due, make sure you keep a note of whom it is registered with and when the renewal date is. It would be disastrous to lose the domain name after two years of building the site and business because perhaps you moved address and they could not trace you.

DESIGN AND CONTENT

The design of your website should reflect the corporate identity. Any logos and colour schemes from your business stationery should be transferred to the website template. This helps provide continuity and improves recognition of the brand.

If you have any knowledge of windows software packages, it is possible to buy good programmes such as Dreamweaver or Microsoft FrontPage and create your own website. For a more professional job and if you want a property search database and content management system, then you may need to pay a web designer.

A good letting agency website should provide a lot of useful content. As we will see later, useful and relevant content not only helps your customers but also helps increase the website’s position in the search engine rankings.

Think about including:

Lots of useful information for landlords and tenants, for example:LegislationDetails on renting or letting propertyLocal area informationList of local schools and amenitiesLinks to useful resources

A property search function allowing the user to search by:Area (town)Price (minimum and maximum rental)Number of bedroomsType of property (flat, detached, etc.)


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The website should also be intuitive and easy to navigate. It is useful and typical to have a different area or pages for each section with a link to each that is easy to find. Suggested page headings include:

Home

Property search

Landlords

Tenants

Local area

Links

About us

Contact us

The above headings are the typical minimum found on property agent websites. You may wish to include more or combine some of them.

WEB DESIGNERS

There are many web designers around, varying from one-man bands to much larger companies. The services they offer, and their skills, will vary.

It is always good to get a word of mouth introduction to any sub-contractor and you should ask around friends and colleagues if they know any good web designers. Be careful, however, to check the designer has knowledge of working on other property-related or similar sites.

One good way to find a knowledgeable source is to study the websites of other letting and estate agents. There will almost always be a small text link on the title page pointing to the designer’s own site. Look at websites with styles that appeal to you and contact their designers.

The industry press will also have adverts from designers specialising in property websites.

Make sure you have discussed and agreed a complete design brief with your designer and agree at the start exactly what the price will be, what you will receive and how long it will take.


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You may wish the designer to do all or some of the following:

Domain registration

Arrange a hosting package

Design the template

Add the content

Design the logo or work with what you have given them

Add a property search database

Create a content management system

Search engine submission

Search engine optimisation

Manage the website updates

Obviously the less work the designer needs to do and the more information and content you can give them, the better (and cheaper) it will be. There is no reason why you cannot create all the content, that is, the specific wording for each page, yourself. This can be presented to the designer simply in a word processing format and they will copy it to the web page. You may also have relevant photos to add.

Make sure the content is not too wordy – add photos and logos etc. to break up the page.

The advantage of working with a designer that has already created other property-related sites is that they should already have a suitable database and content management system. These are the expensive items if the designer has to start from scratch.

Make sure you discuss how property details and specifically photos will be added to the site. There should be a simple control panel for you or your staff to log onto and add property details in a logical and simple manner.


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A content management system or some knowledge of a web design package will allow you to update the wording and content yourself. It is not ideal to pay someone to make every single little text change at a later date. For example, you may wish to alter your fees or offer a new service. Being able to make changes yourself is invaluable; it will reduce on-going costs and will mean your website can be updated regularly and promptly.

SEARCH ENGINE OPTIMISATION (SEO)

There have been volumes written on this subject and there is only room here for an overview.

There are many different search engines such as Yahoo, Google, Ask, Lycos, etc., with Google being the most popular. The aim is to get your website to appear high up the list for different search terms, known as keywords or key phrases.

The position at which the website appears on the search engine is known as the ‘Search Engine Ranking’. It is believed most people only look at the results on the first couple of pages returned by the search engine, so the ranking is extremely important, as there may be thousands of returned results.

Most search engines use their own closely guarded algorithms and systems to decide what gives a website a high ranking for different keywords and phrases entered in the search field. They also update their requirements regularly and websites will constantly move position in the rankings.

The process of changing the website or web page design to give it a higher ranking is known as Search Engine Optimisation (SEO) and is a specialist field in its own right. However, having a little knowledge of this is useful when discussing it with your web designer, as a lot can be done easily at the design stage and should, therefore, be included in the design brief. There is also a lot you can do yourself with little specialist knowledge to improve your site’s ranking.

The first thing to do is to make sure either you or your designer have submitted your site to the search engines. Although they will eventually find your site organically, submitting the site will speed up the process. All the search engines have a web page where you can submit the site and it is adequate to enter the main (index) page. Other pages will be found through links in the main page.

The one thing that many experts believe is key to a high ranking is to have lots of relevant content. This means filling the web pages with content related to letting property. It is a good idea to include the keywords and phrases within the content. Therefore, the first thing to do is to decide what terms you wish to be ranked


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highly for. These are obviously words associated with renting and letting property. For the letting sector, typical keywords are:

Letting

Renting

Rental

Property

House

Flat

However, if you are opening a letting agency in Brighton, people will not find your site by entering ‘property’ as it is not relevant enough. They will probably enter whole and specific phrases. In this case they are likely to enter the full phrase ‘Letting agents in Brighton’ or ‘Brighton letting agents’. Tenants may enter phrases such as ‘Property to rent in Brighton’ or ‘Brighton rental properties’.

Examples of key phrases include:

Letting agent in Brighton

Letting agents in Brighton

Brighton letting agencies

Property to rent in Brighton

Flats to rent in Brighton

Apartments to rent in Brighton Marina

Properties to rent in Sussex

Therefore, it is good to include these phrases within the content and repeat them a couple of times. However, repeating them too many times has an adverse effect, so mix them up such as in the examples above.

As well as content, below is a list of what else is currently believed to affect position and it is worth reading further on the subject or discussing it with your web designer:

Giving the web page a ‘title’ relevant to the content


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Adding a relevant page ‘description’

Entering keywords and phrases into the ‘meta tags’

Adding relevant ‘alt tags’ to photographs

Getting as many other sites to link to yours as possible

DIRECTORIES

It can be very difficult and costly to gain a high ranking for your website. You can, however, achieve a ranking on the first page instantly, by paying a subscription to certain directory sites. Some directories have SEO experts working constantly to keep their sites on the first page of the search engines for key terms. They then charge different companies to list on the site. Unfortunately for individual companies, these directories often fill the first page of results due to the spending power they have, the natural links they get from other sites and their specific content. Directories are discussed further in Chapter 4 on Marketing.

Visit the search engine you want to rank highly on and type the key phrase or key phrases you are optimising for. You will often see a list of local area directories such as thebestof.co.uk or industry specific sites such as ukpropertyshop.co.uk Check out their subscription fees and think about listing for instant ranking success! Don’t leave it there though. You will find, just like your own site, that the directories fall in and out of favour with the search engines and the positions fluctuate. Do not sign up for long periods, monitor the position regularly and swap directories if necessary.

PAY PER CLICK AND SPONSORED SEARCHES

Google, Yahoo and other search engines have a system where a website owner can create a fairly prominent advert for their homepage, usually at the top or on the right-hand side of the page. You simply sign up and pay for a certain amount of credit and choose the keywords and phrases you want your advert to appear for. You also bid on how much you are willing to pay for each click through to your site. The higher you are willing to bid, the higher up on the list your site will appear. You can normally pick how much you are willing to spend per day so that not all of your credit is used too quickly.


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Leasing or buying premisesWe covered choosing the type and location of premises in Chapter 2. Assuming you have not decided to work from home or rent space from another business’s premises or serviced office, you will either need to lease or buy a property to work from.

Most start-up businesses will not have the capital to invest in buying a property at the start and will opt for the lease option. Leasing a commercial property is fairly straightforward. The lease is often for a reasonable length of time and is renewable. Rents are normally fixed for set periods with rent reviews written into the lease.

PROS AND CONS OF LEASING

Pros:

Lower initial fees

Rent fixed for a known period

Property owner is responsible for structural repairs

No risk of capital loss if property prices go down

Cons:

May be limited in the types of alterations you can make to the property

May not be able to give up lease if you want to move

May have to give up lease before you are ready

Usually responsible for internal repairs and maintenance

It may be worth considering having a structural survey done even if you are only leasing the property. Any items shown in the report can be considered and possibly fixed before signing the lease.

Buying a property to run a business from is a significant initial investment. If you need a mortgage to purchase a property you could either apply for a commercial mortgage in the name of the company or a personal mortgage in your own name and lease it to the company. Just like buying a home it would be prudent to get a structural survey on any property you are considering.


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PROS AND CONS OF BUYING

Pros:

Not paying rent to someone else

You can stay as long as you like

Total flexibility to alter the property to suit your needs (subject to planning)

The property itself could be a good long-term investment

Cons:

Higher up-front costs

You are responsible for all maintenance and repairs

Property may go down in value or be difficult to sell if you need to move

Office equipment, furniture and fittingsThe level of equipment and fittings will vary depending on the business model of your business. A serviced office environment, for example, may have the larger office machines such as faxes and photocopiers at your disposal. Below is a list of items that you will need to buy, or have access to, which should help you plan and prepare your start-up capital cost forecasts:

Desktop computer or laptop

Colour inkjet or laser printer

Telephone and answering system

Fax

Photocopier

Scanner

Filing cabinets

Desks

Chairs


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Cabinet

Promotional material display stands (point of sale units)

Property display system and lighting

External and internal signage

Additionally you will need some tools to help you with the business, including:

Digital camera – for property photographs

Digital voice recorder – for inventories

Laser measure – for room dimensions

Agency database softwareIt is possible to run a letting agency without a property database. Traditionally, all the information associated with each client and property would be stored in a paper file and any important dates, such as when property inspections were due, would be written in a desk diary.

A full paper system is time consuming and comes with the risk that there is usually only one copy of each important document. These could be lost for ever if there was a fire or flood at the office.

Today it is still not possible to get away without having to store some paperwork in a manual file. Information such as gas safety certificates and tenancy agreements tend to be in paper form. Help is at hand, however, in the form of software tailored specifically for the property sector. Several user-friendly database systems are available that offer:

Applicant, tenant and landlord information logging

Property detail logging

Tenancy information logging

Standard legal documents with mail merge*

*Mail merge enables the data already entered into the software, such as names of the tenants, to automatically be added to documents without needing to re-type the information.


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Diaries and to do lists

Key logging

Internet portal upload of property details

Full client accounting

Brochures, lists and window displays

Contractor management

. . . plus many other features.

The databases hold all the information associated with the tenancy process and save a lot of time, as you do not need to re-enter data. It is also secure, as backups can be made and stored off site, and paper copies can be printed when required.

Choosing the right software at the beginning of the business is critical. It is notoriously difficult to change systems once you have been entering information for some time. There are many programmes on the market. Most offer similar main features but they vary in how many features they offer, front-end user friendliness and, of course, price.

Below is a small selection of software programmes, suppliers and their websites:

CFP Winman – www.cfp-software.co.uk

Domus – www.domus.net

Key-Data Gold – www.key-data.co.uk

LetMC – www.letmc.com

Property Manager – www.propertymanageronline.com

Rentman – www.rman.co.uk

Vebra – www.vebra.info

Some suppliers offer a monthly fee payment system, some charge for ongoing support and an annual user licence. Some packages are desktop based and some internet based.

www.cfp-software.co.uk

www.domus.net

www.key-data.co.uk

www.letmc.com

www.propertymanageronline.com

www.rman.co.uk

www.vebra.info


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Create a shortlist from considering the features offered and your budget and then call the suppliers to organise a demonstration of each package before choosing.

Make sure the software has the ability to cope with infinite numbers of applicants and properties and is usable for multi-user and multi-office environments.

Services to offerThere are three types of service recognised across the letting and management sector:

Tenant finder only (or let only)

Tenant finder plus rent collection – (or let and rent collection only)

Fully managed

In addition, most agencies offer a no obligation and free market appraisal plus advice to potential clients on how best to present their property, their legal obligations, and so on.

TENANT FINDER

This service will usually incorporate:

The initial inspection to take details and photographs of the property

Advertising and marketing of the property

Accompanied viewings

Reference and credit checks of suitable applicants (Normally included as one of the elements in all levels of service, but the applicant will normally be charged for this part of the process)


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Full inventory and schedule of condition (Agents often offer inventories as a separate service and charge an additional fee)

Production of all tenancy-related documentation

Check in – handover of keys to the tenant and signing of tenancy agreement, etc. (Some agents will simply arrange for the tenant to pick up the keys and sign the paperwork at their office. Others will offer a full check-in service where they will meet the tenant at the property and take them through the inventory and how the heating, etc. works. Again, some will charge extra for this, or only offer it as part of the full management service)

TENANT FINDER PLUS RENT COLLECTION

This service will usually include all of the aspects of the tenant finder service plus:

Monthly rent collection from the tenant

Transfer of rent (minus agent’s fees to the landlord)

Issuing a monthly statement of rental income to the landlord

FULLY MANAGED

This service will normally include all of the aspects of both the tenant finder only and the rent collection services, plus the management of the property during the tenancy, which involves:

Meter readings and transfer of account to the tenant

Arranging for contractors to carry out repairs and maintenance on behalf of the landlord during the tenancy

Carrying out regular (usually quarterly) property inspections

Arranging for the tenancy to be renewed if applicable

Serving notice on the tenant to leave the property on behalf of the landlord

Checking the tenant out of the property at the end of the tenancy

Arranging for the refund of the tenant’s deposit or payment of any dilapidations as required

As shown above, while most agencies will broadly offer these three services, they will invariably include different elements under these headings and may charge additional fees for certain items such as inventories.


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You may also wish to offer some additional services such as ‘Advertising only’ or ‘Room only’. Some landlords are happy to take care of all the logistics but may wish to take advantage of advertising on your website or the property portals that you use. Others may just have a room to rent, which you could advertise at a lower fee.

Setting your fee levelsYour fee levels will depend on the data from your market research – i.e. what the rent levels are in the area and what the local competition charge – as well as the type of service you are offering and how you want to position the company.

LANDLORD SERVICE FEES

As a guide, tenant finder services are usually offered at 50–75% of the first month’s rent, plus VAT (this may be advertised as equivalent to the first two weeks’ income from the first month’s rent, or as a percentage of the first six months’ rental income). Agents normally set a minimum charge as some properties may have quite low rental values.

Rent collection services are normally charged between 8% and 10% plus VAT, of the monthly rental income and there may be additional set-up and renewal fees.

Full management services are typically between 10% and 12.5% of the monthly rental, plus VAT. Again, most agencies will also charge a set-up fee for each tenancy with the management service and some will charge for tenancy renewals.

Most large high street agencies charge the top rate (city agencies may be as high as 15%). They are charging based on branding, prominent location and perceived levels of service. Some smaller agencies can afford to charge as low as 7% or 8%.

The way our company operates is that we have very low overheads, and therefore could afford to match the lowest fees in the area, yet we offer an all inclusive service which offers everything the client needs. This matches and in most cases surpasses the other agents in the area. However, there is a stigma that companies charging very low fees are budget agencies that offer an inferior level of service. For this reason we do not undercut the opposition but position our fees just below the top rates in the area.

‘

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TENANT APPLICATION FEES

These vary enormously, but it is important to note that agents are not allowed to charge the landlord and tenant applicants for the same service. Therefore, your literature should clearly state what both the landlord and tenant pay for, especially as some of the items the tenant pays for may be listed as a feature under the list of services offered to the landlord, for example reference and credit checks.

Typically the applicants are expected to pay a fee that covers:

Reference and credit searches

Drawing up the tenancy agreement

Check in to the property

General administration (processing payments, phone calls, etc.)

Agents may also set standard charges within the tenancy agreement to cover late payments, bounced cheques and renewal applications.

Professional accreditationThere has been a call from several parties for letting agents to be licensed. So far this has not come into force and being accredited by a governing body is voluntary. Accreditation will give your customers peace of mind that they are dealing with a professional organisation that is not just a rule unto itself. It is strongly recommended that you apply to one of the organisations that provide a code of conduct for letting agents.

Two organisations that offer a professional accreditation are the Association of Residential Letting Agents (ARLA) and the National Approved Letting Scheme (NALS). Corporate membership of either organisation means that the company’s accountancy procedures are audited and approved, and the company must comply with the schemes’ code of conduct. Most importantly for your clients, the policies mean your clients’ money is kept in a bonded account and protected by an insurance scheme offering client money protection.

INDIVIDUAL MEMBERSHIP

If you have taken the ARLA accredited qualifications provided by NFOPP (National Federation of Property Professionals) suggested in Chapter 2, you will be eligible for individual membership to ARLA and will be able to add the letters ‘MARLA’ after your name on your business card.


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Useful resourcesFurther business advice

Business Link – www.businesslink.gov.uk

Small Business Advice – www.smallbusinessadvice.org.uk

Sample business plans – www.bplans.co.uk

Registering the company name

Companies House – www.companieshouse.gov.uk

Registering for tax

HM Revenue and Customs – www.hmrc.gov.uk

Professional accreditation

Association of Residential Letting Agents – www.arla.co.uk

National Approved Letting Scheme – www.nalscheme.co.uk

Business set-up checklistHave you:

Written your business plan?

Made contact with the business manager at your chosen bank (or more than one bank)?

Chosen a suitable name and legal structure and registered with Companies House?

Registered as self-employed with HMRC?

Arranged suitable insurance policies?

Approved the corporate identity and ordered your stationery and marketing materials?

Approved the website design and made sure the domain is reserved/registered and hosted?

www.businesslink.gov.uk

www.smallbusinessadvice.org.uk

www.bplans.co.uk

www.companieshouse.gov.uk

www.hmrc.gov.uk

www.arla.co.uk

www.nalscheme.co.uk


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Arranged demonstrations and chosen the property database software?

Decided on fee levels?

Joined an appropriate governing body?

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4

MARKETING

In this chapter:

Marketing strategy•

Focusing on the customer•

Marketing ideas•

The launch of your business•

Marketing overviewMarketing is a broad term covering all aspects of promoting your business, from handing out a business card to one person, to a full-page weekly advert in the press that may be read by thousands.

Marketing is more than just advertising; it requires a strategy to promote the list of benefits that you offer and that your customers will desire and want to buy. If your strategy is to be cheaper than the competition then it may be quite an easy message to promote. If, like most independents, you are promoting a higher level of service than your rivals, then the message may be more difficult and require a prolonged campaign using different media.

The marketing planAn essential part of any marketing strategy, the marketing plan will outline your approach and budget for attracting customers. It may be generally written for the whole business or might refer to a specific marketing campaign, for example the launch of a new product or properties in a new area. Like the business plan, it should be laid out in sections including:

Executive summary

Overview of the marketplace and who your particular customers are

Competitor and SWOT analysis

M A R K E T I N G

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Objectives

Marketing strategy

Budget

Return on investment forecast (ROI)

Some of this information overlaps with your main business plan and, similarly, may be used as an internal goal-driving document or an external document to be presented to investors.

As with the business plan, the marketing plan should be reviewed and updated regularly and should be distributed to staff, in order to gather and process their feedback.

Who are my customers?You will generally have two main customer types: landlords and tenants. Both will come in various guises and from all walks of life. The list below gives the main categories of each client type. You will need to adjust your marketing approach depending on the demographics of both types of client in your area.

Landlord categories:

Individuals or couples relocating that can’t or don’t want to sell their existing property

Individuals or couples who inherit a property and want to keep it as an investment

Buy-to-let investors with a small portfolio

Buy-to-let investors with a large portfolio

Commercial owners of residential property

Tenant categories:

Families relocating or downsizing

Students starting at a new college or university

Professionals relocating

Benefit claimants


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Foreign nationals relocating

Companies who have employees moving to the area

Retirees downsizing

Most agents will probably have a good mixture of each of these sub-categories. Depending on where you are located, you may find through your market research that there are particularly large numbers of certain groups. For example, if you are based near a large university there will inevitably be large numbers of students looking for property to rent. If there has been a lot of property development in the area then you may have a lot of investment landlord clients.

Your marketing will be aimed at both customer types. Generally tenants will respond to specific properties you are advertising that fit their requirements and you will not need specific offers or strategies to attract them. Although, you will need to carefully consider where you advertise your portfolio and how it is presented to get the best response. You will also need to pay special attention to making sure you stand out from the crowd to attract the all important landlord client.

Where are my customers?It may be obvious that, although the majority of prospective tenants will come from local or national areas, there could be a significant number of people re-locating to the UK from literally anywhere in the world. The expansion of the European Union in recent years has seen a large increase in the number of people coming to work in the UK from Europe.

Landlords too are not necessarily locals. Those that have relocated and kept their properties as an investment may have moved globally, and occasionally you will come across foreign investors that have bought UK property to let.

Local advertising and the internet will attract local clients and the internet will be the prime source of advertising for clients located further afield.

Where to advertise on the internetIn Chapter 3, we touched on improving the position of your website on the main search engines by listing it on well ranked directories and by pay per click advertising. These concepts will improve the marketing of your site by enabling potential clients to find you when keyword searching. As well as following this approach, you may also consider listing the site on:

M A R K E T I N G

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Property portals (www.rightmove.co.uk, www.propertyfinder.com etc.)

Business listing sites (www.yell.com)

Town and tourist information directories (www.thebestof.co.uk)

The Open Directory Project (www.dmoz.org)

The single most important place to advertise is with at least one or two of the top property portals. These sites allow you to upload your properties and allow potential tenants to search by postcode, area, property type, number of bedrooms and maximum rent, etc. They are currently the most popular place that people buying or renting search for properties. This is because it allows them to enter their requirements once and receive listings from many agents in one go, instead of having to keep looking at different agent’s websites. The price the portals charge varies and most of them offer different levels of branding, so you can pay more to have your logo beside each of your properties or for your property to appear at the top of the page.

Press advertisingMost towns and cities will have one or two local newspapers. These publications rely on advertising fees to cover their costs. They are, therefore, usually free and may be delivered to many of the properties in the area or be very cheap to buy from local shops. They are usually a weekly publication and will often have a specific property section where most of the estate and letting agents in the area will place a property-listing advert.

Many agents are cutting down on the amount they spend on this more traditional form of advertising. It does, however, still play an important role both for branding and for advertising individual properties. There are some people that prefer to browse the weekly property section rather than search the internet and, as most estate and letting agents still maintain some presence in the paper, many landlords will expect their properties to be advertised here. Many potential landlords may find your advert while reading the paper themselves. Therefore, even if you do not place a regular property listing in the paper it is an ideal place for advertising special offers and landlord specific adverts.

www.rightmove.co.uk


www.yell.com

www.thebestof.co.uk

www.dmoz.org


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Remember to negotiate the price, especially if you intend to place a regular advert. As more and more agents reduce spending in this area, papers will be keen for new business.

Ask for your advert to be placed on a right-hand page as readers see this more readily.

Public relationsPublic relations (PR) is an important part of any marketing campaign. It is an effective and often under-used tool for getting your message across … and it is essentially free!

Examples of effective PR activities include:

Press releases

Distributing newsletters or emails

Supporting a charity

Sponsoring a local school, building or event

Hosting an open day or property-related seminar

It is worth remembering that any time you, or a member of your staff, come into contact with a customer or potential customer you or they are representing the company and should be trained accordingly.

PRESS RELEASES AND EDITORIALS

Press releases are a great form of free publicity. To write a good press release you usually need an angle or story. Most local papers will be willing to print a small column announcing the opening of your business, especially if you are going to

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be placing a regular advert with them. Post launch, however, you can try different approaches such as announcing that:

You are adopting a charity or sponsoring a local school or event

You have a new member of staff or are moving or expanding

The company is offering something new or a different service

The company has joined a professional body (e.g. NALS or ARLA)

The company or member of staff has won an award or passed associated exams

When issuing a press release it is important to send it to the correct person within the company that publishes the paper or magazine. There may be a separate editor for the property, company news and general news sections. A simple search of the publication’s website or a phone call will help you locate the right person. It is well worth cultivating a good working relationship with these editors.

Tips for writing a good press release:

Type ‘Press Release’ at the top of the page

Add a date for publication (important if you want to time the release with other aspects of your marketing campaign)

Try and come up with a catchy heading (although the editors may choose their own)

Use a readable font and double-space the lines

Try and keep it to one page

Make it concise, newsworthy and not just an extended advert for the business

Print it on company-headed paper

Type ‘End’ or ‘Ends’ in the middle at the bottom of the main text

Include contact details and a short biography about the company and author after the main text

Include a relevant photo


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As well as press releases, you can often get a free mention in the press by writing an editorial or even becoming a regular columnist. Articles can be submitted to the local business section or the property sections. The number of industry specific subjects to write about is infinite but you could consider:

Commenting on the housing market

Writing a useful guide about renting or letting property

Writing about regulations that affect landlords, e.g. gas safety, deposit regulations, etc.

Discussing new proposed legislation that may affect the lettings market

We managed to negotiate a full page editorial feature in our local paper when we launched the business and this was invaluable in letting people know we had arrived and what services etc. we were going to be offering.

SEMINARS

Seminars are a useful approach for attracting potential landlord clients to your door. Running free, informative sessions will enable you to build up a good contact list. You can run the seminar yourself or with another local expert, for example a mortgage advisor or estate agent. In this way you can expand on the topics covered and share the costs of running the seminar. Ideas for potential informative seminars include:

Buy-to-let investment advice

Where and what to buy (and not to buy) for letting in your area

Mortgage and re-mortgage advice

Information on letting property for the first time for novice landlords

Discussion and information about new or proposed legislation affecting landlords

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Sessions like this are usually offered free and the best approach is not to do the hard sell on the day. Have each presenter do a short, non-sales pitch about their company and have plenty of promotional material available to give to anyone who is interested. You will need to book a room large enough for all the attendees. Arrange for them to arrive perhaps a few minutes before the presentations start and serve some refreshments.

These sessions should be aimed at showing that your company offers more than just the usual letting and management service, and they will help establish your name and reputation as an expert in your local area.

Make sure people know they need to book beforehand so that you can obtain their contact details. After the meeting, send them a thank you for attending, perhaps with a follow up article or special offer voucher.

Word of mouthThis is invaluable and the best free source of marketing. Referrals made by customers are more effective than any advert placed in the papers. Everyone would rather use a company that was referred to them than try and stumble across a good service provider from the local business listings. As well as customers, make sure you tell everyone what you do. Offer incentives or reward referrals with a discount, gift or cash. Get your friends and family to spread the word.

NetworkingThis is a great way to increase word of mouth referrals. There are many networking meetings that you could attend nationwide. There are breakfast clubs, lunch meetings, women in business meetings and even golf networking events. They vary in format. Some are very formal, charge an annual membership and almost insist you attend and bring referrals for your fellow networkers each week. Others are more relaxed and informal.


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Most networking clubs invite members to bring guests along. Speak to fellow business people that you know and see if you can attend one or two as a guest before committing to joining.

Like advertising, networking usually requires a sustained approach. You may be lucky and get a lot of referrals at the first meeting but usually people need time to get to know and trust you before mentioning you to their family, friends or colleagues. To get the best from these events you also have to be proactive, attending regularly and making sure you are passing on business to the other members.

Leaflets and flyersLeaflets can be a good method of marketing, especially if you are advertising a promotion or special offer. They need to stand out from the bulk junk mail that comes through the door on a daily basis. It is, therefore, a good idea to have them professionally designed and printed, as an amateurish attempt could have an adverse effect on the business.

You can pay companies to deliver them, or if business is quiet or when you are starting out, why not do the legwork yourself. It helps you to get to know the area.

Remember not to push your hand through the letterbox. I still have the scars from a dog that went for the leaflet and got my hand as well!

As well as being delivered, flyers and leaflets can also be distributed or left at all sorts of places where there is a good footfall of people, for example:

Doctors’ and dentists’ surgeries

Community halls

Churches

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Playgroups and schools

Large company receptions

Shop and supermarket notice boards

New property development sales offices

The options are numerous but remember to get permission from the occupier first.

New property development sales offices, in particular, are extremely targeted and can result in a good hit rate. Many investors target new builds with the aim of buying to let. Therefore, it is a good idea to research the new housing developments in your area, particularly those building properties that rent well. Visit the sales office and have a chat with the sales people, pick up their brochures and then create a flyer, which specifically lists the properties available with an estimated rental valuation for each property. Return this to the sales person and ask them to give it to any potential investors. Remember to add your contact details, refer to the developers on the flyer and perhaps link it to a special offer.

Although some developments are manned by sales staff from a property development company or by a local estate agent who may be a competitor, the developers are normally keen to show potential investors what the returns may be on their properties and independent valuations are better than their own predictions. They will normally be giving out flyers from several agents in the area and I have never had anyone refuse. Building a relationship with the sales staff is important.

Leafleting needs to be focused and repetitive to work. If you have a budget for 50,000 leaflets, you probably will not achieve good results by delivering the 50,000 leaflets, all over the county once. Better results are normally attained by selecting 5,000–10,000 properties in the area you have researched or immediately around the business location and making several deliveries a couple of weeks or so apart, possibly with different messages or offers.


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To Let boardsDepending on your point of view, To Let boards are either an excellent form of branding and advertising or a complete eyesore. Personally, I think a dozen boards attached to the railings outside a block of apartments can be very detrimental to the look of the area. They are, however, a necessary evil. Not only will prospective tenants notice them if they are driving around looking at areas where they would like to live, but potential landlords in the same street will often call to say they have a similar property to let. They will often ask you if you have had much interest and for how much the property is rented. For this reason it is important that you make sure the let slip goes up as soon as possible, as you can be sure they will notice how long the property is on the market.

Cold callingCold calling has a stigma; people are adverse to the double-glazing salesperson calling them late in the evening or at weekends. However, unlike an advert in the press or delivering thousands of leaflets, which can prove difficult for targeting potential landlords, cold calling can be targeted to people you know are letting their properties. It can be a great way to build up a list of clients, or potential clients in your area. The place to look for a list of numbers to phone is the local papers. Most will have a classified section titled ‘Property to Let’ or ‘Accommodation to Rent’. If you keep a record of the numbers that appear and the property details, you can either ring them straight away or maybe wait and see if they re-appear for a couple of weeks.

Preparation is the key to cold calling. It is worth having a script ready or memorised. Remember to smile even though the person on the other end can’t see you, as it will show in your voice. If someone is advertising for example a two-bedroom property, it is worth looking through your database of enquiries to see how many potential tenants you have already on the books that may be interested. Nothing works better than saying you have someone lined up to view immediately.

It is important not to get disheartened. Unless you are very lucky, you will make a lot of calls for what may seem like little reward.

I made 150 calls in the first year of business for about a 10% hit rate. Out of all the calls, one or two put the phone down fairly quickly, no one was ever rude to me and many thanked me for bothering to call, even if they were not interested.‘

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It is all about timing. You never know when you will be speaking to someone who owns half the local town and just happens to have got fed up with the agent they were using, or perhaps someone who has been managing the properties themselves and has been thinking of handing them over to a letting agent.

Most of the customers we picked up this way had two or three properties and they have all provided repeat business.

As mentioned, people do not tend to like getting sales calls in the evening and if you call someone at work at 9am on a Monday morning you may also get a negative response. The calls need to be made early enough so that the property has not been let (or so that another agent has not already got there first!), but not so early that the landlord has not had a chance to gauge a response to their own advert. Our local paper comes out on a Friday and people expect to have had some response over the weekend, so calling them on Monday afternoon or Tuesday mid-morning seems to work well.

Promotions and special offer ideasYou can include promotions and special offers to attract new customers in any form of advertising material that you use, whether it is a specific leaflet offering a discount or attached to your regular advert in the press.

People love a bargain and offering ‘10% off ’ your tenant finder fee or ‘One month’s free management’ can work wonders. Other incentives include:

No set up fees

Free inventory

Free re-mortgage advice (if you have contact with a financial advisor)

Discounts on portfolios (i.e. if a landlord asks you to manage more than one property)

Free floor plans

This is assuming you do not offer the above as a standard part of your services.

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To really get some interest early on you could offer:

Three months’ free management

50% discount on tenant finder services

Any property managed for the lowest price you charge, e.g. for the same fee as a studio flat

Direct mailDirect mail usually produces better results than random leaflet distribution. However, identifying potential customers is not easy. The obvious way is to target properties that have been advertised to let by a competitor. Even then you will need to search and pay for the title deeds to locate the actual owner’s name and they may not live at the address if it has already been rented in the past.

Another way is to target properties that have been advertised for sale for some time and to offer the owners some free advice and a free market appraisal so they can consider the option of letting the property instead.

Although it is fairly common practice, be aware that this practice will be frowned upon by your competitors and, most importantly, if you are a member of NALS or ARLA it will be against their codes of ethics to target fellow members’ clients.

Paper directoriesPaper directories were once very popular. Publications such as the Yellow Pages and Thomson Local are delivered once or twice a year to nearly every property in the UK. The cost of advertising for the year in such directories is quite high compared with other forms of advertising. However, you are able to pay by size and design of the advert and, therefore, can make your company stand out from the crowd by having a larger space or a colour advert.

These directories are still available and people do still refer to them, however they are all gradually gaining an online presence and the paper copies may become obsolete.

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RadioThis is another useful media for presenting your message. There will normally be a couple of commercial stations covering your area. Most will offer different advertising options. These are normally based on the frequency and time of day the advert is played.

Jingles and adverts on the radio are a specialist field and most stations will prepare the concept for you. If you get it right this can be a very effective form of marketing, as a jingle will often stick in someone’s head for some time, particularly if it is played frequently. Radio advertising does tend to be expensive compared with other forms of advertising.

Vehicle liveryOne great form of advertising is to have the company logo painted onto your car or company vehicles. Assuming the car is in reasonable condition and not an old banger, then it is a ready-made moving billboard. People will be reading it when sitting in traffic and whenever it is parked anywhere people will be able to see it.

As the company grows and if you decide to supply cars to staff, then you may be lucky enough to have a fleet of moving signs, constantly driving through your key locations and giving a real brand presence.

Pre-launch marketingThis is an important time for any new business and preparation is the key. Whether you are launching the business from home or opening a shop front, you should set an immovable date well in advance. Any pre-launch marketing should be geared to the grand opening.

It is no good quietly turning the closed sign to open on the big day and then waiting for the phone to ring. To get the business off to a good start, you need to let as many people as possible know that you are opening for business and why they should start using a fledgling business.

Pre-launch marketing ideas include:

Tell everyone you know and get them to tell everyone they know

Attend networking and local business group meetings

Provide special opening offers


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Saturate the area with leaflets and flyers

Distribute press releases

Advertise in the local press

Advertise on the local radio station

Display posters and flyers in the business premises’ window

Stand in the local shopping centre or high street and distribute leaflets to passers by

Launch information on your website

You will find that utilising all or a combination of the above ideas will have the biggest affect.

It is difficult to know when to start informing people of your opening date. You will be limited by budget but it is never too early to start a word-of-mouth campaign. Tell as many people as you can, as soon as you can, but make sure they are also reminded near the launch date!

Flood the local area with leaflets and flyers offering special opening discounts or offers and back them up with press releases and advertising in the local press. It is worth advertising up to a month or so before the launch date, although you may need to be prepared to take calls from prospects ahead of the opening date.

The big day – opening for businessUnless you are working from your bedroom, opening for business should not be a quiet affair. There are some things you can do to make sure the day goes with a bang, including having a ‘Grand Opening Ceremony’. When planning this event you can:

Invite local dignitaries (mayor or councillor)

Invite a local personality (sportsperson or actor)

Make sure the local press are invited

Inform the local radio station and invite a representative

Invite all your friends and family (so the place looks busy from the start!)

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Invite any landlords that you have already made contact with

Give special offer vouchers away on the day

Organise welcoming drinks and snacks

You will no doubt be exceptionally busy answering questions on the day and, if you do not have any or many staff, it is worth getting a family member or friend trained up to answer some of the more obvious questions, hand out information or serve the drinks.

Make sure you have plenty of marketing material ready for both landlords and tenants. It would not look good to run out on the first day!

Marketing budget and measuring resultsYour marketing plan will help you to analyse the budget and return on investment, either for the year or for a specific campaign. It is extremely important to monitor this constantly and make sure you are not ploughing money into a strategy that is not yielding results. Conversely, you must also be careful that a specific advertising campaign or approach is given enough time to work. It is not normally sufficient to place one small advert in the local press for one week only or to deliver one set of leaflets. Your plan and budget should reflect a sustained approach.

Although it is not always easy, try to ask every customer where they heard about you and record the information. This needs to be fairly specific. Most people that find your company on the internet, for example, will say ‘on the internet’ but you will need to find out if a specific paid directory or portal is working, or if that advert in the yellow pages is paying for itself.


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There are so many forms of marketing to utilise it is easy to over extend your budget, especially early on, and especially as a variety of methods work better than just one. It is important to be disciplined. If one approach is providing a good return, then certainly spend a bit more in this area but equally cut spending in other areas if something is not working.

As a new business, you will receive a constant stream of people wanting to sell you a listing in their publication or on their website. They will use tactics such as, ‘we have a last minute space available in our magazine, it can be yours for the special price of £X’. Always consider any offers carefully, rather than being persuaded by the first conversation over the phone, and be warned that there may be some that do not actually have a viable publication, have over-inflated prices or claims on distribution, and so on.

Useful resourcesNational leaflet distributors

Mailbox Nationwide – www.mailboxnationwide.com

Post Solutions – www.leaflet-distributors.co.uk

To Let boards

Henderson Signs – www.hendersonsigns.co.uk

Sign Medic – www.signmedic.com

www.mailboxnationwide.com

www.leaflet-distributors.co.uk

www.hendersonsigns.co.uk

www.signmedic.com

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Marketing checklistHave you:

Completed your marketing plan and established a budget

Told EVERYONE about the business opening or latest offer

Listed your business on all available free internet sites

Arranged to visit local networking meetings

Negotiated the price for your regular paper advertising and designed the copy

Issued press releases to all local papers

Distributed leaflets and flyers EVERYWHERE

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5

BUSINESS FINANCE

In this chapter:

Budgeting and controlling costs•

Sales targets•

Taxes•

Keeping records•

Finance overviewA letting agency will have two sets of accounts. Like any business, it needs to record the costs associated with running the business and the income received from sales. The second set of accounts is to record the income collected from tenants on behalf of the agent’s landlord clients. These client accounts need to be recorded separately and the monies retained in entirely different bank accounts, separate from the company’s own money. In this chapter we will only consider the company accounts. Client accounting is covered in Chapter 12.

The business plan discussed in Chapter 3 will include cost, income and cash flow forecasts for three to five years ahead. Generally only the next 12 month period is likely to be very accurate and the other figures will be adjusted on an annual basis, depending on the performance and experience in the previous accounting year.

Although the amount of income the company achieves may logically seem to be the most important financial goal to concentrate on, controlling costs and meeting sales targets are both equally important to keep the business in a healthy financial position. Keeping a tight control of costs will help maximise profit and keep the company in a strong position to survive misfortune or downturns.

Operating costsThese costs include everything you pay to run your business. Some costs will be fairly fixed and predictable for the year ahead. Others will need to be tightly

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controlled to ensure you do not go over budget, and some will inevitably change depending on the amount of business you generate.

Costs that will either not vary from the budget or for which increases will be known or predictable include:

Rent

Business rates

Software licences

Professional membership fees

Accountant fees

Insurance policies

Even with these fairly fixed costs there may be surprise increases from suppliers or you may need to change supplier halfway through the accounting period.

The costs that you need to keep careful control of include:

Marketing and advertising (internet, press, flyers)

Networking meeting memberships

Ongoing staff recruitment and training

Salaries

It is easy to get carried away with the amount of advertising or to take on extra staff too early. For example, you may have a very busy month and income may look as though it will be well ahead of forecast, but is it a continuing trend or a lucky month?

The areas that generally tend to vary from budget if you do more or less business than forecasted include:

Utility costs

Office stationery and supplies (ink, paper and consumables)

Tax and VAT


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Vehicle fuel

Franchise management fee

Tax, petrol and a management fee, if you have to pay it, will normally be directly proportional to the amount of business you are doing. The more properties you have on the books, the more viewings you will carry out and the more fuel you will use. The higher the turnover, the more tax and management commission you will pay.

Setting and monitoring sales targetsIt is important to monitor your actual sales against your targets in the same way as you would monitor your expenditure levels. Later, you may need to set sales targets for a team and measure their performance. Targets are normally set on a monthly or quarterly basis.

Small glitches are not particularly important and there is no point panicking if you do not actually receive the target turnover by a specific day, for example the last day of the month. Due to the nature of the business, you may be receiving quite large fees for properties let on a tenant finder basis. This means you may be significantly under or even over target by quite a significant amount in cash terms on the last day of the month. However, it is difficult to control when a tenant actually moves in and you may have one, two or several move in the day after your target assessment date and therefore beat your target in the next period.

Obviously if you are under target month after month then it is time to start looking at what is going wrong.

Graphs are the best way to represent figures and spot trends. Inserting the numbers into a spreadsheet makes them easy to manipulate and transform into graphical form, which can be used for management reporting, to present targets versus performance data to staff, or to show a lender.

As well as just a monthly turnover target you can also set targets for, and monitor, other figures which will help you see where your turnover is coming from and perhaps help spot where the weak points are if you are under target. It may be useful to monitor:


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Number of properties let and turnover from tenant finder only services

Number of properties let and turnover from rent collection services

Number of properties let and turnover from full management services

Number of policies sold and commission received from tenant and landlord insurance

Other commissions received, i.e. contractors invoices, mortgage advisor referrals, etc.

It is easy enough to set targets, but if they are written down and forgotten about or not communicated to the rest of the employees then they are unlikely to be achieved. The whole company needs to be involved in achieving each of the company’s goals. It is worthwhile involving everyone at an early stage and constantly communicating progress.

Predicted turnoverYour target sales revenue, or turnover, is based on your prediction of the number of properties you will let. In the first year of business you will not have any history or experience to use as a base point and the figures will be based on your research of the size of the market in your location and how much market share you believe you can win from the competition. In future years there will be an element of target growth involved, which is necessary to grow the company.

Cash flowCash flow is extremely important. Even mature companies can suffer or even fail if they have bad control of their cash flow. A shop, for example, would need to buy stock to display and then sell it to the customer. Normally they would be able to pay a supplier 30 days or more after buying the stock and customers would be required to pay on receipt of the goods. This model looks good at a glance. If, however, they had a bad trading period and did not sell enough products before payment was due for the stock, then they may not have enough money in the bank to pay the supplier, which can lead to bad debts and a downward spiral.

This model can be even worse for some businesses, particularly if they are selling a product or service on to another business or are working on a long-term project. Their customers may also have negotiated a 30-day (or longer) credit period. This can mean quite a long gap between having to pay for the raw materials and receiving income from the sale, or having to pay staff and overheads for a long period before any income is received.


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Companies can also fail if they have invested a large amount in stock to sell onwards and the company that is buying it does not pay.

Fortunately a letting agency generally has a different business model. There is no stock to buy and the upfront costs are generally fairly small. As a letting agent you will receive income from two main types of service. Typically you will receive larger, one off payments from a let only property and smaller, regular monthly payments from fully managed properties.

For a let only service you will invest some work and therefore costs up front before the property is let, but once the tenancy starts the fees can be collected. For managed properties you will invest the work and costs associated with letting the property and collect the fees monthly once the tenancy starts. Tenants pay rent by standing order, monthly, in advance and fees are taken from the rental income before passing the balance to the landlord. Therefore, although the costs of letting the property need to be covered, after a period of time and if the tenants remain in place you are essentially paid in advance to manage the property.

Once a portfolio of managed properties has been built up then you will have a minimum regular monthly income, which is fairly fixed for a known period. Once you have a large enough income from this portfolio to cover your costs the business should never suffer cash flow problems.

As you take your fees from the rent you collect from the tenants there is no need to chase your customer (the landlord) for payment, removing another problem that affects some companies.

You need to be almost obsessive about monitoring your costs. You may rely on a good bookkeeper to take care of recording the figures monthly and an accountant to present the figures annually, but you need to know exactly what your outgoings are and access the figures instantly if required. It may be easy early on if it is just you writing the cheques, but you will need a disciplined approach as the company grows, as you will need to monitor the budgets of separate departments or offices within the company.


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Profit and lossProfit or loss is the resulting figure calculated by deducting all of the company’s costs from its sales income. Often the initial figure is calculated by subtracting the direct costs from the sales, resulting in a gross profit or loss. The net profit or loss is the final figure given after all other overheads, salaries and taxes have been subtracted.

VATCurrently there is no need to register with HM Revenue and Customs (HMRC) for VAT until the company is turning over £67,000 per year (this amount tends to change annually). However all large companies charge VAT and, although you would be able to offer a very low price to customers, if you do not charge for VAT it gives the game away that you are a new company and potentially inexperienced or even unsuccessful. Therefore it is a good idea to register for VAT as soon as you start the business. The other benefit is that you can claim back VAT on purchases. In the first year this will include any capital costs associated with setting up the company.

At the time of writing the standard VAT rate in the UK has just been lowered temporarily to 15%, previously it had been 17.5% for many years. There is a reduced rate of 5% on some items such as fuel and power and a 0% rate on a few things such as food and books. Therefore, the VAT return in the first year can be quite a significant boost to your cash flow. Eventually, your sales will hopefully be far higher than your purchases and future VAT returns will always mean you paying out to HMRC. It is important, therefore, to factor VAT into your cash flow forecasts.

You will need to submit a quarterly VAT return to HMRC and this can be done online or by paper return. You need to keep enough cash on hand to pay these returns on time.

Income tax, National Insurance and corporation taxAs an individual your tax status and responsibilities will vary depending on the legal structure of your company. As a sole trader, partnership or limited liability partnership, you are treated as self-employed. As such, you will pay tax based upon the profits of your company. You are, however, allowed to offset business expenses against your tax liabilities.


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As a director of a limited company you will pay income tax and National Insurance Contributions as an employee of a company. The company will be liable for corporation tax based on the profits of the company.

HMRC places the following requirements on the company structures listed above:

Sole traders need to submit a self-assessment tax return on an annual basis and pay income tax and National Insurance Contributions

Partnerships and limited liability partnerships need to complete a partnership self-assessment tax return annually. Each partner also needs to submit their own self-assessment tax return annually and pay income tax and National Insurance Contributions

Limited companies need to complete a corporation tax return annually and a set of accounts at the same time

Note that limited companies are also required to submit the annual return and accounts to Companies House. They must also keep an accurate set of records (invoices, receipts, etc.) and accounts for a period of six years from the end of the accounting year. A fine can be imposed if records are not kept, are inaccurate or are not filed in time.

PayrollIncome tax and National Insurance are payable by all employees of a company including directors. Income tax is deducted from an individual’s pay by their employer, using the system known as PAYE (Pay as You Earn). The employer then pays it to HMRC on a monthly or quarterly basis.

An employer is required to submit certain forms to HMRC including the P35 (employer’s end of year return) and the P60 (employees’ end of year summary) for each employee.

If you intend to employ people you will first need to register as an employer with HMRC. You will then need a copy of your new employees’ P45 and their National Insurance number.


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Tax, National Insurance, corporation tax and payroll are specialist fields and an accountant or tax specialist will normally save you enough to cover their fees. You are responsible for all submissions to Companies House and HMRC, so if your accountant agrees to make the returns for you make sure you both agree who is submitting what and when. It is also advisable to make sure you have a written contract.

Other financial obligationsAs well as tax and National Insurance, there is a legal requirement for employers to:

Make deductions from their employees as appropriate for student loan repayments

Pay employees’ maternity leave

Pay employees’ statutory sickness

Make tax credit payments on behalf of the Inland Revenue

Keeping a recordYou will need to keep accurate records of all your expenditure and sales receipts for the business. As well as the actual bookkeeping and account records, you will need to keep physical copies of all:

Invoices and receipts received

Invoices and receipts issued

Stubs from chequebook and paying in book

Bank statements

Commission statements


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INVOICES AND RECEIPTS

It is worth organising and filing all receipts and invoices as soon as they are received. You won’t want to spend hours doing it when the accountant needs to see them at the end of the year or worse still if you are audited.

These days many invoices are sent electronically but it is worth printing a physical copy. Add your own sequential internal reference number to the top of the invoice and file them in order in a suitable ring binder or file. Invoices from suppliers will have different styles of invoice number, making them difficult to recognise and find when writing up the accounts. Adding your own number makes it easier for anyone to follow the system. The number can be recorded in the books and this makes them instantly accessible when anybody needs to find them.

Receipts should also have a sequential number and be filed in a separate binder.

CHEQUE AND PAYING IN BOOKS

Make sure you clearly write the date, the amount and the unique reference number from the invoice or receipt onto any cheque or paying in book stubs. Again this helps to cross reference with the accounts and the relevant invoice or receipt and saves a lot of time if looking for errors in the accounts. Keep all your old cheque and paying in book stubs as they may be needed for the end of year accounts or for an audit.

BANK STATEMENTS

Most banks these days offer electronic statements and these can be filed with a suitable filename and date on your computer. Again you may wish to print and file a physical copy, which can make it easier when reconciling the statement with your accounts.

Bookkeeping and accountsAs well as the physical copies you will need a bookkeeping system to record:

Sales

Purchases

Bank records

Petty cash

Salaries


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I cannot stress enough how important it is to keep your bookkeeping records up to date on a regular basis. In the early days, when you may not have much to record, it is easy to leave it all until the end of the month. As you get busier you will have less and less time to spend on filing and recording the data and, therefore, it is better to get into the habit early.

Of course, most businesses eventually need a part or full-time bookkeeper and they will probably take care of the books on a weekly basis. Larger businesses will need someone full-time to enter details on a daily basis.

BANK RECONCILIATION

At the end of the month you will need to make sure your bank statement is in line with your accounting records. This is when you will glean the benefits of being organised with the numbering, filing and recording. Each transaction recorded in the accounts needs to be checked against the bank statement. Inevitably there will be errors such as typing mistakes, overpayments, overcharges, early or late payments or date errors. If you have been organised then relating each transaction to its receipt or invoice etc. will help you find the error easily.

Systems and softwareTraditionally, companies used a written bookkeeping system but it is doubtful these days if you could easily run a business without a computer. Therefore, it is a good idea to at least use a spreadsheet, and preferably a dedicated accounts software package to record your accounts.

Most accounts packages such as SAGE and Quickbooks have the added benefit of producing reports and graphs, giving you instant access to:

Expenditure by type

Turnover by source

Budgets versus actual expenditure

Sales versus targets

Profit and loss statement

Balance sheet

Cash flow analysis


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As indicated, it is a good idea to be quite obsessive about costs and most accounts software packages will allow you to set codes for as many different types of expenditure (or cost centres) as you need. There is, therefore, no need just to lump all your costs together. For example, rather than just placing all your advertising costs into a cost centre named ‘advertising’, it is a good idea to break it up into areas such as ‘press advertising’ and ‘internet advertising’ or as many categories as you like.

Typical cost centres might include:

Press advertising

Internet advertising

Utility bills

Salaries

Office cleaning

Office stationery

Office maintenance

Fuel

Printing (flyers, leaflets, etc.)

Useful contactsEmployee tax and VAT

HM Revenue & Customswww.hmrc.gov.ukSelf-assessment and PAYE enquiries: 0845 366 7816VAT services helpdesk: 0845 010 8500

Finance checklist

Have you set up a good system for filing and keeping records?

Have you set and reviewed your sales targets?

Is your team fully aware and supportive of the targets?

www.hmrc.gov.uk


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Are you monitoring all aspects of the costs associated with your business?

Even if you have a bookkeeper and accountant, are you entirely familiar with the accounts and have accurate and up-to-date figures immediately available?

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6

STAFFING YOUR BUSINESS

In this chapter:

Finding the right people•

An employer’s legal duties•

Leading and motivating the team•

Alternatives to employing people•

Even if you start out on your own, it is extremely unlikely that you will be able to avoid employing staff at some stage. The nature of the business means it is difficult to run a letting agency on your own once it reaches a certain level of business.

Becoming an employer brings a whole new list of skill requirements, problems and benefits. You will need to be an effective recruiter, a good leader and be able to deal with the day-to-day staffing issues alongside your own, the business’s and the customer’s.

It is easy to build a good reputation when the customers are dealing solely with you and you have control of every aspect of the business. The challenge is to maintain the control and reputation when other people are dealing with those same customers on your behalf. The larger the company grows the more difficult this can be. Early on all the staff may report directly to you, but later on you may have tiered levels of management in place, and even separate branches and office locations. Therefore, careful staff selection, training, motivation and retention are paramount from the start.

Assessing your requirementsIf you are opening a high street branch, where a large footfall of visitors is expected, you may find that you need someone immediately, particularly if you do not have a partner. You will need one person to monitor the phone and greet visiting clients while the other is out on viewings, and so on. If your office is not likely to receive

S T A F F I N G Y O U R B U S I N E S S

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many passing visitors then it is possible to run things yourself initially. It is not ideal, but phone calls and emails can be forwarded to your mobile phone when you are out of the office, or you can pay a remote answering service so that potential clients speak to a real person and not an answering machine if you are with another client.

Planning ahead is vital. You will probably need to employ someone before you have enough business and income to support the extra costs. If you decide to wait until you have enough business to sustain a new member of staff, you may find that you have no time to plan well enough or to spend on interviews and you may end up rushing the process and employing the wrong person.

Your business plan should reflect the timing of when you expect to take on new staff members, how many you plan to employ and how you will afford to pay them. If the company is not yet producing enough cash flow to cover all the costs of employing and paying someone, then you may need to plan to borrow money or arrange an overdraft to support the staffing requirements. Obviously there are some risks if this route is followed.

As the company grows, people will inevitably leave and may need replacing. This is difficult to plan for and rapid recruitment may be required in these cases, although it is still important not to rush things too much.

Staffing requirements vary from firm to firm but most letting agents have defined rolls for staff members, usually these roles are defined as:

Lettings negotiators

Property managers

Administration staff

Additionally larger firms may have:

Sales managers

Area or branch managers

Accountants

IT personnel

Marketing personnel


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When defining your staffing requirements, you need to look at the nature of the business at that moment in time, as well as considering where it is going in the future. For example, if you happen to have taken on a lot of fully managed properties and it looks like the number will keep increasing, then you may need to employ someone with property management experience. If most of your work is on a tenant finder basis then you may need a lettings negotiator.

These days many of the roles may overlap and, although specialists will be required, most people are expected to be flexible in their duties. This is especially important early on when you only have one or two staff members.

Once you know the role you are trying to fill, it is worth having a pre-conceived list of skill requirements and attributes required to fulfil the requirement. Below is a typical list of attributes I would consider important for two of the main roles within a letting agency – lettings negotiator and property manager.

Lettings negotiator

Good communication skills

Good interpersonal skills

Passionate and enthusiastic about property

Knowledgeable about the letting and tenancy process

Used to working towards goals and targets

Preferably holding a relevant lettings qualification

Well presented (clothes, shoes, appearance, etc.)

Team player

Holds a clean driving licence

Property manager

Good communication skills

Good interpersonal skills

Logical and well organised

Used to prioritising workload

Used to dealing with contractors


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Passionate and enthusiastic about property

Knowledgeable about the property management process

Used to working towards goals and targets

Preferably holding a relevant lettings or property management qualification

Well presented (clothes, shoes, appearance, etc.)

Team player

Holds a clean driving licence

These lists are not finite and you will no doubt need to write your own, or add to the above.

Finding applicantsThere are many ways to advertise for applicants including:

Placing an advert on your own website or in your branch window

Word of mouth

Advertising in the local or national press

Advertising at the local job centre

Advertising at schools, colleges and universities

Using a recruitment agent

Later you may also wish to consider promoting from within, taking on trainees or creating junior positions. Where you advertise will depend on the role you need to fill. Senior positions may require specialist help to fill and you may need to search further afield, while junior positions may be sourced cheaply and locally.

CURRICULUM VITAE (CV) AND APPLICATION FORMS

Unless you have spoken to them on the telephone, the first impression you may form of a candidate is through their CV or application form. Most companies will have a standard application form for a particular job they are trying to fill and may ask for the applicant’s CV for more detail. Some will have a large form that includes all the details they require in a standard format and therefore do not ask for a CV, as the information would be repeated. If there are a lot of applicants for


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an advertised position then these documents will be used to filter out the ones that will be invited for interview and those that will be rejected at an early stage.

Although there are plenty of guides to writing good CVs, you will inevitably get to see and read many different styles. Therefore, creating a standard application form will help you compare all the applications quickly.

Personally, I like to see the person’s CV as they have had to spend some time and creativity on the document rather than filling out the boxes on a form. There are many schools of thought as to how a CV should be written. It used to be thought that it should be no longer than a page; then it became two pages. Realistically, as people are now more transient and have more qualifications or attend more courses than in the past, it can be difficult for some to get all the information down on two pages. I look for well written, concise CVs that do not necessarily follow convention and if they need to be longer, because the candidate is well educated with a lot of experience, then so be it. They should of course have good grammar and spelling, especially as these days I would expect them all to be typed on a word processor.

How we interpret these initial communications from potential employees is very subjective and, even if you have never employed anyone before, you will have your own opinions of what will make a good employee. It is, however, worth having a clear picture of what qualities you are looking for and importantly what type of person will fit into the company before inviting anyone to interview.

The interviewThere are various interview methods from informal chats to very formal techniques that involve panel interviews, or having several stages of interview where the applicant meets different managers. Some involve the candidate having to complete various psychometric tests and other evaluation papers or role-playing situations.

Whichever method you decide to use, it is a good idea to have a standard format and a set of questions to ask all the interviewees so they may be compared fairly during the interview. Usually there will be general questions that you ask everyone and then specific questions relating to the particular position available and the information that you already have from the individual’s CV.

Below is a list of typical, general questions that interviewers may ask. It is by no means comprehensive but you may wish to use some of them or add more of your own:


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Give me a brief one-minute synopsis of your career so far.

Why do you want this job?

Why are you leaving your current job?

Where do you want to be in five years time?

What are your strengths?

What are your weaknesses?

What do you do in your spare time/what are your hobbies?

Why should we give you the job?

In addition it can be useful to ask situational questions, for example:

What would you do if a landlord or tenant swore and shouted at you?

What would you do if you discovered or thought there was an illegal activity occurring in a property?

There are, of course, hundreds more questions that you could devise depending on the job available.

It is a good idea to ask open questions that require longer answers. If all your questions require a simple yes or no, you will not learn a great deal about the candidate. There isn’t a perfect score for the answers given. How they are interpreted is subjective but in general they should:

Demonstrate a positive attitude

Be short and concise and not long, rambling answers

Give the full story

Be honest and not inflated claims

Interviewing is a skill that takes time to master. You need to learn as much about a person as possible and find out whether they have the necessary experience and skills, and whether or not they will be a good fit within the company – often within an hour-long interview.


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If you have any doubts or are not sure about an interviewee, then arrange another interview. It may be a gut feeling or maybe you ran out of time at the first interview and feel you need to ask more questions. It is better to use up another hour of your time now, than spend a long time regretting employing (or not employing) someone.

Due to the nature of the business, it may also be a good idea to ask the interviewee to demonstrate their experience and skill. For example, if you were interviewing a potential lettings negotiator, it would be useful to have them show you around a property as though you were the potential tenant. You may give them the details and some time to prepare before the demonstration, or send them the full details prior to the interview.

Another method would be to send them the bare minimum of details and let them use their initiative to find out the rest – that is, give them the photos and address and let them find out as much as they can about the property. During the ‘viewing’ you can ask all the questions that a normal viewer would ask. The candidate should be able to find:

Where it is (and meets you there on time)

The property’s council tax band

Its utility suppliers

If there is broadband available

Who the owners are

What the local schools are like and where they are

What other amenities are nearby

Whether there is a train station nearby or bus routes

All of this information is easily available on the internet or from other sources, and it is information that they may have to gather, in reality, if they join the company.


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Don’t forget that during the selection process you also need to sell the company to any prospective employees. They may be attending interviews at several firms and you need to get the message across that yours is the best to work for. Be passionate and positive about the company and the job.

Choosing the right candidateAssessing potential employees may not come easily to many people. Your own instincts will come in to play but general things to look for are:

Do their qualifications and experience match your original requirements?

How have they presented themselves (dress, timekeeping, etc.)?

Politeness (Did they knock on the door? Did they wait to be asked to sit down?)

Honesty (Did the answers to the interview questions match the details on the CV?)

Did they show a genuine interest in the company and the job, or were they just going through the motions?

If the opportunity arose, did they interact well with other members of staff?

REFERENCES

Most large employers insist on obtaining employment and character references for prospective employees. These are useful in assessing the integrity of the candidate and whether they have inflated their previous salaries or job descriptions.

Due to possible legal ramifications, many firms will only give a standard reference reporting the minimum information such as confirming the person worked at the company from date x to date y, their job title and the salary they were paid.


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It is worth remembering that not many people will give you the name of a referee that is going to give a bad reference. Therefore, a reference is really only another piece of evidence to add to the complete picture of the prospective recruit.

REJECTION LETTERS

Once a position has been filled, it is only polite to send a rejection letter to unsuccessful applicants. If the interview process goes on for some time then it may be worth sending the letter to unsuccessful applicants after the application stage. It is a good idea to keep these letters brief and to the point and thank the person for applying. Most companies do not give reasons for rejection. Most people will feel they were better suited to the job than the person chosen and occasionally may try and pursue the point, occasionally through the courts! It is simply better to state the company policy is not to release that information.

Your responsibilities as an employerAs well as the financial responsibilities of recording and reporting tax and National Insurance Contributions, discussed in Chapter 5, an employer has other legal obligations. Some of these include:

Paying at least the minimum wage

Making necessary checks for eligibility and applying for work permits for foreign workers

Not insisting that employees work more than the legal number of working hours

Not discriminating on the grounds of race, religion, sex, age or disability

Providing employees with a safe and healthy working environment and having a health and safety policy in place if there are more than five employees

Having an employer liability insurance policy

Offering a stakeholder pension scheme if there are more than five employees


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PaperworkTERMS OF EMPLOYMENT

Employment ‘contracts’ are often a verbal agreement made between the employer and employee. Usually, the employer makes an offer to the employee in terms of the job description, salary, working hours and other terms of employment. These terms are deemed to have been accepted when a new employee starts work. This oral agreement is as legally binding as a written one but could be difficult to prove at a later date.

Even if a written contract is not supplied, employees are legally required to be given a written statement, detailing the terms of their employment, within two months of starting work. Details that must legally be included in the written statement are:

Name and address of the employer

Name of the employee

Date the employment started

Job title

Pay and hours of work

Holiday entitlement

Other information that should be included or issued separately:

Sickness pay

Notice periods

Pension details

Disciplinary procedures

Grievance procedures

COMPANY HANDBOOK

The additional company policy details can be given in the form of a company handbook issued to all employees. The handbook will usually include items such as health and safety, quality policies and other company rules such as smoking, drinking, parking, etc.


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Salary, commission and bonus levelsSalary levels need to be set to reflect the local job market and what your competitors pay to attract prospective employees. Searching the larger recruitment websites such as www.monster.co.uk or www.fish4.co.uk will help you to assess local salary levels for the job.

Within the company you will need to set salary grades to reflect the skills, qualifications and experience of the employees and they need to be adequate enough to retain them. Pay grades need to be tiered from junior roles to senior roles and most companies have a range of grades with bands of salaries within them. This allows employees to obtain raises for good performance without necessarily achieving a formal promotion.

Within the lettings industry, commissions are often paid in addition to the basic salary. This is usually to the front line lettings negotiators that have a direct effect on turning applicants into tenants. These commissions are meant to motivate employees to bring in more business and to close deals, and are therefore typically based on the number of new properties listed or new tenancies signed in a particular month or quarter.

There are many ways to calculate these commission payments. They may be individual or team based. They might be paid for each individual tenancy or based on a target number being reached for that month. Care and discipline must be exercised, however, so that employees are not motivated to sign up just anyone to a tenancy by cutting corners in an effort to reach a commission level.

BONUSES

Bonuses are used to motivate the rest of the staff such as accounts, administration, property managers, etc. There are just as many ways of calculating bonus schemes as there are for paying commissions.

Just like commissions, finding the balance between motivating people and causing resentment can be difficult. This is perhaps because a bonus is paid to the whole firm and some people may be perceived as not pulling their weight.

OTHER INCENTIVES

Rewards for good performance do not always have to be money based. Some companies offer rewards such as discount vouchers for cinemas, restaurants and theatres. Other ideas include:

Dinner for two at a local restaurant

www.monster.co.uk

www.fish4.co.uk


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Holidays

Use of a prestigious car for the weekend

Red-letter day vouchers

Hampers

Game of golf at a local course

Minimum wage levels The national levels for minimum wages effective 1 October 2008 are:

£5.73 an hour for adult workers 22 years old and over

£4.77 an hour for workers aged 18–21

£3.53 an hour for workers aged below 18

Management skillsApart from the business skills discussed earlier in the book, a good manager essentially needs to be able to motivate and lead people. Good management skills include:

Being a good motivator/team builder

Leading by example

The ability to delegate

Presentation and meeting management

Verbal and written communication

Empathy

Prioritisation

Problem solving

MOTIVATING AND RETAINING EMPLOYEES

There are many theories about motivation and many books on the subject. A key thing to remember is that motivation is a very personal thing, that is, there isn’t just one single motivational technique, system or plan that will suit all your employees. Some people are motivated by helping others, some like to receive recognition, some by achieving goals and obtaining bonuses and others by constantly improving their


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knowledge of the industry through training. Therefore, the way to successfully motivate individuals is to get to know them, find out what drives them and what they want to achieve. The key, then, is to create a working environment that helps them achieve these goals. It is no good knowing that an employee is motivated by always keeping up to date with the latest training and qualifications, if the company does not help them achieve it, perhaps by contributing to fees or allowing them time to study.

Staff assessmentsStaff assessments or appraisals are normally considered to be the annual meeting between manager and employee, where the manager tells the employee what they think of the employee’s performance for the preceding year, and they both agree some goals for the next 12 months. If they are lucky, the employee may also have a chance to give some feedback about the firm and their manager, and may get an annual salary raise or earn a bonus.

Unfortunately, from experience, these annual meetings rarely have the outcome they are supposed to have, that is, motivating under-performing employees to improve and rewarding those that have performed well.

Employees should be appraised constantly. A simple thanks for a job well done informs people that they are well thought of and that they are doing a good job. In contrast, if an individual is not performing then a quiet chat with them immediately the problem is noticed will hopefully steer them in the right direction. Waiting until the annual appraisal before mentioning that you are not happy with someone means the company suffers for months. Also, resentment can build up which may come across in the appraisal and it can become a personal attack rather than an honest and open evaluation.

SETTING OBJECTIVES AND GOALS

Goal setting is not easy. If goals are too hard, people become de-motivated and do not attempt to improve; too easy, and the employee is not challenged enough. It is generally agreed that goals should be specific, measurable, attainable, realistic and time based (often described with the acronym SMART).

All parties need to agree on the exact or specific objective

The people involved need to know when the goal has been reached or achieved and how performance will be measured

The goal should be attainable and realistic – resources may need to be allocated


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to a person to help them achieve the goal and it should not be too far beyond their skill level

A timeframe should always be set so that performance can be monitored

Formal appraisals and any goals or awards should be recorded in writing, and a copy given to the employee and a copy placed in their file.

Staff trainingHaving a formal training program will enable all staff to keep up to date with the latest legislation and regulations and provide a more professional image for the whole company. Staff should be encouraged to:

Read the trade magazines and newsletters from professional associations

Follow an in-house training programme

Take relevant qualifications

Attend seminars and talks by industry professionals

It is important that new recruits feel comfortable from day one and fit in quickly. Therefore it is also useful to have an induction session, or day, which may involve some basic informative sessions on the company’s policies and procedures such as quality or health and safety. In addition, if new recruits can ‘buddy’ an experienced employee for the first few days they will come up to speed quickly with internal procedures.

Having a formalised recording procedure is useful to maintain consistency, to ensure everyone is up to date and that they attend regular refresher courses. Each employee should have a training log that is signed off by a senior staff member. This also helps if staff salaries are tied in with achieving certain levels such as passing certain professional exams. The log can be used to expand on the training by writing down any other goals agreed for the employee and signing off when they are also achieved.


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Rewarding training achievements will help keep staff focused on their training and will motivate them, especially if these achievements are linked to rewards such as bonuses or salary levels.

Training for specific academic qualifications is offered by some of the professional bodies governing the industry and the details are discussed in Chapter 2. There are, however, several other organisations that offer specialised training tailored for letting agencies covering all other aspects of the business. These organisations are listed in the useful resources section at the end of this chapter.

SubcontractingSubcontracting out certain jobs can have many benefits. It can help provide a temporary increase in capacity during busy periods or provide a skill set that may be missing within the company. It also means you can delay having to take on an additional employee, with all the associated costs and administration, before the company is really busy enough to need them.

There are several professions that offer services to letting agents such as:

Inventory clerks

Professional photographers

Bookkeepers and accountants

Phone answering services

Inventory clerks, in particular, can provide a very useful additional resource. They provide a professional inventory, schedule of condition and photographs of the property prior to a tenancy. This evidence is necessary to support any claim on the deposit. In addition, they often offer check in and check out services that can free up a lot of capacity.

There are suitable companies offering inventory services in most areas, but it may be worth using an agent accredited to the Association of Independent Inventory Clerks (AIIC). Membership means they will have the appropriate professional indemnity insurance and follow a professional code of conduct.

Remote phone answering companies can offer an invaluable service to start-up companies. If you start out on your own, or with just a couple of staff members, and the person normally in the office answering the phone is sick or on holiday, an


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answering service can provide invaluable cover. They tend to charge per message taken and are, therefore, not cheap to use but they offer a great level of flexibility.

Useful contactsBusiness advice – registering foreign employees

UK Border Agency – www.bia.homeoffice.gov.uk

Inventory clerks

Association of Independent Inventory Clerks – www.theaiic.co.uk

Training

The Letting Training Centre – www.lettingtrainingcentre.co.uk


Staffing checklistHave you:

Updated your business plan to reflect your staffing requirements

Created a criteria list for various job roles that you will need to fill

Informed relevant authorities that you are an employer

Created a standard interview procedure and list of standard questions

Assessed local market salaries and set your internal pay rates

Created a staff induction and training plan

Assessed whether you could hold off on employing someone by using a subcontractor

www.bia.homeoffice.gov.uk

www.arla.co.uk

www.lettingtrainingcentre.co.uk

www.theaiic.co.uk

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7

CUSTOMER SERVICE AND EXCEEDING THE CUSTOMER’S EXPECTATIONS

In this chapter:

Effective customer communication•

How to exceed the customer’s expectations•

Creating a positive outcome from a complaint•

How well are you really doing?•

Not all customers are external clients•

Customer service is everything!As a letting agent, you will be offering a service to people rather than a product. There are a finite number of customers and there may be a lot of companies competing for the customer base. Therefore, the view those customers take about your company is critical and retaining their loyalty is vital. In fact, it is so important I have dedicated a whole chapter to the subject.

As discussed in earlier chapters, you can try and compete on price, but you run the risk of positioning the company as a budget agency. This can lead people to assume that your levels of service are equally ‘low budget’, or can mean that you enter a price war. You can also try and compete on branding, marketing and advertising but the increase in business received may not be reflected by the amount you have spent. It may also be difficult to compete against the larger chains in this arena. The one area in which even a small start-up company can gain a competitive advantage, without spending lots of money, is the quality of the service they offer – or their level of customer care.

As a small company, as with most other areas of business, it is easy to maintain and control how you treat the customer day to day but it can be challenging for a growing or large company.

C U S T O M E R S E R V I C E A N D E X C E E D I N G T H E C U S T O M E R ’ S E X P E C T A T I O N S

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Telephone and email – the first point of contactThe first point of contact that many customers have with you or a member of staff is via the phone or by email. It is absolutely true that ‘first impressions count’ and, therefore, vital to make this initial interaction a positive experience for the customer.

Telephone tips

Answer all incoming calls promptly. The usual recommendation is by the third ring – no one likes to be kept waiting

Smile when talking (it will come across in your voice)

Speak clearly and at a reasonable pace and don’t interrupt the caller

Don’t eat or drink whilst talking

Return all missed phone calls and messages promptly – preferably the same day

Have a human answer the phone whenever possible – one universally hated experience is the ‘robot’ answering systems that prompt you to ‘press 1 for . . .’

Set up a voicemail or automated system for transferring calls if you are already on the phone or not at your desk and there isn’t anyone else to answer it

Have a consistent message when answering the phone – but keep it short, e.g. ‘Good morning – Universe Lettings, Steve speaking, how may I help you?’

Thank the person for their enquiry

Email tips

Treat all initial communications formally – start with Dear Mr/Mrs and do not use slang

Answer all emails promptly – preferably the same day

Create a standard ‘signature’ for the bottom of all the company’s emails. This should contain all your contact numbers, email and web address

Thank the person for their enquiry


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Obviously time management is important and you will need to prioritise. However, if you want to stand out from the crowd and are resigned to working longer hours than your competitors, at least at the start, there is no excuse for not returning messages the same day. You can often reply to an email or two between viewings or meetings or catch up on them at home, in the evening or the weekend. (It often impresses landlords to receive replies after normal working hours.)

For all types of enquiries that can’t be dealt with immediately, it is vital to tell the person when you will come back to them with an answer and absolutely vital to make sure that you adhere to the timeframe.

Communication and feedbackCommunication is central to keeping your customers happy. It is easy to tell them that things are going well. Perhaps you have had lots of enquiries for their property or it has been let very quickly. It is even more important to keep them informed if it is not going well. Perhaps they have the price too high, or they need to change something to appeal more to the market.

Most landlords expect regular updates on progress during the letting process. Then they are normally happy not to hear from you much during the tenancy (as this normally means something needs fixing!) except to receive their monthly rental statements and periodic inspection reports.

However, each individual will have their own thoughts on how often they want to hear from you and you should agree this with them at the start. Some like phone calls; others emails or texts. As a standard, we normally say that we will text or email each landlord to inform them whenever we have arranged a viewing and then again to give any feedback from the viewing. This is less time consuming for us and the landlord, who may not want personal conversations while they are busy at work, but are happy to receive updates they can read quickly in private. We will, however, adjust to their requirements.

Dealing with complaintsIn an ideal world, with effective procedures, the best trained staff and understanding customers you would not receive any complaints, just acclamations about your high levels of service. Indeed, this is what you should be striving for. Inevitably, however, you will receive a complaint from time to time, even if it is just from someone that likes to complain or whinge over the smallest details.

How you deal with complaints can escalate and justify the complainant’s claims further or, if handled correctly and speedily, can actually turn into a positive


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PR exercise for the company. Dealing with complaints requires a high degree of diplomacy and empathy.

If you are unfortunate enough to receive a serious complaint, it is not a good idea to admit the blame outright and you should contact your solicitor (in the worst cases you will need to inform your professional indemnity insurance provider) as soon as possible and let them deal with it. Sending a small peace offering, however, might quash small day-to-day issues. For instance if a tenant makes a genuine complaint that a repair issue was not dealt with quickly, then it may be worth sending a personalised apology and perhaps a gift voucher or similar.

COMPLAINTS POLICY

If you are a member of a professional body such as ARLA or NALS, you will be required to have a standard complaints policy and it is a good idea to have one even if you are not a member. Having a policy and ensuring all members of staff know how to deal with complaints is essential.

The policy should cover how to deal with the initial complaint, the response time, and whom the complaint is to be escalated to if the issue is not dealt with to the complainant’s satisfaction.

DEALING WITH ANGRY CUSTOMERS

As a letting agent, you will be dealing with landlords’ high value assets and with people that are moving home, which can be a very stressful time. This can occasionally cause people to be very emotional about seemingly small problems and can lead to a range of reactions. As well as knowing the company complaints policy, your staff should be trained to deal with angry customers, as they may be the first to pick up the phone and talk to them. Customer-facing staff members should be empowered to deal with complaints themselves.

The person dealing with the problem should aim to calm the person down and then resolve their issue. Techniques for doing this include:


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Listening to the person without interruption. Often they will want to vent their anger to get it all ‘off their chests’ and will often start to calm down once they have had their say

Keeping your own voice low and level when speaking will slowly bring the other person’s level down too

Not interrupting, challenging or arguing with the person. This will exacerbate the problem

Not making excuses or blaming someone else

Apologising and either offering a solution or informing the person exactly what action will be taken to resolve the problem

If the issue can’t be dealt with immediately or someone else needs to be informed, then let the complainant know exactly who will be investigating and when he or she will be phoning back. It must be made sure that the call is made on time

Building a relationship with the landlordBeing able to provide exceptional levels of personal customer care relies upon knowing the customer. The only way to do this is to get to know them. You will need to listen carefully to their requirements, their likes and dislikes and try to offer a personalised service. It is useful when building a relationship to try and remember personal things about the clients, for example:

Are they married?

What is their partner’s name?

Do they have children and what are their names?

What are their hobbies?

I am not suggesting that you spy on customers but remembering small details – such as that their youngest has just started school and then, the next time you seem them, asking how little Billy got on – can greatly improve the relationship. All people are different, however, and some will want to keep a strictly professional relationship and not discuss much other than letting the property.


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GOING ABOVE AND BEYOND THE CALL OF DUTY

As previously discussed, you can attract some customers with low prices but that won’t keep them loyal. Some landlord clients will simply want the cheapest available service and will swap to a competitor who may start offering even lower fees. Most, however, will have come to you in the first place because they want to let their property and have little stress and hassle in the process. They are likely to stay with you (and recommend you) for as long as you deliver this service even if your fees are at the top end of the market rate.

The aim should be to over deliver without adding significantly to your costs. You should find that the little things make a big difference, for example:

Offering to come and collect paperwork, spare keys, etc. from their home or workplace, if it is local to your office, to save them posting or delivering items themselves

Sending personalised thank you letters, Christmas, birthday, new baby, etc. cards

Sending promotional items like calendars at Christmas or perhaps golf balls featuring the company logo if you know they play golf

In essence, any small thing you can offer that takes more hassle out of the process for the client or keeps the company name at the forefront of their minds will help. A lot of agencies just do the bare minimum and in these cases the client will not feel they have received value for money, or feel like recommending the agent.

You can also build a good name amongst your tenants by treating them as well as your landlords. Responding promptly to maintenance issues is a key factor that we will discuss later. You can also go above and beyond with tenants by:

Sending a ‘Welcome to your new home card’

Leaving a small gift pack at the property – this could be promotional items like pens, mugs, etc. with the company logo

Leaving some essentials such as milk and a loaf of bread for when they check in – a bottle of wine normally gets a good mention!

You will notice that some of these ideas fall into the marketing and promotional category and really, therefore, serve two purposes. I believe that if you offer the little extras discussed in this section then you will automatically achieve a subtle


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marketing campaign and good PR that will lead to the best leads i.e. word of mouth referrals.

The internal customerAs a company grows it will inevitably be split into distinct departments, even if these departments are made up of a single person initially. Eventually, these small departments may grow and some, such as accounts and IT, may even be located separately from the ‘front line troops’ of sales and administration.

Internal departments need to work cohesively, as one team. Different departments are effectively customers of other departments. For example, the administration team will need to receive accurate application paperwork and prompt communication of any changes or issues from the negotiators during the application phase. In return, the lettings negotiators will need to receive prompt responses from the administration team carrying out the references or distributing the paperwork for the tenancy process.

It is often tempting for internal work to be put back in order to maintain service levels to the outside clients, or to let office politics get in the way. Therefore, the importance of internal customer care should be part of staff training and good service needs to be actively encouraged.

Testing customer service levelsIt can be dangerous to assume the company is offering an exceptional level of service just because you have not received many complaints. People often won’t complain directly; instead they will just tell all their friends and family how badly they have been treated!

There are several ways to check how the company is performing:

Create a customer feedback form – and actively encourage all customers to return it

Create a feedback or suggestion section on your website

Customer surveys – actively call landlords or tenants and ask for their feedback

Use a mystery shopper to test different areas of the company (there are agencies that will do this for you but you could ask a friend or family member to call in and assess the staff ’s responses)


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Training staff to adopt the customer care approachStaff training was covered in Chapter 6, however training and motivating people to put the customer first is fundamental to the image portrayed by the company. People may achieve all the necessary letting qualifications but if they do not know how to treat the customer, then the company will suffer. Therefore customer care should be at the forefront of any training program.

At the beginning, as a start up, you have an ideal opportunity to get customer service policies in place. It is a lot harder later on if you need to try and change long-term behaviours of employees. It may also be difficult if you have bought a business with existing staff. In these situations, things will not change over night and behavioural patterns will need to be slowly altered.

Like most company policies, good customer care needs to start at the top to filter down effectively. You have to practise what you are preaching. If you want staff to have a fast response to customer enquiries and you go home at 5 pm with a pile of calls that you have not followed up, then you can’t expect anyone else to behave differently.

As you grow, any training should include the whole company. We have already discussed the ‘internal customer’ and every employee will have a customer even if they never actually meet or talk to the external clients. Therefore, include management from every level and all the non-customer facing employees.

Customer service checklistAre you committed to putting the customer first? Your staff will follow your lead

Do you have a customer complaints policy in place?

Are you actively monitoring customer feedback and suggestions?

Is customer care part of the company’s training programme?

Are you rewarding staff for going above and beyond?

Do your staff members treat other employees as customers?

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8

BUSINESS LEGAL REQUIREMENTS

In this chapter:

Keeping staff and customers safe at work•

Letting agents and the law•

Protecting clients’ personal data•

Copies of much of the legislation and regulations summarised in the next three chapters are available from either the Health and Safety Executive (HSE) or the Office of Public Sector Information. Their websites and addresses are given in the useful resources section at the end of each chapter.

Health and Safety at Work etc Act 1974The Health and Safety at Work etc Act states: ‘It shall be the duty of every employer to ensure, as far as is reasonably practicable, the health, safety and welfare at work of all his employees.’ It is the key document regarding health and safety in the workplace covering the following aspects.

The employer’s duty regarding the health and safety of:

Their employees

Contractors working on the business premises

Visitors to the business premises

People that may be affected by the business operations or the actions of the employees

In addition, it states the requirements for employees to work with their employers to ensure a safe working environment.

B U S I N E S S L E G A L R E Q U I R E M E N T S

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The main areas of the legislation that will be particularly relevant to a letting agent are:

The provision of a safe working environment for employees

Maintaining the business premises to ensure it is safe for all workers and people that may come and go from the property

Providing adequate instruction, training and supervision for employees to ensure there are no risks to employees

Providing a written health and safety policy

As the act covers visitors such as contractors and customers, you need to ensure the premises are safe even if you do not have staff.

Particular areas that you may wish to risk assess are:

Entrances and exits

Stairs

Floor surfaces

Ventilation

Fire safety

Provision of first aid

The Accommodation Agencies Act 1953This Act states in its summary that it is: ‘An Act to prohibit the taking of certain commissions in dealings with persons seeking houses or flats to let and the unauthorised advertisement for letting of houses and flats.’

There are three main areas that are covered by this Act that you need to consider when advertising properties and charging clients for your services. A letting agent should not:

Charge a potential tenant just to register their details and requirements

Charge a potential tenant for a list of addresses or other details of properties available to let


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Advertise a property as being ‘to let’ on any details, advertisement or other documentation, without the property owner’s permission

Therefore, you can only take monies, including application fees, deposit or rent, from someone who is making a formal application for a particular property that you are advertising. Your application forms should make it clear what the fees are for and the address of the property should be noted on the forms.

Also, you need to check carefully that you have the permission from the owner of the property. In the case of multiple owners, you will need permission from all of them. Again, it is key to have water tight terms of business that all the owners sign and to verify the identification of the people you are dealing with by taking copies of their passport or driving licence and a recent utility bill.

If you have any doubts that you may not be dealing with the owner, the Land Registry provides a facility for downloading the title document from their website.

The Trade Descriptions Act 1968This Act aims to ensure that manufacturers, retailers or service providers do not mislead their customers when describing the goods or services they are advertising or supplying.

The area that is most likely to affect you as a letting agent is your description of the details of either the services you offer or the properties that you advertise. Examples may include:

Advertising that your agency is a member of a professional organisation if it is not or if the membership has lapsed

Offering property details advertising room dimensions that are much larger than actual

Indicating that the property comes with a private garden if it is actually communal


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In order to have committed an offence under this Act, the description must be false to a material degree, for example having a significant impact on a purchaser’s ability to use the goods or services, or a significant affect on their value. The supplier must also ‘knowingly’ or ‘recklessly’ have provided the information. Therefore, care must be taken to check the property description with the owner and ensure property details for advertisements are recorded accurately.

It can be easy when attending a viewing to give a false impression. For example, if someone asks if the fridge is included, it is better to check with the owner if you are unsure rather than say yes (or no). If there isn’t a fridge and you have told them there is, then they may have an additional expense that they were not expecting. Conversely if you told them the owner was removing it and they have bought one to be delivered when they move in, they may have wasted their money.

Take special care with things like parking spaces. Landlords will often say there are x number of allocated spaces, because they have historically parked in particular places. It can often turn out that the spaces are not actually included on the title plans and, therefore, do not officially come with the property.

The Data Protection Act 1998The Data Protection Act makes provision for the regulation of the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information. In principle the Act covers the way information is collected, stored and shared. It also gives individuals the right to access any information about them that you may be holding.

The Act also covers information you may keep on file about your employees, especially details about their health and who is allowed access to the information.

Most organisations that process information (including letting agencies) need to register with the Information Commissioner’s Office (ICO) and pay an annual

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registration fee. Contact details for the ICO are given in the resources section of this chapter. Registration means that you join the Public Register of Data Controllers.

Letting agents gather a lot of personal and financial information about their clients, including:

Names

Addresses

Employment and salary details

Bank account details

Mortgage details

County court judgement or bankruptcy order against them

They may also hold a lot of information on file about their staff.

As a letting agent you will need to have a data protection policy and training programme in place.

The Information Commissioner’s Office (ICO) has many useful guides about the different aspects of data protection on its website. It includes a guide for start-up businesses.

Money Laundering Regulations 2007Money laundering is the process used by criminals and terrorists to exchange money or assets obtained illegally into money or assets that cannot be linked to the criminal or terrorist activity. It can include handling, laundering or investing the proceeds of a crime.

Although letting agents are not directly covered by the regulations, criminals have been known to invest their illegal tender into high value assets such as property, and the regulations do refer to any business dealing with transactions over 15,000 euros. Therefore, you will need to be aware of the regulations.


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The regulations require businesses to:

Have procedures in place to anticipate and prevent money laundering

Train staff in the law and internal procedures

Appoint a Money Laundering Reporting Officer, who will be responsible for reporting any suspicious activity to the Serious Organised Crime Agency (SOCA)

Carry out due diligence to ensure customers’ identities are verified before entering into a transaction

Keep records of the due diligence for five years

The above requirements are based on a risk-based assessment of the likelihood that a transaction may be used for money laundering.

A full copy of the regulations and a guidance summary are available from the Office of Fair Trading (OFT) website. The HM Treasury and the Joint Money Laundering Steering Group websites also have additional information. The OFT’s guidelines advise particularly considering the risk of:

New customers carrying out large transactions

Overseas customers

Those in a public position that may be more exposed to corruption

Customers who are unwilling to provide proof of identity or confirm who they are representing

As a minimum, make sure you have the name, address and date of birth of all your customers. It is a good idea to keep a photocopy of all owners’ and all tenants’ identifications such as passport and a current utility bill from their last address. Check the name of all owners of the property on the land registry website. Be aware if you are dealing with unusually large sums of money, such as taking several months rent in advance.

If you have any suspicions they must be reported to SOCA.


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DiscriminationThere are several pieces of legislation that prevent discrimination on the grounds of:

Sex

Race

Religion

Disability

Age

The Acts covering these areas are:

Sex Discrimination Act 1975

Race Relations Act 1976 (as amended 2000)

Equality Act 2006

The Employment Equality (Religion or Belief) Regulations 2003

Disability Discrimination Act 1995 (as amended 2005)

The Employment Equality (Age) Regulations 2006 (as amended 2008)

As a business owner and employer, you must take care to ensure that you treat all your customers and staff fairly and adhere to the above regulations. You should also provide training to staff to ensure that they are also aware of the regulations when dealing with customers.

Note: Failure to comply with any of the regulations in this chapter can lead to fines and/or imprisonment.


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Useful resourcesRegistering under Data Protection

Information Commissioner’s Office – www.ico.gov.uk

Wycliffe HouseWater Lane WilmslowCheshire SK9 5AF

Money Laundering Guidance

Office of Fair Trading – www.oft.gov.uk

HM Treasury – www.hm-treasury.gov.uk

Joint Money Laundering Steering Group – www.jmlsg.org.uk

Serious Organised Crime Agency (SOCA) – www.soca.gov.uk

Regulations and Legislation Copies

The Office of Public Sector Information – www.opsi.gov.uk

Health and Safety Executive – www.hse.gov.uk

www.ico.gov.uk

www.oft.gov.uk

www.hm-treasury.gov.uk

www.jmlsg.org.uk

www.soca.gov.uk

www.opsi.gov.uk

www.hse.gov.uk

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9

COMPLYING WITH THE LATEST LETTING REGULATIONS AND LEGISLATION

In this chapter:

Key tenancy legislation•

Safety requirements for rental property•

Other legislation affecting agents, landlords and tenants•

Housing ActsThese are the key pieces of legislation that affect most of the tenancies that are created today. By introducing new types of tenancy and legislation to protect the rights of the tenant, as well as allowing landlords some flexibility to evict tenants without having to go to court (within certain criteria), the Acts have helped pave the way for a boom in the rental market in recent years.

The Housing Act instigated in 1988 meant that all tenancies created under the Act were automatically assured tenancies but could be assured shorthold tenancies (AST) if a prescribed notice was issued. The differences and the benefits of the AST are discussed in Chapter 10.

The main changes in the amendment to the Housing Act in 1996 meant that now all tenancies are automatically ASTs.

The amendment in 2004 introduced a Housing Health and Safety Rating Scheme, licensing for Houses in Multiple Occupation (HMO) and established the tenancy deposit schemes.

C O M P L Y I N G W I T H T H E L A T E S T L E T T I N G R E G U L A T I O N S A N D L E G I S L A T I O N

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Safety regulationsGAS SAFETY (INSTALLATION AND USE) REGULATIONS 1998

These regulations require landlords (or their agents) to ensure that all gas appliances, fittings, pipework and flues are maintained in a safe condition. This includes portable gas appliances such as LPG bottle fed heaters.

Part of the requirement is to have all appliances, fittings and flues tested for safety by a qualified Gas Safe registered engineer. The test has to be carried out before the property is let to a tenant and a certificate issued to each tenant before they move in. Thereafter, the property must be tested on an annual basis and a new certificate issued to the tenants within 28 days.

The annual test does not necessarily ensure the gas installation is safe and, therefore, it is also recommended that they are serviced and maintained regularly in accordance with the manufacturer’s instructions and by a Gas Safe registered engineer.

If you are letting the property you will need to obtain a copy of the certificate from the landlord before checking tenants into the property. If you are managing the property, it will usually be your responsibility to arrange for the annual safety check – depending on your terms of business with the landlord.

As the agent responsible, you may also need to prove that you are doing more than just issuing a certificate from a sub-contractor once a year. You should ensure:

That staff are trained in risk assessing properties, both at appraisals and property inspections

That contractors are qualified, Gas Safe registered and their registration is current – this can be checked on the Gas Safe website given in the resource section at the end of the chapter

Details of any repairs should be logged and recorded

Procedures are in place to make sure checks and repairs are carried out on time


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Do not assume that the property does not need a gas safety certificate because the landlord says there isn’t any gas at the property. There may be a portable LPG heater in a garage that they have forgotten about and that the tenant may use. We had one instance where we were letting the annex to a large house. The annex did not have gas heating or appliances, but we found the gas meter to the main house in the cupboard in the tenant’s bedroom!

It is also recommended that the tenant is advised of what to look for in the event of a gas or carbon monoxide escape and what action to take. General advice includes:

Keeping all flue vents clear at all times

Being aware of the location of the gas shut off valves

Opening all doors and windows in the event of a leak

Calling Transco on 0800 111 999 if a leak is detected

Calling the landlord or agent to arrange repair

The tenancy agreement should allow you access to the property for repair and maintenance issues. In the unlikely event that a tenant refuses entry, for any reason or with an unreasonable delay, then they are putting themselves at risk. You will need to make sure you keep a record of their refusal and the landlord may need to take legal action to gain access, if necessary.

Note that wood, coal and other non gas fuelled appliances are not covered directly by the regulations. However, in certain circumstances they can still give off carbon monoxide and it is also highly recommended that they are treated in the same way as a gas appliance and serviced, maintained and tested regularly.

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ELECTRICAL EQUIPMENT (SAFETY) REGULATIONS 1994

These regulations stipulate that the electrical system and all electrical appliances in a property that is let, must be safe. This means there should be no risk to anyone, the property or pets.

Unlike the gas regulations, there is currently no requirement for the electrical equipment to be tested. However, the only way to make sure it is safe is to have it tested regularly. Annual tests are recommended for all appliances (Portable Appliance Testing) and the full electrical system should be checked regularly, and certificates issued and filed. All testing should be carried out by a qualified electrician.

It is recommended that second-hand appliances are not installed at the property.

PLUGS AND SOCKETS ETC. (SAFETY) REGULATIONS 1994

These regulations compliment the Electrical Equipment Regulations and require plugs, sockets and adaptors to meet current standards and to be fitted with the correct fuses. It also stipulates that the supplier has liability to provide safe equipment. The courts may see landlords or agents as the supplier, if the equipment is supplied in a rented property.

BUILDING REGULATIONS PART P (DESIGN AND INSTALLATION OF ELECTRICAL INSTALLATIONS)

This set of regulations, introduced in 2005, under the Building Regulations, requires most electrical work associated with a property to be carried out by a competent person. A competent person is someone that is registered with an approved self-certification scheme. However, the regulations do allow someone that is not registered to carry out the work, providing they seek approval from the local authority building control department to inspect the work. The competent person or the inspector will issue an electrical safety certificate for the work that has been carried out.

This affects your work as a letting agent because you will need to make sure that any recent electrical work that may have been carried out and any work that you arrange is certified. Also any contractors that you use to carry out repairs and maintenance should be registered with one of the following schemes:

BRE Certification Ltd

British Standards Institute


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ELECSA

NICEIC Group Ltd

NAPIT Certification Ltd

In addition, some contractors, such as plumbers, who may have to carry out some electrical work can be certified by CORGI or OFTEC.

If you are managing the property, you may also need to show due diligence in the event of a problem with the electrical system. It is therefore recommended that a risk assessment is carried out regularly to determine that:

There is no visual damage to any electrical installation, appliance or wiring

All appliances are in working order and that instructions for use have been supplied

Plugs, sockets and fuses are of the correct type and rating

Earth tags are in place

Records of the visual inspection should be kept and can form part of the inventory or property inspection report.

You should also have a procedure for vetting potential contractors to check their memberships to the correct certification schemes and retain copies of the professional indemnity and public liability insurance. You should also keep copies of the safety certificate issued by the contractor for each job in the property file.

SMOKE AND CARBON MONOXIDE DETECTORS

Any new property built since June 1992 must have mains supplied and inter-linked smoke alarms. It is also highly recommended that all properties let to tenants have smoke alarms fitted on each floor, regardless of the age of the property.

Although not covered by any regulations, it is highly recommended that an audible carbon monoxide alarm is fitted in each property.

All alarms should be tested prior to the tenancy and a clause added in any tenancy agreement stipulating that it is the tenant’s responsibility to test the alarms regularly and replace the batteries.


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FURNITURE AND FURNISHINGS (FIRE) (SAFETY) REGULATIONS 1988(AMENDED 1993)

These regulations require that all soft furnishings manufactured (or re-upholstered) must meet safety standards and carry a label indicating their compliance. Suppliers now have an obligation to make sure that the goods they sell meet the requirements and have permanent compliance labels attached.

Landlord or agents may be seen as suppliers if furniture is supplied in a property to let. Therefore they have the same obligation to make sure all soft furnishings are compliant and have the necessary labels in place.

All soft furnishings can be checked for compliance during the inventory. The presence of the required label can be indicated on the inventory and any non-compliant furniture should be reported for removal before the tenant moves in. Any new furniture introduced by the landlord should be checked and added as required.

The regulations specifically note the following furniture covered under this legislation:

(a) furniture of any description which is ordinarily intended for private use in a dwelling and includes beds and divans (including the bases and headboards of both), sofa-beds, children’s furniture, cots (including carry-cots, playpens, prams and pushchairs and any other article of a like nature and use designed to contain a baby or small child), cushions, high-chairs, mattresses (of any size) and pillows, but does not include bedding or floor coverings (including carpets and mats); (b) furniture which is ordinarily intended for private use in the open air but which is also suitable for use in a dwelling; and (c) any collection of components designed or intended to be assembled into any article of furniture defined in subparagraphs (a) and (b) above.


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The penalty for non-compliance of any of these safety regulations can be a large fine or even imprisonment for either the landlord or agent. At worst, a case of non-compliance can lead to serious injury or even death and can lead to charges for manslaughter. Agents may be held responsible if they are managing the property or enter into the agreement on behalf of the landlord by signing the tenancy documents. In either case they have a duty of care to inform the landlord of his or her obligations.

Therefore, your terms of business or service agreement and other literature given to the landlord should inform them of all the requirements under these regulations and clearly indicate who is responsible for the annual safety checks and for issuing new certificates to the tenants. If you are only finding a tenant this would normally be the landlord, and if managing the property it would normally be you as the agent.

Tenancy depositsNew regulations were introduced in April 2007 under the Housing Act 2004, requiring all deposits taken for assured shorthold tenancies in England and Wales to be safeguarded in a government authorised tenancy deposit scheme. Three such schemes are available from:

Tenancy Deposit Scheme (TDS)

Tenancy Deposit Solutions Ltd (Trading as Mydeposits)

The Deposit Protection Service (DPS)

The first two are insurance-backed schemes, which allow the agent to retain the money in their own client accounts and just register the tenancy details. They both charge for membership and for each deposit submitted. The DPS scheme is a custodial scheme and the deposit money is physically paid to the DPS. They retain some of the interest on the deposit to cover their administration costs and therefore the scheme is free to use.

As well as registering the tenant’s deposit, the landlord or agent must issue the ‘prescribed information’ to the tenant, giving:


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Contact details of the relevant tenancy deposit scheme

Contact details of the landlord or agent

Information explaining the purpose of the deposit and what claims can be made by the landlord

Details on how to apply for the release of the deposit

Information on what happens if there is a dispute about the deposit

The deposit must be registered, and the above information given to the tenant within 14 days of receiving the deposit. If this does not happen, the tenant can go to court and may be awarded up to three times the deposit from the landlord. As well as a fine, the landlord will not be able to legally serve a section 21 notice if they have not registered the deposit.

At the end of the tenancy, both the landlord (or agent) and the tenant must agree any claims the landlord makes for dilapidations. In the event of a dispute, both parties can agree to abide by the decision of the schemes dispute resolution service without having to go to court.

In the case of multiple tenants, a lead tenant will be required as a contact for the scheme but all tenants should receive a copy of the relevant information.

As an agent you will need to have a system in place to make sure all deposits taken under an AST are registered with one of the schemes within the timeframe.

Each scheme should give you the relevant prescribed information. In addition, you should add the landlord’s and tenant’s contact information and both parties should sign the form to agree their contact details are correct and prove they have been issued the information.

Energy performance certificate (EPC)EPCs followed on from the introduction of the home information packs (HIP) that were introduced as a requirement when selling a house. The EPC is one of the documents required in a HIP, and became a requirement for all rental properties in October 2008.


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To obtain an EPC, a domestic energy assessor (DEA) will visit the property and look at its construction including:

Heating system

Glazing

Insulation

They will issue a certificate giving an energy efficiency rating and an environmental impact rating and note any suggestions on how the rating could be improved. There is not a current requirement for the owner to follow the suggestions, but a copy of the certificate must be given to any applicants before they commit to the tenancy so they may compare different properties. Therefore, this is one document you will need to request from the owner or arrange on their behalf.

It is useful to have contacts with several DEAs to be able to offer this service to your clients quickly, as the property cannot be let without it.

EPCs are relatively inexpensive and last for ten years. They give tenants an indication of what the heating bills may be at the property, that is, a low energy efficiency rated property may have higher bills than a high rated property.

Houses in multiple occupation (HMO)A new definition of HMO was introduced in the Housing Act 2004. The Act also introduced mandatory licensing of certain HMOs and gives local councils the authority for discretionary licensing of others. The licensing can impose restrictions on the number of occupants and place requirements on the amenities provided.

A HMO is described as a building or part of a building, which is privately rented and occupied by more than one household sharing an amenity such as kitchen, bathroom or WC. The building may consist of flats that are not self-contained.

A HMO is required to be licensed if:

1. the HMO or any part of it comprises three storeys or more;


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2. it is occupied by five or more persons; and

3. it is occupied by persons living in two or more single households.

Therefore, in general, properties with two stories and five people or more, or three stories and fewer than five people, or buildings that consist of self-contained flats i.e. those that do not share facilities such as kitchens and bathrooms, will not require licensing.

A storey can include attics, basements and even mezzanine floors if they are used as an integral part of the HMO.

The licensing requires the owner, or anyone that manages the property, to register the property and a large fine can be issued to landlords (or managers) that fail to do this or to comply with the terms of the licence.

As the managing agents can be found liable if a HMO that they are managing is not licenced, or does not meet the terms of the licence, it is advisable to take special care with properties of this nature. Seek advice from your solicitor about the terms and conditions of your service agreement. Consider carefully if you want to be involved with this type of property and be careful when inspecting properties to ascertain whether they do or do not fall within the criteria of a HMO.

Application forms for licences are available from most local council websites.

After application, a council representative will normally make an inspection of the property. If applicable they will then issue a licence stipulating conditions such as:

Maximum number of occupants

Gas and electrical safety checks are carried out

Furniture meets fire safety regulations

Fire alarm systems installed

Written tenancy agreements for all occupants


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The licence also requires the manager to be a ‘fit and proper person’ and that they have not previously had a licence revoked.

Stamp duty land tax (SDLT)This was introduced in 2003 for all land transactions, including tenancy agreements, and simplifies things when letting a residential property. The old system meant that a small duty was due on relatively low rental leases and that the documents had to be officially stamped to be admissible in court. The new SDLT means that a lease only needs to be paid on rentals with a net present value (NPV) of over £125,000 and then the duty is only 1% and calculated on the balance over the £125,000. Therefore, SDLT is rarely due for the average rental property.

There are some issues to note, however:

If SDLT is payable, it must be paid by the tenant (just as it would be due to the buyer if purchasing a house)

The agent has a duty of care to inform the tenant that they may be liable for SDLT and that they must inform the Inland Revenue by sending in the relevant forms

The NPV is a means of adjusting for inflation and is calculated by multiplying the monthly rental by the term of the lease and discounting by the rate set by the HM Revenue and Customs

If a lease is extended either by another fixed period or becomes periodic, the extensions are deemed as linked for calculation purposes and the SDLT can become due upon these extensions to the lease

The SDLT is due for any type of tenancy agreement (AT, AST, company, etc.)

The current discount value and a NPV calculator can be found on the Inland Revenue’s website given in the Useful Resources section at the end of the chapter.

Unfair Terms in Consumer Contracts Regulations 1999 (amended 2001)These regulations refer to consumer contracts and therefore cover tenancy agreements and the terms placed on a tenant. The Office of Fair Trading (OFT)


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has a publication that explains how the regulations specifically affect tenancy agreements – The Guidance on Unfair Terms in Tenancy Agreements – which states:

A standard term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.

A copy can be downloaded from the website given in the Useful Resources section.

The regulations require that the terms of a tenancy agreement cannot be to the disadvantage of the tenant.

The guide also indicates that the contract must be written in plain, intelligible language and the landlord cannot discharge their own responsibilities under other legislation or pass them onto the tenant, for example a clause making the tenant responsible for repairing the structure of the building, which is the landlord’s responsibility under the Landlord and Tenant Act 1985.

The guidance gives many examples of terms that could be considered unfair and examples of revised wording to make them acceptable. Although you may have adopted a standard tenancy agreement from a legal stationer, it is highly recommended that you have an insight into the regulations.

Changes in legislationNew legislation and regulations are introduced all the time. It is important to stay up to date with any changes that may affect the way you do business. This can be achieved by reading the latest letting publications and staying alert to the news.

If you are a member of one of the professional bodies such as ARLA, make sure you are on their list for news updates, or that you check their websites regularly. These organisations are often the first to start discussing changes, as they may well be involved in initial discussions and consultations with the government.


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Useful resourcesTenancy deposit schemes

My Deposits – www.mydeposits.co.uk

Deposit Protection Service – www.depositprotection.com

The Dispute Service – www.thedisputeservice.co.uk

Health and safety

Health and Safety Executive (provides range of free leaflets and publications including gas safety advice) – www.hse.gov.uk

Her Majesty’s Stationery Office and the Office of Public Sector Information (provides copies of safety regulations, other legislation and Office of Fair Trading guidelines) – www.opsi.gov.uk

Gas Safe (registered contractor checking) – www.gassaferegister.co.uk

PART P (provides full copy of the Building Regulations) – www.partp.co.uk

Stamp duty

Stamp duty calculator (SDLT) – http://ldcalculator.inlandrevenue.gov.uk

USEFUL PUBLICATIONS

The Negotiator: subscriptions – tel: 020 8955 7040, www.negotiator-magazine.co.uk

Agreement Magazine: automatic subscription with ARLA membership or contact ARLA – tel: 0845 345 5752,www.arla.co.uk/publications/magazine.aspx

Landlord Magazine: subscriptions – tel: 0800 321 3128,www.landlordnet.com

Sold Out Magazine: subscriptions – tel: 0845 539 0309,www.soldoutmagazine.co.uk

http://ldcalculator.inlandrevenue.gov.uk

www.mydeposits.co.uk

www.depositprotection.com

www.thedisputeservice.co.uk

www.hse.gov.uk

www.opsi.gov.uk

www.gassaferegister.co.uk

www.partp.co.uk

www.negotiator-magazine.co.uk

www.arla.co.uk/publications/magazine.aspx

www.landlordnet.com

www.soldoutmagazine.co.uk


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Complying with the regulations checklistDo you have procedures in place to ensure:

You have copies of the relevant safety certificates before allowing tenants into a property

You have carried out an efficient risk assessmentYou have advised your landlord clients of their legal obligations (in

writing)Safety certificates are updated on an annual basis or when they fall due

Are you are up to date with the latest legislation?

Are all the clauses in your tenancy agreements fair?

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10

THE LETTING PROCESS

In this chapter:

Recording client details•

How to conduct a good viewing and ‘sell’ a property•

Staying safe•

The tenancy process•

Registering landlord, property and applicant detailsThe first contact with a landlord is often by phone. During the conversation, it is important to make sure that all the details necessary to contact them again, as well as enough details about their property to provide an accurate valuation if they have requested one, are recorded.

Any staff member who answers the phone should have a practised routine to make sure they have all the details required to go forward. Some companies use a prompt card or registration card, which can be to hand on everyone’s desk. These will have a space to record all the necessary personal data of the caller, including:

Full name

Telephone numbers

Email address

Home address

. . . as well as details of the property to rent including:

Address of the property

Property type (detached, terraced, etc.)

T H E L E T T I N G P R O C E S S

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Number of bedrooms

Number of bathrooms

Size of garden

If there are off-road parking spaces and/or a garage

Some people prefer to type this information straight into a database, if the company has it, whilst on the phone. This does of course save time, means the information is not lost and is instantly available to everyone. If the card system is used, the details need to be added to the database later either by the person that wrote it down or by a member of the admin team.

It is also good practice for everyone to keep a book on their desk to record details of all phone calls they receive. They will then have a permanent record to refer to, if the need arises.

It takes practice to get all the necessary information, as much of it tends to come out during the initial conversation. For example, the receptionist may have already introduced the caller by name or they may start the conversation with, ‘I have a three bed semi-detached house in x location to let and I was wondering if you could help?’ Most people do not like to repeat themselves so it is important to jot this information down quickly, but staff should be trained to make sure they either steer the conversation to obtain all the information or to explain that they need to record a few more details if necessary.

Landlords may also send email requests, which may have a lot of the information required in the message. This information can be filled in first and will shorten the time taken to record the other relevant information.

Callers will have different requirements and typical requests are:

Advice on buying a suitable investment property

Whether a property should be let furnished or unfurnished

What services the company offers and what the fees are

Property valuation

Request for service details to be emailed or posted


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These requests for information also need to be recorded and, if necessary, the question or request should be passed to the relevant person or department for either a prompt response or for an appointment to be made to appraise the property.

Property valuations and appraisalsThis is an important part of the customer relationship process. It is often the first face-to-face contact you, or a staff member, have with the landlord. One of the key ways to make sure the first meeting goes well is preparation. This means knowing where you are going so that you can arrive on time, having all the information to hand that you may need, having a good look at the property details before hand and anticipating any questions the potential client may ask.

Typically you will need to provide:

A rental evaluation

Advice on presenting the property to tenants

Details of your company’s services and fees

Information on the types of tenant that are looking for the particular property type

If the rental market is buoyant

How quickly it is likely to rent and what void periods they may have

In addition, you will need to inform the property owner of certain details they will need to be aware of to let their property, including:

The requirement to request consent to let the property from mortgagee and leaseholder if applicable

The requirement to inform any insurance policy providers that the property will be let

The availability of appropriate insurance specific to letting property (rental guarantee, public liability, etc.)

Plus, you have a duty of care to inform the owner of their responsibilities and current legislation affecting the letting of residential property. This information includes details of:


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Responsibilities for repair under the Landlord and Tenant Act 1985

Gas safety regulations

Electrical safety regulations

Furniture and furnishings fire safety regulations

Deposit requirements

Energy performance certificates

Full details of the legislation are covered in Chapter 9. You can briefly deliver this information verbally at the appraisal but it is recommended that you also give it to the owner in written format, so that you have proof that you have informed the client. In fact, we deliver it in three formats: it is outlined on our website (but of course there is no proof the client has read it), we also have an Information for Landlords brochure as described in Chapter 3, which our working procedures state we give to every landlord, and finally, within our service agreements, we get the landlord to sign to say they will comply with the relevant legislation.

Most agents will give potential clients a ‘landlord pack’ which will normally include some form of brochure similar to the one indicated above, a list of services and breakdown of fees, and possibly extra information such as the details of professional accreditations or insurance brochures. These items are often provided in a glossy folder with the company logo etc. printed on the front. Having a similar pack available will look far better than a few photocopied bits of paper!

RENTAL VALUATION

This is a key piece of information that every landlord will require, even if they have a good idea themselves or have previously rented the property. If you are new to the business, or just new to the area, then you may need to research this beforehand. Over time you will have a good idea of the market valuation of different types of property, in different areas, within your working location. Prices, however, can vary for similar properties only a couple of streets apart and, of course, over time.


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Assuming you are not immediately aware of the current price for the particular property, there are a couple of ways to obtain the information. The first place to look is your own records. You may have had similar properties in the past, even if they were not in the same area, or you may have had properties of a different size in the same street. These can be adjusted to get a current valuation. You can also search competitors’ adverts, either in the press or on the internet for similar properties.

One of the most useful tools to provide an accurate, current market value is via the tools section of the Rightmove.co.uk website which is available to agents that advertise on the portal. It has a record of every property that has been advertised historically on the site and it can be searched by specific property, in specific postcodes and by date range.

Even if an accurate match cannot be found, again the information can be adjusted. For example, you can expand the area around the specific postcode, go back further in time, look at slightly larger or slightly smaller properties in the same location, and so on. If you are well prepared and have researched the property, you will only need to make a slight adjustment to the valuation when you have inspected it. You may need to make adjustments for the décor and condition, or any proposed improvements the client may be making before letting the property.

I usually start the appraisal with a walk around each part of the property to get a feel for the size and condition, before giving a final valuation. And I normally give a range rather than one figure, for example £600 to £650 per calendar month – unfurnished.

Consents to let the propertyMORTGAGE

If the property is mortgaged on a normal residential mortgage, the landlord will need to ask the mortgage providers permission to let the property. Most mortgage lenders will charge a fee to provide a written consent and may also request certain caveats. These may include:

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That the property is only let under an assured shorthold tenancy agreement

That the tenancy agreement includes specific clauses

Requesting a copy of the tenancy agreement

That the property is not let to students

If the property is an investment, bought specifically to let, then the client may have a buy-to-let mortgage which will not need specific additional permissions.

It is recommended that you request a copy of the ‘consent to let letter’ from the client, or a copy of a document showing that it is a buy-to-let mortgage, and keep it on file.

INSURANCE

The landlord will need to retain a building insurance policy and will need to inform the policy provider that the property is let. Some companies may charge a slightly higher premium for let properties. Failure to inform the provider can invalidate the insurance.

Advice on presentation of the propertyYou will no doubt see a huge variety of properties, and in various conditions and levels of cleanliness. In a lot of areas there will normally be a great deal of choice for tenants, and they tend to be a discerning bunch these days. Properties in poor condition will, at best, take a long time to let or fetch a much lower price than a similar property in good condition – at worst, they will not let at all! Although you will want to turn the lead into a listing, especially early on, it is worth being brutally, but diplomatically, honest about the property at the first meeting. If it needs a spring clean say so and if it has an avocado bathroom note that a white suite would be more suitable.

The sales pitchJust because you have been asked to visit and appraise the property does not mean the landlord will automatically give you the property to list. Inevitably they will


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be assessing at least a couple and maybe more agents in the area to get a range of valuations on their property as well as quotes for letting or managing it.

Unless the potential client is intending to just choose the cheapest quote, you will need to make sure you stand out from the crowd. Having prepared thoroughly and answered all their questions readily will hopefully have made a good impression, but no doubt the other agents will be equally well practised at this. Things to ‘sell’ to the potential client, if applicable, are:

Professional memberships (NALS/ARLA etc.) and the benefits to the client such as:

Client money protectionComplaints procedure

The positive impact of being a dedicated letting agent only

The benefits of being an independent agency such as:Having the whole team focused entirely on letting their propertyThe speed and flexibility of service

The benefits of being part of a larger chain or franchise such as:National media advertising and brandingExperience, back up and marketing budget

Where you advertise – perhaps you are on one or more of the top property portals or have a whole page advert each week in the local press

That you work longer hours or more days a week than the competition, or that you can be contacted out of normal office hours via mobile or email

It is important to be positive and confident throughout the discussions with the owner so that they believe that you are confident you can let their property.

Information to recordSometimes you may receive the instruction to list the property at the appraisal meeting. Other times you will need to go back again when the owner decides that they are going to employ your services or that they are ready to let the property.


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Once you have been instructed, take your time recording the additional details of the property such as:

Size of the bedrooms (doubles or singles)

If there are fitted cupboards or wardrobes

Level of furnishing – if unfurnished, are the kitchen goods included?

Are any of the appliances disconnected, e.g. the old gas fire in the living room

How many parking spaces there are

If there is power and light in the garage

Amount of additional storage space

If there is double glazing

Type of heating – storage heaters, central heating (gas or oil), electric radiators, etc.

Phone and TV sockets

Satellite dish/cable connection

You may also need to ask the owner some questions to find out some more information such as:

The council tax band

Garbage and recycling collection day

Utility suppliers

If there is broadband available in the area

If there is a communal satellite dish – if it is not visible

The owner may also express certain preferences for the type of prospective tenant. This should also be recorded and may include:

No students

Professionals only


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No pets

Non-smokers only

You may also wish to take dimensions of the rooms or key rooms and maybe even sketch a plan of the property to turn into a full floor plan later.

A laser measure will speed up the process of taking measurements and enables you to do it on your own without needing someone to hold the other end of the tape measure.

PhotographsThese are the key to marketing the property. They are usually the first part of any advertisement that potential tenants will see. Therefore it is worth taking time to get good shots and even visiting the property more than once if necessary, perhaps to get a good external picture on a sunnier day or when the owner has had chance to tidy up.

A good camera helps and ideally it would have a good flash and a wide angled lens. Unfortunately most compact digital cameras do not have great flashes and tend to have mega zooms rather than wide angled lenses.

To take a good photo, some staging is normally required including:

For external shots, have the sun behind you and get back far enough to frame the property but not to get too much of the neighbour’s property in the shot

Open blinds and curtains to let in as much natural light into rooms as possible

Switch on all the lights in the rooms

Ask the owner to clear any clutter away

Take the photograph at mid level, that is, not pointing downward into the room


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The police advise estate and letting agents to ask owners to move any expensive or powerful cars away from the front of the house, before taking a photo to be used for an advert. The internet makes it very easy for criminals to search the lists of photos to find cars they want to steal. It is, therefore, also worth asking the owner to remove any family photos or valuables before taking room shots.

Creating eye-catching adverts for propertiesMany agents still only upload one photo and a short description to their websites or property portals. This may be because they are used to the small space available in the press and the details they historically have on file may be limited.

Most internet searchers expect to see as much detail as possible, this way they can narrow down the properties they are really interested in. This saves wasting their time and yours, either calling for more information or viewing unsuitable properties.

Most of the portals allow a good number of photos and a large description. If you are using a property database software package such as Vebra or CFP, then all the information will only need to be entered into the software once and then can be uploaded automatically to all the larger portals if you have subscribed.

I therefore recommend including as much information about the property as possible, such as room dimensions, council tax, parking availability, proximity to stations, motorways, schools and amenities, and so on.

If you intend to advertise in the press, the larger papers will usually create a template based on your corporate logo for you and issue some software for free. This will allow you to upload property details to their publishing department. There is normally only enough space in your advertising template for one or maybe two photos of each property and a brief bullet-pointed description. The key to press adverts is to use the best photo of the property that you have (usually an external photo) and to get the main points down in the limited space.


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Studying your competitors’ press advertisements and searching the portals yourself will help you see what really stands out and is eye-catching for potential customers.

Storing keys to the propertyYou may end up with a stock of literally hundreds of keys. It is, therefore, extremely important to keep these safe and to make sure they are not identifiable with the property if they are lost or stolen.

The recommended way to do this is to store them in a lockable or secure cupboard within a secure room or office. The sets of keys should each have a secure tag with a unique number or code that is unrelated to the property address. The code number can be entered against the actual property address in a separate and secure register, either in paper form, kept separately from the keys, or in a computer file.

Anytime a key leaves the office – with a member of staff for a viewing, or issued to a contractor for maintenance purposes – the person taking the key should sign a separate register with just the code number, or just the address on it, and then sign again to say the key has been returned.

Some database software comes with a module for key logging.

Service agreementsThere are three main types of service agreement typically used by letting agents:

Tenant finder agreement (let only)

Tenant finder plus rent collection

Full management


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In addition, you may wish to create an agreement for advertising only or when advertising for a lodger.

Each service agreement should outline the responsibilities of both parties to the agreement. The agent’s responsibilities will vary by level of service offered and will include the different aspects of each service, which were outlined in Chapter 3. The landlord’s responsibilities will include:

Complying with all the legislation covered by the Housing Act

Complying with all health and safety legislation and regulations

Complying with the Landlord and Tenant Act 1985

Paying the agent’s fees

In addition, the agreement should include clauses, which state that the persons signing the agreement:

Are the sole owners of the property

Have sought permission to let the property from the mortgage company and leaseholder

Have informed their insurance policy holders that the property is to be let

Live in the UK for tax purposes

Give their permission for you to transfer the fees owed to the agency from the client money account to the company account when due

Indemnify the agent from any claim that may be made in connection with letting the property on their behalf

Give the agent power to act on an emergency basis to make the property safe or secure, if the owner cannot be contacted

Give the agent power to sign tenancy-related documents on their behalf


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An agent needs the owner’s permission to advertise the property. They also have an obligation to inform the landlord of their statutory and contractual requirements. The service agreement can be used as proof of this, so it is important to get these terms of business signed by all the owners of the property before advertising it for let.

Property details formThis is a useful document for collecting additional information about the property that you or the tenant may need. It can be given to the owner at the same time as the service agreement.

The information to request on this form may include:

Utility supplier’s details

Utility account numbers

Location of meters and stop taps

Bin and recycling collection days

Council and tax band

Their bank details for rent payments

Additional contact information

Any appliance guarantee or insurance information

Any home emergency cover details

Non-resident landlord registration number

Preferred contractors

Verifying ownership of the propertyLegally a letting agent cannot advertise a property to let without the permission of all the owners of the property. There have been cases in the past where current


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tenants have sublet the property or the owner’s relations have let the property without their knowledge. If an agent were party to this, they would be liable.

To verify ownership of the property you need to obtain both proof of ownership and proof of the identity of the person you are working for. Ownership can be verified in the following ways:

Requesting a copy of the mortgage agreement

Requesting a copy of the title deeds

Obtaining a copy of the title deeds from the land registry website (see resources section at the end of the chapter)

To obtain proof of identity you will need to obtain a copy of each of the owner’s passports or driving licences with photo (both parts) and preferably a recent copy of a utility bill from their current address.

All these documents should be kept on file.

Registering potential applicants’ detailsRegistering details of potential applicants is a similar process to registering landlord details. You can either use a prompt card or type the information into a database. There are normally two types of enquiry from potential applicants: those for specific properties that they have seen advertised and more speculative enquiries to see if you have anything suitable on your books.

The information you will need from speculative enquirers includes:

Name

Contact information – address, land line phone number, mobile phone number and email address

Specific property requirements including:Property type – flat/house, etc.Furnished or unfurnishedMinimum number of bedroomsMaximum rental budget


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How many people will be rentingType of tenant – student/professional couple, etc.Locations they are searching inWhen they need to moveHow long they are looking to rent for If they have any pets or smoke

Again it is useful to use a property database software package, especially if you have a large number of properties on the books. Most packages come with a tenant/property matching facility. This allows you to enter the searcher’s details and find properties on your list that may suit them.

All enquirers’ details can be kept on file so they can be matched against any future new properties that come to market.

For specific enquiries it is worth recording the same data. You will often find that people phone to arrange a viewing and then, when you start taking down their full details, they realise they have missed something in the advert (especially if you have not created a detailed ad or they have seen it in the paper!) that makes the property unsuitable for them. For example, they want an unfurnished property and the property they are enquiring about is furnished.

Although in situations such as in the example given above, you may avoid wasting time viewing unsuitable properties, you don’t want to put applicants off if there is a chance they might like the property. When matching properties to suitable applicants you will often find that if the property is a close match, but there are one or two differences, the person searching may be flexible and take, say a furnished property instead of unfurnished, if it is in the right location and still within their budget.

ViewingsLetting agents tend to carry out a far lower average number of viewings per property than estate agents with properties for sale. People obviously make quicker choices over the relatively lower investment and shorter term aspects of renting compared


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to buying. This is good news, as it means the time taken to let a property in today’s market is relatively short.

If you have taken detailed information from an enquiry and have an understanding of the type of property they really want (or may accept), then you should reduce the number of viewings further.

Quite often the property will be empty, but equally the owner may be living there or the current tenant may still be in situ. You will need to inform them in plenty of time that you have a viewing and maybe even diplomatically ask them to keep it tidy.

Try to avoid having the landlord show people around. Landlords will see it as more professional if you carry out the viewings and it means you have more chance of getting honest feedback from the viewers if the owner is not there. At all costs avoid the previous tenant showing prospective new tenants around (or even being there, if at all possible). They will inevitably point out the negative aspects of the property!

Existing tenants usually accept viewings and it is a clause in most tenancy agreements that landlords or their agents are allowed to enter the property to carry out viewings. This normally occurs in the last two months of the tenancy. If any tenants do make a fuss then you are legitimately allowed to enter if you give them 24 hours notice in writing. This would of course make arranging viewings awkward and should be avoided. Therefore, a good relationship with the tenant is vital. This is normally achieved by following their requirements. Perhaps they prefer no viewings after a certain time in the evening, which is normally quite easy to work around.

Always confirm viewings, especially if they were made the day before or earlier. Many people just don’t turn up which can be frustrating. Usually this is because they have found somewhere else that they like and can’t be bothered to let you know. This is not only rude and discourteous but will waste huge amounts of your time.


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During the viewing you need to be knowledgeable about the property and sell all its positive aspects. To do this you need to be familiar with the property and its surroundings. Even if it is the first time you have visited the property (maybe someone else appraised the property), it is a good idea to get there early so you are familiar with the layout and check all the property details before you go. You will then be able to answer the viewer’s questions efficiently.

These are the most popular questions we are asked by viewers:

The council tax band

If broadband is available in the area

If a satellite dish or cable is available or if they can have it installed

Where the nearest schools/station/shops are

If the owner accepts pets

How many allocated parking spaces there are (may not be obvious in some apartment blocks)

Arriving at the property early enables you to open all the curtains or blinds and switch on the lights. You might discreetly remove some clutter from view to present the property in the best possible way (be careful if moving the owner’s/tenant’s possessions).

To really ‘sell’ the property to the viewer, point out the good points and try and turn any negative points into positives. You must be careful not to misinform the viewer but if, for example, they notice there is a main road close by, then agree and say how well positioned the property is for transport links.

There are many good points to look for in a property and you should point them out if they are there, such as:

Large living spaces or bedrooms

Low maintenance gardens – or big family/pet friendly gardens


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Proximity to rail/road links

Low council tax bill

Recently refurbished/redecorated/new carpets, etc.

If you intend to get most of your enquiries through the internet, put as much information and as many photos on the websites as possible. There will then be little need to print the property details to hand to every viewer. Most websites and portals allow the searcher to print the details themselves. You will find many people bring their print outs along to the viewing and we have rarely been asked for a copy. Therefore you can further reduce your overheads and impact on the environment. If someone does request a copy, just ensure a copy is sent immediately from the office – preferably by email.

After the viewing it is important to ‘close the sale’ – this means actually asking the viewer if they are interested and would like to apply. This is because many will not be sure of what to do next.

If they are not interested then it is important to ascertain why, so that it can be fed back to the landlord for possible improvements or changes or just to let them know you are doing a proficient job.

From experience, people viewing properties often shy away from giving negative feedback, possibly because they do not want to offend you. It is possible to get around this by indicating that it is not your property and therefore they can be honest about their feelings as it might help the landlord in the future. Occasionally, there may only be a minor issue which you may be able to resolve for them immediately and change their view to the extent of applying.


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We occasionally even have viewers that avoid saying they are not interested to the extent that they actually indicate they want to apply, take away the application forms, and then are never heard from again!

In case of receiving an application, it will speed things up if you carry the following documents with you to the viewing:

Tenant application forms

Draft copy of the tenancy agreement

Energy Performance Certificate (EPC) for the property

Method of taking payment

As you will be taking a non-refundable holding fee from the prospective tenant, they must be given the chance to read what they are signing up for and must be able to compare the energy performance of the property, so the draft tenancy and EPC are important.

Safety and securityThis section is concerned with general safety and security while on a viewing or when customers may come under your charge. The main legislation covering health and safety at work is the Health and Safety at Work etc. Act 1974 (HASAWA).This has been covered in more detail in Chapter 8 but is linked to the issues here.

You have a responsibility to make sure your staff are safe and a duty of care to ensure your customers are safe while in your care.

YOUR STAFF’S SAFETY

The main time there may be a risk to staff is if they are working alone in the office, especially if it is not in a particularly public area. There are a number of alarm systems and remote locks available for these situations.

When confirming a viewing, call the prospective applicant’s main land line phone number if possible to make sure they have given a traceable number. Never accept a lift to a viewing with the viewer – always use your own car.

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It is also a good idea to have a system in place that ensures all members of staff that are carrying out viewings inform someone of the viewing’s time and place and when they are expected back. This is especially important at weekends and evenings when there may only be a couple of staff on duty, or if you are working alone when you start the company, in which case it is a good idea to inform a family member.

It may be that staff send a quick text or make a quick call after each viewing or couple of viewings, if they are out on viewings all day. If they are expected back at the office during the day, then someone should ensure that they have been seen arriving back.

For larger companies where control of all staff members is difficult, there are emergency systems available that use mobile technology as an alarm if the staff member has a problem. Companies selling suitable products are listed in the resource section at the end of this chapter.

YOUR CUSTOMERS’ SAFETY

There are also a number of areas where you need to ensure your customers’ safety:

In the office

If you are driving with the member of the public in your car

At the property while conducting the viewing

Some viewers may not have transport or you may decide to take them between several properties or from the office to the property. Any cars used for company business need to be safe and have a current MOT, tax and business insurance. Anyone driving should always stick to the speed limit and not allow themselves to be distracted by mobile phones, radios (or the customer!).

You may also be liable if the customer were to injure themselves while in the property that you are viewing. Therefore it is necessary either to arrive early enough to carry out an inspection of the property or enter first to ensure all hazards are cleared away or can be pointed out and avoided. For example, the property may be undergoing refurbishment and there may be ladders, tools or cables around.


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Processing applicationsApplicants will either tell you that they want to take the property immediately after the viewing or they may come back to you when they have finished viewing their list of prospective properties.

It is fairly common these days for people to make an offer below the advertised rental price. You have an obligation to put every offer forward to the owner and let them accept, decline or make a counter offer.

If an offer is made below the asking price, I normally manage the applicant’s expectations by saying that if they want to negotiate on price then they should expect to agree to sign for longer than the minimum six month term so that the landlord receives something in return for the discounted price.

Assuming an offer is accepted or the applicant has not negotiated a lower price, then being able to take the application fee and holding fee immediately prevents them changing their minds and ensures they are genuine. The best method of taking payment is either by having the card payment slips with you or phoning back to the office and allowing the applicant to give card details to someone who can enter them into the terminal (assuming you have opted to receive card payments).

TENANT APPLICATION FORMS

Depending on whether you use an external referencing agent or will carry out the references yourself, you will either need two separate forms, or one comprehensive form for tenancy applications. All adult applicants for the property will need to fill out the forms.

Assuming you will use an external agency to carry out the reference and credit checks, you will need an internal form with some additional information. The form should include clauses referring to:

The holding and administration fees. The applicants should be informed that, once they have signed the forms and paid the fees, the money will be non-


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refundable if they back out for any reason or give false information. Note: All monies must be refunded if the landlord declines the application or pulls out before the tenancy agreement is signed.

Signing the tenancy agreement within 28 days of the date of application (or a time period agreed with the owner). It should state that the fees are non refundable if the applicants do not fulfil this clause. This prevents them dragging their feet over a moving date.

The tenancy being subject to satisfactory reference and credit checks, the landlord’s approval, and all monies being paid and cleared. It should also state that the tenancy is ‘subject to contract’ until the tenancy agreement is signed by all parties. This is important so that no verbal or written contract is inadvertently entered into.

Data protection. The form should have a section where the applicant gives permission for their details to be passed to relevant third parties for the process of requesting information relevant to the application process and that their details and the credit and reference report will be presented to the property owners.

The referencing agents will provide you with their own form templates and will typically require the following information to be filled in by all the applicants:

Full names

Date of birth

Employment or accountant details

Addresses for the last three years

Previous landlord or agent details

Bank details

If you wish to carry out all the checks yourself, then your internal form can be used to capture the same information.

You will also need to obtain a copy of some form of photographic identification and a proof of address such as a recent utility bill for each applicant. The reference agency may also need a copy of this and may request additional information such as payslips or bank statements.


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VETTING PROSPECTIVE TENANTS

A referencing agent will be able to provide an almost instant credit check using the records of one of the three main credit-referencing agencies such as Equifax. This will determine if any of the applicants have any county court judgements, bankruptcy notices or other adverse credit information. They will then contact the applicant’s employer and previous landlord/agent if applicable.

The references the agent obtains are not character references, but simply verify that the applicant is in full-time employment, confirms their salary and that they have a permanent position, and that they paid their rent, left the previous property in good condition and gave the correct notice.

Self-employed individuals will need to provide three years’ worth of accounts or earnings or a statement from their accountant.

Once the agency has received replies from the referees, they will normally send a report to you with a credit score (based on their own internal formulas) plus a recommendation to accept or reject.

GUARANTORS

Referencing agencies will need confirmation that the applicants meet certain criteria. Typically, these criteria include:

No adverse credit history

Fully employed in a permanent position

Earnings criteria – typically an annual combined salary of: 2.5 x monthly rent x 12

Some history in the UK, i.e. on the electoral role

That they have previously paid rent on time etc. if applicable

This often rules out:

Students

Some immigrants new to the country

Anyone receiving benefits

Newly self-employed people with no company accounts


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However, it is often still possible to proceed, assuming the owner agrees, if the applicant has someone who is willing to act as a guarantor for them. A guarantor will need to be referenced in exactly the same way as the applicants. They must be informed that they will be responsible if the applicant defaults on any of the terms of the tenancy agreement, such as non-payment of rent or damage to the property. They must also be willing to sign to this effect on the tenancy agreement.

COMMUNICATIONS WITH THE LANDLORD AND APPLICANTS

At this stage in the letting process, it is important to keep communicating with the landlord and tenant. References can often take a while to complete. This is normally due to the applicant’s employer or previous landlord being unavailable or slow to respond. Both the applicant and landlord will need to be updated every couple of days, or as soon as you receive a final report.

Although the referencing agent will have made a recommendation on whether the applicants are suitable, the final decision lies with the landlord. Therefore, it is important not to indicate to the applicants that they have been successful before you have spoken to the property owner.

It is advisable to present the information about all the applicants and any guarantors to the owner and get their approval to proceed in writing. The information they will require is:

Number of applicants

Age

Professions

Salaries

If the applicants have any adverse credit history

When they have requested the tenancy to start

How long they wish to sign the tenancy agreement for

Inventory and schedule of conditionOnce the application process is complete, you can start to prepare the rest of the documentation required for the tenancy. One of the most important documents apart from the actual tenancy agreement is the Inventory and Schedule of Condition. This document forms part of the evidence in the event that the landlord wishes to


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claim for any dilapidations at the end of the tenancy. Equally, it is evidence for the tenants in the event that they dispute a claim.

Carrying out a thorough inventory requires a detailed eye and a logical approach. There are many professional inventory clerks that you can use for this part of the process if required (see Chapter 6 for contacts). However, with practice, you or a member of staff will be able to produce an adequate document.

Using a digital voice recorder to record the details of the property will speed up the process a great deal and allow you to pass the recording to either a typing agency or admin staff to type the report.

The inventory starts with visiting the property and recording all the details. You will no doubt find an approach that suits you but, as a guide, the method I use is:

Walk around the whole property once to familiarise yourself with the layout

Record all the major features and common details, e.g. ‘all windows are white PVC double glazed’, ‘all walls are plain painted magnolia throughout’

Stand in each room and record everything in a logical and progressive way. Starting with the flooring and moving up and around the room, record all fixtures, fittings, décor, approximate age and the condition of each item noted

Record the location of any meters, fuse boxes and stop taps if not already known

Record any specific damage such as a stain on a carpet or scratch on a piece of furniture in detail, e.g. large red wine stain 20 centimetres in diameter approximately 1metre from the lounge door


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Our standard inventory template contains some generic statements such as: ‘All fixtures, fitting and items are in good condition with no marks or damage unless stated. Remarks above and below this standard such as brand new, worn, scratched, marked, damaged, broken, etc. are added in the condition column’. This saves a lot of time describing the condition of every average item.

Details are important. It is not enough to just state that there is a sofa in the lounge. You need to describe its age, colour, pattern, size and any marks or damage. If you were unfortunate enough to get a dishonest tenant who stole the furniture and replaced it with cheaper items, you would find it difficult to prove without a detailed description.

Although you will be obtaining the tenant’s signature on the inventory, it is also a good idea to take photographs of as much of the property as possible. Photos tend to be a record of the inventory, rather than the condition, as the condition of the paint on a wall or the carpet will not show particularly well in a photo. However, photographs are excellent for recording details that are hard to describe, such as particular patterns and colours on curtains or sofas, and provide fairly irrefutable evidence if the unfortunate events described in the last paragraph occur. It is also possible to record damage that is already there such as stains and scratches on items, which will protect the tenant’s interests.

It is also useful to record the utility meter readings on the inventory so that the tenant signs that they have witnessed the meter reading on the day they move in. If they are not recorded on the inventory, they should be recorded somewhere to either pass to the landlord or to transfer the accounts into the tenant’s name.


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Tenancy agreements and types of tenancyAs a letting agent, you will need to have up-to-date copies of several types of tenancy agreement. There are several companies that will supply up-to-date legal copies of tenancy agreements for you to use or adapt. These suppliers are listed at the end of the chapter. Alternatively, some letting agency software suppliers may provide an option to purchase a legal letters and documents pack. These are useful as the software will often allow you to draw the relevant information – such as landlord’s name, tenant’s name, property and tenancy details from the database – and merge it into different documents to save having to type it each time.

Most tenancy agreements that you will need to be aware of or create are covered by the Housing Act 1988 described in Chapter 9. These include:

Assured shorthold tenancies

Assured tenancies

Additionally you may also come across or create tenancy agreements, that are excluded from the act and are simply contracts, including:

Company tenancies

Lodger licences

Premium leases

Tenancies where the rent is over £25,000 per annum

On rarer occasions you may also come across existing agricultural or Rent Act 1977 tenancies.

ASSURED SHORTHOLD TENANCIES (AST)

These are currently the most popular form of tenancy agreement because all Housing Act tenancies created after the 1996 amendment are automatically ASTs. Also, although the tenant has security of tenure for six months, within certain criteria an AST gives the landlord the ability to serve notice on the tenant without needing to give a reason. This gives less security of tenure to tenants than previous historical tenancy agreements.

Typically, ASTs are drawn up for a fixed period equivalent to the minimum period of six months, although they can be longer or shorter. However, if they are for a


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shorter fixed period, the landlord would still need to go to court to evict a tenant if they decided not to leave within the first six months.

ASTs can also be drawn up as ‘periodic tenancies’ with no fixed period. In these cases they run from month to month, but again a landlord cannot recover possession within the minimum period unless the tenant has breached the terms of the tenancy.

ASSURED TENANCIES (AT)

Prior to the 1996 amendment, all Housing Act tenancies were automatically assured tenancies. These gave a great deal of security of tenure to the tenant because, under an AT, notice cannot be served on a tenant unless the landlord has grounds for possession. This means they can run for many years and would not be a good choice for landlords.

COMPANY TENANCIES

Company tenancies are created when a limited or public limited company signs a tenancy agreement and pays the rent for a property on behalf of its employees. The company itself becomes the tenant and its employees live there during the tenancy as permitted occupiers or licensees of the tenant.

Self employed, partnerships and sole traders are not eligible for a company tenancy agreement and would need to sign an AST on an individual basis.

Landlords usually like to have corporate tenants and company tenancies because large organisations are likely to pay the rent on time and will usually make sure that the persons occupying the property look after it. However, the terms of the tenancy normally give the company permission to allow different employees to live there without the approval of the landlord. Although a landlord cannot request to approve each individual, they should be informed of each change of licensee.

Many larger companies will want to use their own tenancy agreement and many use professional relocation agents who occasionally try and charge the landlord various fees. As the landlord’s agent you will need to advise him or her whether the


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terms of the agreement are appropriate and that they generally should not agree to pay the fees, as they are already paying you and the relocation agent should pass any costs on to the company who has requested their services.

Some companies will not agree to pay a deposit. Instead, they may give a ‘letter of guarantee’ to cover damages instead.

It is up to the landlord to accept or decline the company’s requirements but you will usually have to negotiate on their behalf.

LODGER LICENCES

A lodger licence is required when the property is the landlord’s main home and he or she lives in the same property, or part of the same property, as the tenant. In these cases, the landlord, is known as a ‘resident landlord’ and has the advantage of being able to evict the tenant without a court order.

PREMIUM LEASES

Tenants, particularly corporate ones, may wish to pay the rent for the whole fixed period at the start of the tenancy. Alternatively, the landlord may request this if the tenant does not have a good credit history and cannot supply a guarantor. In these cases premium leases are created.

TENANCIES WITH RENTS OVER £25,000 PER ANNUM

As rental prices increase, annual rents of greater than £25,000 on larger houses, or houses in expensive city areas, are becoming more common. If the rent is only just over this amount and the landlord would prefer to use an AST, it is possible to include certain services under the tenancy agreement, such as a cleaner or gardener, and include the cost of their wages in the rent so that the actual rental value is less than the £25,000.

Some mortgage companies will stipulate that the property can only be let using an AST as part of the terms of allowing the landlord to let the property, so this should be checked carefully before accepting certain types of tenant.


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TERMS WITHIN AN ASSURED SHORTHOLD TENANCY AGREEMENT

Legally, tenancy documents must be in ‘plain English’ and, as a contract, must contain certain terms. These are:

Names and addresses of the landlords (or the agent’s address if the agent is managing the property)

Names and current addresses of the tenants

Address of the property to be let

Length of the tenancy

Rental amount

How the rent is to be paid, e.g. monthly in advance by standing order

Date the rent is to be paid

Whether it will be paid to the landlord or agent

Deposit clause

Forfeiture clause

Most of these terms are straightforward but the last two clauses require some explanation.

Deposit clause

The legislation concerning holding deposits has been changed in the latest amendment to the Housing Act. The landlord or agent is now required to register the deposit with a government regulated deposit scheme as described in Chapter 9.

The deposit clause in the tenancy agreement should reflect the new requirements of the legislation and should indicate:

The amount paid as deposit for the tenancy

Specifically where it will be held

Circumstances under which part or all of the deposit may be retained by the landlord


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Whether the tenant, landlord or agent will retain the interest

Dispute resolution information

Forfeiture clause

This clause describes how the property owner can reclaim possession if a tenant breaches certain terms of the tenancy agreement.

This clause is required by the Housing Act to enable the landlord to cite grounds in Schedule 2 of the Act in order to evict tenants. It also states that the landlord can take possession if the rent is not paid for 14 days. Despite how the clause is worded, a landlord still has to apply to court in order to evict a tenant and cannot simply evict the tenant on his or her own.

Additional clauses

The other terms in a tenancy agreement are there to indicate responsibilities of the landlord and tenants. There are typically many more items listed under the tenant’s responsibilities than the landlord’s because the landlord’s obligations are implied by the Landlord and Tenant Act 1985. However, the agreement would normally refer to the main ones such as complying with all current safety regulations and maintaining the structure of the property including:

The structure and exterior of the property (including drains, gutters and external pipes)

The installations for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity)

The installations for space heating and heating water

There may be a long list of clauses for the tenant to agree to. Care must be taken that these comply with the Unfair Terms in Consumer Contracts Regulations. The Office of Fair Trading also issues a ‘Guidance to Unfair Terms in Tenancy Agreements’ paper, which provides a useful explanation.


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The standard agreements supplied by typical legal stationers will normally cover the clauses legally required and have a standard set of additional clauses which you may wish to add to over time. It is worth collecting tenancy agreements from as many sources as possible to see what additional clauses are typically added to protect the landlord. If you do alter or add anything to the standard agreements, I would recommend you have an experienced solicitor read through it.

TERMS WITHIN OTHER TYPES OF AGREEMENT

Assured tenancies are still covered by the Housing Act and will contain the same standard clauses. Even the tenancies that fall outside the act will contain similarly worded clauses, protecting the landlord’s and tenants’ rights.

Executing the tenancy agreementThe tenancy agreement must be signed by all the tenants and any guarantors, plus either the owners of the property (all the owners) or the agent on behalf of the owner.

If you are signing on behalf of the owners then you must have their permission to do this in writing. The best place to obtain this authorisation is by adding a clause within your service agreement. The contract is between the owners and the tenants, even if you sign on their behalf, so they must receive a draft copy of the standard format ahead of time and agree to the variable terms (such as rent, deposit, start date and length of tenancy) separately, in writing.

It is normal practice to have two copies of the tenancy agreement. The original is signed by the landlord and given to the tenants and the counterpart is signed by the tenants and given to the landlord. In practice we normally get both parties to sign both copies as well as initial each page, as this helps prevent any disputes later on.

Once the tenancy agreement has been signed by all parties, you need to make it legally binding by adding the date (again to both copies). This is usually added at the top of the first page.


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Other documentsDEPOSIT PRESCRIBED INFORMATION

Depending on which deposit protection scheme you have chosen to use, there will be a standard template of information to give to the tenants known as ‘prescribed information’. This will be available from the various schemes as described in Chapter 9.

A nominated head tenant and the landlord or agent need to sign this information to agree that their details are correct.

At least two copies are required, one for the tenant (or tenants) to keep and a copy for the landlord.

TENANT HANDBOOK AND ADVICE SHEET

The tenants will need some additional information about the tenancy including:

Current utility suppliers

Utility account numbers

Alarm codes

Door codes

Parking space numbers

Landlord or agent contact information

This information can be provided on a short Tenant Advice Sheet.

They also need to know what to do and who to contact in certain circumstances during the tenancy, for example repair and maintenance issues.

For let only properties, in most circumstances the tenant will need to contact the landlord to arrange repairs or to serve notice to leave the property. For managed properties, you will need to provide them with explicit instructions: who to contact during working hours, who to contact outside normal hours and what to do in an emergency. This can be provided in the form of a handbook or you may have a 24-hour number they can call for advice.


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STANDING ORDER MANDATE

The most efficient way to collect rent is by standing order and we include a term in the tenancy agreement to say the rent must be paid in this way. Your bank may provide a standard mandate form, which you can ask the tenant to fill in, or you can create a template yourself so that it can be used to set up payments directly to the landlord if required.

The mandate should include:

Title: ‘Standing Order Mandate’

Tenant’s bank details where money is to be requested from and landlord’s or agent’s bank information where the money is to be paid to, including:

Bank addressesAccount namesSort codesAccount Numbers

Amount to be paid in figures

Amount to be paid in words

Date of first payment

Date of each additional payment

Signature and name of account holders and the date the form was signed

Note that the rent money should be paid into a bonded client account as it legally belongs to the landlord and not to the agency. The agent’s service agreement should include a clause giving permission to the agent to deduct their fees and any expenses from the rent. Client accounting procedures are explained in Chapter 12.


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Standing order mandates need to be sent to the tenant’s bank. Check that all the sections have been filled out and all signatures are present (more than one signature may be required for joint accounts). The payment should be requested four days before the rent due date to allow time for it to clear in the account. Occasionally the request does not go through so the first payment needs to be monitored to ensure the order has been set up. Note that weekends and holidays will often delay the payment by a couple of days.

Check in processThere isn’t a set procedure for checking tenants into a property. Typically two methods are used: either the applicant comes to the office and signs all the paperwork and collects the keys (they may have been sent the documents for signature in advance), or you meet them at the property to do the paperwork and issue the keys there.

Personally, I believe the second method to be the most professional and effective. This is because it allows you to walk through the inventory with them and take the meter readings together, which prevents any disputes later.

This is the process we use:

Walk through the property with the inventory, agreeing everything on the list and making any agreed alterations or items that may have been missed

Take the meter readings together

Show the tenant how to use any heating, appliances and the location of meters, fuse boxes and stop taps, etc.

Get signatures on all the ancillary documents

Get signatures and then date the tenancy agreements if not already done

Hand the keys to the tenants


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If the tenants are signing the actual tenancy agreement on the check in day, they will need to be given time to read it through thoroughly so they understand what they are signing up to. As tenancy agreements grow ever larger, it is worth sending draft copies in advance so they have had a chance to read it beforehand. Whichever method is used, on no account should the keys be handed over until the tenancy has been signed by all parties.

Post check in proceduresOnce the tenant has been checked in, there will be several administration tasks required, depending on the level of service you have agreed with the landlord. These may include:

Registering the deposit with suitable deposit protection scheme

Transferring the utility accounts into the tenant’s name

Setting up the standing order for rent payments from the tenant’s bank

Photocopying all the tenancy paperwork and sending it to the landlord

Transferring the balance of the landlord’s rent (minus your fees)

Removing the keys from the key register – if you are not keeping a management set

Preparing a property file for the physical paperwork

Updating the tenancy record in the database to add:Meter readingsProperty inspection datesSafety and other certificate renewal datesRent payment due datesNotice to quit and tenancy renewal dates (i.e. the date to contact the tenant

and client to see if they wish to renew the tenancy)

Updating your client accounts with the rental and deposit transfers


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REGISTERING THE DEPOSIT

The three main deposit protection schemes discussed in Chapter 9 each have their own methods for registration. The Deposit Protection Service (DPS) is the only one that requires you to send the money to them and most allow online registration. If you use the Tenancy Deposit Scheme or Mydeposits scheme, then you will need to make sure the deposit money is kept in a bonded client account. It is useful to have a separate client account just for the deposits and show a physical transfer in your accounts to this account.

Each of the schemes will issue repayment details, which should be kept with the property file for future reference.

The deposit registration should take place within 14 days of receipt so you may have already registered it prior to this stage, if the tenant paid much earlier than the check in date.

TRANSFERRING UTILITIES AND OTHER BILLING ACCOUNTS

If transferring the utilities is one of the terms of your service agreement with the landlord, then you will need to contact the utility companies to inform them of the new tenancy. The suppliers you normally need to contact are:

Gas

Electric

Water

Council (for council tax)

Other accounts such as telephone, cable TV and broadband are normally the responsibility of the tenant.

Different companies will have different requirements for recording new occupant information. Some will have a phone number or email address, some an online form and most will have an address to write to. Overtime you will create a record of how to communicate to the main suppliers covering your area. Whichever form


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of communication is used, it is a good idea to send as much information as possible, including:

Previous occupant’s name and forwarding address

Date previous occupants moved out

Meter readings on the day they moved

Landlord’s name and address

New occupant’s name

Date the new tenancy began

Meter readings on the first day of the new tenancy

Most suppliers are used to receiving this information from letting agents but occasionally they do not take note or the communication gets lost, so it is worth informing the new tenants that, while you will endeavour to transfer the bills into their names, it is their responsibility to make contact with the suppliers if they do not hear from them within a couple of weeks of moving in.

Serving notice and notice periodsLANDLORD GIVING NOTICE TO TENANT

If an assured shorthold tenancy has been signed there are two ways for a landlord to gain possession of the property:

If the tenant is in breach of the lease, then the landlord can serve a Section 8 notice stating one or more grounds under Schedule 2 of the Housing Act. This is generally used when the tenancy is within the fixed term or still within the first six months of the tenancy.

If the tenant is not in breach, then the landlord can serve a Section 21 notice without giving any reason. However, the landlord will not be able to claim possession until the minimum of six months of the tenancy has passed.


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Both types of notice are known by the sections that describe them in the Housing Act and under which they are served.

A tenant may be in breach of the lease but the tenancy may have gone beyond six months or the fixed term. In this case it can be quicker to serve a Section 21 notice as the landlord will not need to give any grounds in court.

The grounds for possession under Schedule 2 of the Housing Act 1998 are listed below. These grounds fall into two categories: mandatory and discretionary. Generally, if a mandatory ground is proved in court, then the court must grant possession to the landlord. If the discretionary grounds are claimed, then the court will make a judgement on whether or not to grant possession. Some of the mandatory grounds require the tenant to be given prior notice that the grounds may be cited in order to gain possession. This is normally done by writing them into the tenancy agreement.

The grounds most commonly written into tenancy agreements are Grounds 1 and 2 which refer to the landlord wishing to return to the property which was once his or her main home and the fact that the mortgagee retains the right to regain possession in order to sell the property, that is, if the landlord defaults on the mortgage payment.

If an assured tenancy is in place then the landlord can only use a Section 8 notice to evict a tenant and the tenant must be proved to be in breach of the lease.

Agreements that fall outside of the Housing Act are simply contracts that end automatically at the end of the fixed period. Therefore, legally, the landlord does not have to serve notice. Typically, however, a notice period is written into the tenancy agreement, which must then be adhered to. If a contractual tenancy is periodic, however, then a Notice to Quit must be used.

Depending on the terms of their service agreement, agents that manage properties will often serve this initial notice on behalf of the landlord. Further court proceedings are then the landlord’s responsibility.


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Section 8 notice

A section 8 notice must contain ‘prescribed information’ as indicated in the Housing Act. It must also specify the grounds under which the landlord wishes to regain possession, and be correctly served on the tenant.

For most cases the landlord will need to show evidence of the tenant’s breach of the agreement. For some cases, such as non-payment of rent, this is fairly straightforward. However if the tenant has breached other terms, such as causing damage to the property, then the landlord may need to produce evidence such as photographs, the inventory or agent’s witness statement.

It is often best practice to state more than one ground for possession if possible. This means that there is more chance that the court will evict the tenant even if they have, for instance, paid the rent since the notice was served or repaired any damage caused.

Even if the tenant is in breach of the tenancy during a fixed period, if there is only a short period left, it may be quicker to serve a section 21 notice. This is because if the case still goes to court, the court must grant possession under section 21 and it may prevent a more prolonged process.

Section 21 notice

There are two types of section 21 notice. The first is known as a Section 21(1)(b) and is used to serve notice if the tenancy is still within the initial fixed period. The second is a Section 21(4)(a). This notice is used during a periodic tenancy.

The landlord must give at least two months notice to the tenant with either Section 21 notices and the notice must end on the last day of a tenancy period.


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Notice to quit

A notice to quit is used for general contractual tenancy agreements. This type of notice is governed by the Protection from Eviction Act 1977 and must contain the prescribed wording under this Act. The minimum notice period is per the terms of the tenancy contract and, again, must end on the last day of the tenancy period.

Legal copies of these notices are obtainable from The Letting Centre and other legal stationers.

TENANT GIVING NOTICE TO LANDLORD

For all tenancies, a tenant cannot leave before the end of the agreed fixed period. If they wish to leave at the end of the fixed term, they are not required to give any written notice to leave the premises. If they wish to leave during a periodic tenancy, they must give one month’s notice and the notice period must end at the end of the periodic term.

PERIODS

A fixed period would normally be for six months (although it may be for longer), for example 15 January to 14 July. The end of the fixed period would therefore be 14 July.

For statutory periodic and periodic tenancies, the periodic term is usually one calendar month (if the rent is paid monthly). Therefore, if it is periodic from the start and begins on 15 January, the period would end on the 14th of the following month. If it was fixed at the start and began on 21 March and then lapsed into a periodic tenancy, the period would end on the 20th of the month.

Grounds for possessionThe following grounds for possession are given in the Housing Act 1988:

SCHEDULE 2 Grounds for Possession of Dwelling-houses let on Assured Tenancies

Part I Grounds on which Court must order possession (Mandatory Grounds)


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Ground 1 Not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on this ground or the court is of the opinion that it is just and equitable to dispense with the requirement of notice and (in either case):

(a) at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling-house as his only or principal home; or

(b) the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them requires the dwelling-house as his or his spouse’s only or principal home and neither the landlord (or, in the case of joint landlords, any one of them) nor any other person who, as landlord, derived title under the landlord who gave the notice mentioned above acquired the reversion on the tenancy for money or money’s worth.

Ground 2The dwelling-house is subject to a mortgage granted before the beginning of the tenancy and:

(a) the mortgagee is entitled to exercise a power of sale conferred on him by the mortgage or by section 101 of the [1925 c. 20.] Law of Property Act 1925; and

(b) the mortgagee requires possession of the dwelling-house for the purpose of disposing of it with vacant possession in exercise of that power; and

(c) either notice was given as mentioned in Ground 1 above or the court is satisfied that it is just and equitable to dispense with the requirement of notice; and for the purposes of this ground “mortgage” includes a charge and “mortgagee” shall be construed accordingly.

Ground 3The tenancy is a fixed term tenancy for a term not exceeding eight months and:

(a) not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on this ground; and


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(b) at some time within the period of twelve months ending with the beginning of the tenancy, the dwelling-house was occupied under a right to occupy it for a holiday.

Ground 4The tenancy is a fixed term tenancy for a term not exceeding twelve months and:


(b) at some time within the period of twelve months ending with the beginning of the tenancy, the dwelling-house was let on a tenancy falling within paragraph 8 of Schedule 1 to this Act.

Ground 5The dwelling-house is held for the purpose of being available for occupation by a minister of religion as a residence from which to perform the duties of his office and


(b) the court is satisfied that the dwelling-house is required for occupation by a minister of religion as such a residence.

Ground 6The landlord who is seeking possession or, if that landlord is a registered housing association or charitable housing trust, a superior landlord intends to demolish or reconstruct the whole or a substantial part of the dwelling-house or to carry out substantial works on the dwelling-house or any part thereof or any building of which it forms part and the following conditions are fulfilled:

(a) the intended work cannot reasonably be carried out without the tenant giving up possession of the dwelling-house because:


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(i) the tenant is not willing to agree to such a variation of the terms of the tenancy as would give such access and other facilities as would permit the intended work to be carried out, or

(ii) the nature of the intended work is such that no such variation is practicable, or

(iii) the tenant is not willing to accept an assured tenancy of such part only of the dwelling-house (in this sub-paragraph referred to as “the reduced part”) as would leave in the possession of his landlord so much of the dwelling-house as would be reasonable to enable the intended work to be carried out and, where appropriate, as would give such access and other facilities over the reduced part as would permit the intended work to be carried out, or

(iv) the nature of the intended work is such that such a tenancy is not practicable; and

(b) either the landlord seeking possession acquired his interest in the dwelling-house before the grant of the tenancy or that interest was in existence at the time of that grant and neither that landlord (or, in the case of joint landlords, any of them) nor any other person who, alone or jointly with others, has acquired that interest since that time acquired it for money or money’s worth; and

(c) the assured tenancy on which the dwelling-house is let did not come into being by virtue of any provision of Schedule 1 to the [1977 c. 42.] Rent Act 1977, as amended by Part I of Schedule 4 to this Act or, as the case may be, section 4 of the [1976 c. 80.] Rent (Agriculture) Act 1976, as amended by Part II of that Schedule.

For the purposes of this ground, if, immediately before the grant of the tenancy, the tenant to whom it was granted or, if it was granted to joint tenants, any of them was the tenant or one of the joint tenants under an earlier assured tenancy of the dwelling-house concerned, any reference in paragraph (b) above to the grant of the tenancy is a reference to the grant of that earlier assured tenancy.

For the purposes of this ground “registered housing association” has the same meaning as in the [1985 c. 69.] Housing Associations Act 1985 and “charitable housing trust” means a housing trust, within the meaning of that Act, which is a charity, within the meaning of the [1960 c. 58.] Charities Act 1960.


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Ground 7The tenancy is a periodic tenancy (including a statutory periodic tenancy) which has devolved under the will or intestacy of the former tenant and the proceedings for the recovery of possession are begun not later than twelve months after the death of the former tenant or, if the court so directs, after the date on which, in the opinion of the court, the landlord or, in the case of joint landlords, any one of them became aware of the former tenant’s death.

For the purposes of this ground, the acceptance by the landlord of rent from a new tenant after the death of the former tenant shall not be regarded as creating a new periodic tenancy, unless the landlord agrees in writing to a change (as compared with the tenancy before the death) in the amount of the rent, the period of the tenancy, the premises which are let or any other term of the tenancy.

Ground 8Both at the date of the service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing –

(a) if rent is payable weekly or fortnightly, at least thirteen weeks’ rent is unpaid;

(b) if rent is payable monthly, at least three months’ rent is unpaid;

(c) if rent is payable quarterly, at least one quarter’s rent is more than three months in arrears; and

(d) if rent is payable yearly, at least three months’ rent is more than three months in arrears; and for the purpose of this ground “rent” means rent lawfully due from the tenant.

Part II Grounds on which Court may order possession (Discretionary Grounds)

Ground 9Suitable alternative accommodation is available for the tenant or will be available for him when the order for possession takes effect.


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Ground 10Some rent lawfully due from the tenant:

(a) is unpaid on the date on which the proceedings for possession are begun;

(b) except where subsection (1)(b) of section 8 of this Act applies, was in arrears at the date of the service of the notice under that section relating to those proceedings.

Ground 11Whether or not any rent is in arrears on the date on which proceedings for possession are begun, the tenant has persistently delayed paying rent which has become lawfully due.

Ground 12Any obligation of the tenancy (other than one related to the payment of rent) has been broken or not performed.

Ground 13The condition of the dwelling-house or any of the common parts has deteriorated owing to acts of waste by, or neglect or default of, the tenant or any other person residing in the dwelling-house and, in the case of an act of waste by, or neglect or default of, a person lodging with the tenant or a sub-tenant of his, the tenant has not taken such steps as he ought reasonably to have taken for the removal of the lodger or sub-tenant.

For the purpose of the ground, “common parts” means any part of a building comprising the dwelling-house and any other premises which the tenant is entitled under the terms of the tenancy to use in common with the occupiers of other dwelling-houses in which the landlord has an estate or interest.

Ground 14The tenant or any other person residing in the dwelling-house has been guilty of conduct which is a nuisance or annoyance to adjoining occupiers, or has been convicted of using the dwelling-house or allowing the dwelling-house to be used for immoral or illegal purposes.


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Ground 15The condition of any furniture provided for use under the tenancy has, in the opinion of the court, deteriorated owing to ill-treatment by the tenant or any other person residing in the dwelling-house and, in the case of ill-treatment by a person lodging with the tenant or by a sub-tenant of his, the tenant has not taken such steps as he ought reasonably to have taken for the removal of the lodger or sub-tenant.

Ground 16The dwelling-house was let to the tenant in consequence of his employment by the landlord seeking possession or a previous landlord under the tenancy and the tenant has ceased to be in that employment.

Ground 17Where the landlord was induced to grant the tenancy by a false statement made knowingly or recklessly by (a) the tenant or (b) a person acting at the tenant’s instigation.

Useful resourcesStaff safety systems

Crime Alarms – www.crimealarms.com

Buddy Safe – www.buddysafe.com

Referencing agents

Endsleigh – www.endsleigh.co.uk/letting-agents.html

Homelet – www.homeletuk.com

Letsure – www.letsure.co.uk

Rentguard – www.rentguardtenantref.co.uk

Rentshield – www.rentshielddirect.com/agents.html

www.crimealarms.com

www.buddysafe.com

www.endsleigh.co.uk/letting-agents.html

www.homeletuk.com

www.letsure.co.uk

www.rentguardtenantref.co.uk

www.rentshielddirect.com/agents.html


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Verifying title documents

Land Registry – www.landregistry.gov.uk

Legal document suppliers

The Letting Centre – www.letlink.co.uk

www.landregistry.gov.uk

www.letlink.co.uk

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11

THE PROPERTY MANAGEMENT PROCESS

In this chapter:

Effective property management•

A thorough inspection process•

Dealing with problem tenants•

The deposit claim process•

Property management overviewThe previous chapters have covered the letting process, which covers the stage from first contact with the landlord and applicants to checking a tenant into a property. These early stages are often quite straightforward if a methodical approach is followed and the company has good procedures in place.

Managing property effectively also requires a logical approach but there will be many more ‘grey’ areas, where decisions need to be made quickly and actions recorded accurately. Also, a high degree of diplomacy will often be required.

Managing a property is often the most difficult and, sometimes, stressful part of the job but the reward is normally higher because a regular monthly income is received from each property in your portfolio. Therefore, this income can be relied upon for future business planning.

Most larger agencies will have specific property managers or even a property management department that specialises in this aspect of the business.

It is important for a property manager to get to know a property. This will be achieved by an initial visit, regular inspection visits and the property file. It is useful to build up a database for each property, including information such as:

Location of stop taps

Location of gas, electric and water meters

T H E P R O P E R T Y M A N A G E M E N T P R O C E S S

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Location of fuse boxes

Appliance and boiler model and serial numbers

General age of building, fixtures and fittings

Warranty information

Service providers (gas/electric, etc.)

Appliance and heating operation manuals

Dates for safety checks and boiler servicing

Much of this information can be obtained from the inventory and property information sheet (see Chapter 10). Any additional information should be requested from the landlord.

Most database packages have sections for recording this information and you will inevitably have a paper file as well.

Rent collectionMost letting agents offer two types of rent collection: either an intermediate service for landlords that prefer not to deal with the financial aspects of letting their property, but feel that it will require little maintenance; or collection as part of the full management service.

Rent is normally paid monthly in advance and the agent should ensure that the first month’s rent is paid and cleared in their account before allowing the tenant to have the keys to a property.

These days, it is best practice to ask the tenant to set up a standing order for all future payments. To ensure the standing order is set up correctly, the tenant can be asked to fill out a standing order mandate at the check in (see Check in Process in Chapter 10).

The rent is passed to the landlord after deduction of:

Agency management fee

Maintenance and repair invoices

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A monthly statement should be issued to the landlord for their records. Most agency database packages will have an accounting function that will produce this automatically.

It is common practice for some agents to pass on the rent to the landlord on one specific date in the month, regardless of when the rent is paid by the tenant. This simplifies the accounting procedure and allows the accounts person or department to deal with the rent payments in one go, rather than a few a day. This is fine as long as the landlord has been informed and has agreed (usually by inclusion in the service agreement).

Eventually, most agents will receive rental payments into their account on a daily basis. Therefore, even if their practice is to pay the landlord on a particular day, the account should be checked daily so that late payments can be flagged.

Dealing with late paymentsRents can be paid late for numerous reasons and are often minor issues due to:

Paperwork, e.g. standing order mandate errors

Bank errors

Weekends and holidays

Tenant’s bank account becoming overdrawn

Tenant’s salary being paid slightly late

These problems can often be cleared up quickly. Late payments can be due to more serious issues, however, such as the tenant losing their job or deciding to withhold the rent for some reason. Judgement of the situation will vary depending on the tenant’s history. For example, if it is a new tenant then the situation will most likely be (though not always) one of the lesser issues. If they have a history of late payments then it is more likely to be a more serious issue.

In all instances, you should have defined procedures to follow and prompt action should be taken. It is recommended to make contact with the tenant as soon as a payment is missed. I would also recommend that this initial contact is made by phone. This allows you to judge the tenant’s reaction to see if they are surprised, or if they are aware of the missed payment. Email and letters are slower and tend to be a bit too formal for the initial inquiry. All missed payments, however, should be acknowledged in writing as this may be useful evidence if the case worsens.


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Property inspectionsProperty inspections are an important part of effectively managing the property on the landlord’s behalf. Inspections are typically every three months although they may be increased or decreased in frequency depending on how the tenant is treating the property.

Although turning up frequently and unannounced might seem to be best way to assess if the tenant is in breach of the tenancy agreement, this practice would contravene the tenant’s right to ‘quiet enjoyment’ of the property. Therefore, it is wise to let them know that an inspection will be performed quarterly and to give them at least 24 hours notice that you are going to visit. Generally, if you have built a rapport with the tenants this can be done by phone or email but should be backed up in writing if the tenant has become ‘awkward’ for any reason.

It can be useful if the tenants are at the property when you inspect because they often use the opportunity to report issues that they have not got around to telling you about before! Some tenants, however, will request that the appointment is after normal working hours, i.e. an evening or weekend. This may be fine if it fits in with your calendar, but it will typically be the busiest time for viewings. Therefore, unless you are really likely to upset them and ruin a good relationship, you may wish to advise them that they are welcome to attend but it will have to be at a regular time that suits your calendar. If you give them a choice of appointment times you will appear accommodating but assertive.

As well as monitoring the tenant’s behaviour, a regular inspection will allow you to spot any potential maintenance issues that will need to be reported to the landlord. There are several things to look for when visiting the property:

General state and level of cleanliness

Signs of damp or condensation especially in kitchens and bathrooms

Damage to fixtures, fittings and the landlord’s furniture


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Signs of other people living at the property (more beds used than number of tenants)

Signs of illegal activity (drugs, etc.)

Signs of leaks e.g. stains on the ceiling/flooring

Electrical problems – loose sockets, switches or wiring damage

Blocked gutters

Structural damage to the exterior outside (e.g. cracks in the masonry or broken windows, etc.)

Smoke alarm working check

State of the garden (trees and shrubs overgrowing or tenant not cutting the grass or weeding)

It is a good idea to take a copy of the original inventory with you to refer to, especially if you are not familiar with the property or have not been for some time. It may also be necessary to take photographs to show the landlord, for the record, or in the worst cases, as evidence for court proceedings.

Tenant issues vary enormously in severity. Many problems are minor and are often down to the tenant not being aware of their responsibilities, such as keeping rooms aired to prevent condensation building up or cutting the grass regularly. These minor issues normally just require a diplomatic word to put right. More severe problems may require warning letters and following up at an agreed date.

The most severe issues may require initiating court action to evict the tenant. In these cases, evidence that they have breached the tenancy agreement, or have failed to alter their behaviour after receiving a formal warning letter, may be required.

After the inspection, a full report should be filed and any issues flagged to the landlord and tenant in writing. If there are issues such as maintenance and repair, you may need to arrange for a contractor to attend and inform the landlord of any


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expenditure required. If the tenant needs to be asked to do something to adhere to their responsibilities, it is always more diplomatic to speak to them informally before sending the formal report, as receiving this unexpectedly may cause more alarm than is intended.

Even if there are no particular issues, informing the landlord that an inspection has taken place will ensure he or she realises that you are actively managing the property and will give them peace of mind that all is well.

Maintenance and repairsMaintenance and repairs issues vary from minor requirements such as arranging the annual gas safety check for the property, to trying to contact an emergency contractor during a Bank Holiday weekend to fix a leak that is flooding the property.

The most problematic issues have a habit of occurring at the most difficult times. In the second year of business, even with a relatively small portfolio, I had to deal with the issue of a tenant without hot water calling on Boxing Day. It is well worth having procedures in place to cope with this!

Good property management requires an understanding of the allocation of responsibility for repairs and judgement to prioritise urgent repairs over minor issues.

Tenants will often assume that the landlord is responsible for every aspect of the property’s maintenance. However, as it is their home (at least temporarily), there is a requirement for the tenant to act in a ‘tenant-like manner’ and take care of some common issues such as:

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Changing blown fuses and bulbs

Replacing smoke alarm batteries

Fixing leaking taps/changing washers

Upkeep of the garden

Unblocking drains and toilets that they have blocked

The landlord is generally responsible for all other issues but specifically:

The structure and exterior of the building

External gutters and drains

Heating and hot water supply

Electricity supply

Appliances, fixtures and fittings if they are worn out or broken due to regular use

It is important to give the tenants explicit instructions on what to do and who to inform when something goes wrong. The process they follow will need to vary depending on whether the property is fully managed or not and also how severe the maintenance situation is. For let only properties, you simply need to provide the landlord’s or his or her representative’s contact details. For managed properties, there are a number of ways to handle maintenance issues. Typically there will be a level of response depending on the urgency of the problem reported.

Most agents will provide a detailed Tenant Handbook, outlining what the tenant should do depending on the urgency of the problem. It may, for example, contain simple advice on what they should physically do if they smell gas or if there is a water leak, such as turning off the water at the mains stop tap. This may prevent the problem worsening or becoming dangerous before a contractor can arrive. The handbook should also advise on what to expect in the way of a response time. This advice might take the form of examples of what constitutes an emergency and what will wait until the next day.

Tenants should also be advised that they do not have authority to arrange their own repairs unless it is an absolute emergency and they have been unable to contact you.


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Tenants should be given relevant numbers to phone for different issues. This may be in the form of:

The property management department’s number for contact during office hours

A 24-hour emergency number for out-of-hours calls

A range of contractor numbers to call depending on the issue, e.g. a plumber for water/heating problems

New build properties on larger developments may be under warranty and the developer may have an emergency number that can be passed on to the tenants

A number for a 24-hour recorded message that offers advice on what to do by pressing certain numbers, e.g. ‘For heating problems, press 1’. The message will give the contact number for a member of staff as a last resort.

Unless you can afford to pay someone to provide cover outside of office hours, or you don’t mind being woken up yourself, you may wish to qualify suitable contractors to provide this service for you. This means they will only be paid when called and this will normally be when the landlord pays for an invoiced repair. If you choose this route, then it is vital that the contractor is trusted and trained only to attend to emergencies. They should also be given a maximum limit to the work to do before contacting your nominated property manager. They should be able to use common sense and advise tenants when the problem they have is a non-emergency, which can be dealt with during normal working hours (and therefore for normal hourly rates!). If a situation involves a lot of work, you may require them to make the property safe and then allow you to deal with the issue the next day.

Most problems will be annoying to the tenants and they will want them fixed as soon as possible. The property manager, however, needs to walk the line between carrying out repairs as efficiently and quickly as possible for the tenant, while


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keeping the costs as low as possible for the landlord. In reality, most problems, except emergency issues, will wait until the next day, when a contractor will charge normal rates.

Minor issues may include:

Lack of hot water

Toilet issues, if there is more than one in the property

A broken fence (if it is not endangering anyone or likely to cause damage to theirs or another property)

Examples of emergency problems include:

Roof damage allowing rain and so on to enter the building

Broken glass requiring emergency boarding

Heating that has stopped working (in winter)

Water leaks

Gas and carbon monoxide leaks

Tenants should also be advised that if it is determined that the problem is not an emergency or the fault has been caused by anything other than wear and tear (for example, through malicious damage), then they may be liable for the bill.

In essence, common sense should prevail!

Qualifying suitable contractorsYou will need to build a list of suitable contractors to cover almost every job you can think of that a property may require. These include, but are far from limited to:

Plumbers

Electricians

General handypersons

Cleaners and carpet cleaning specialists

Builders

Gardeners


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Roofers

Decorators

Locksmiths

It can be difficult for a start-up company to find good quality contractors that turn up on time, can be booked to attend quickly and charge competitive rates. Loyalty and willingness to attend quickly will often depend on the amount of work you give them, and the relationships you build.

The most common issues will no doubt require general handypersons, plumbers, electricians or cleaners. Therefore, you should have several of each of these on your list. It is also important that some of them are available for emergency call outs – 24/7.

Local contractor details can be found online, in the yellow pages or by word of mouth referrals from friends and colleagues. You will inevitably also receive a stream of marketing information from local trades people.

A letting agency should have a procedure in place for qualifying contractors before using them and certain minimum criteria that they need to meet. This might include:

Having been in business for X amount of time

Holding professional indemnity, public liability and employee liability insurance

Obtaining copies of the above insurance certificates

A face-to-face meeting/interview

Signing an agreement outlining their services, fees, a code of conduct and invoicing arrangements

References from other local letting agents or other companies

This type of procedure will provide good evidence that the contractor is relatively reliable, and so on. However, new contractors’ work should be monitored to ensure they have:

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Carried out a proficient and thorough job

Left the property tidy and secure

Were polite to the tenants

An audit process is also recommended to make sure contractors continue to provide a good level of service and to obtain updated copies of their insurance certificates, etc.

Often the level of repair and the expenditure will need to be authorised by the landlord before work is carried out. Contractors should have explicit instructions as to the level of work required and informed never to take orders from the tenant. It is advisable to provide a written works order where possible to prevent misunderstandings.

Planning for maintenance workIssues such as gas and electrical safety checks and boiler servicing can be planned well ahead of time. Once a property is entered on the system, these dates should be entered either in an appropriate calendar such as on Microsoft Outlook or other relevant database software, which allows advance alerts for due dates. Alternatively, you may ask relevant contractors to provide reminders or plan the work automatically.

Personally I prefer to keep at least one back-up system for important dates. The company may be liable if it did not arrange an annual gas safety check if it was required to by its service agreement. Computers have a habit of crashing and losing dates, or information can be entered incorrectly or deleted by mistake. Consider using a paper copy such as a wall planner specifically for maintenance issues, or enter dates in both Outlook and the property database calendars.

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Scheduling allows you and the contractor to plan well ahead of time, allowing you to inform the tenant that a contractor is coming and to work around any unforeseen circumstances, such as cancelled appointments.

Remember that a letting agent always needs permission from the landlord to authorise any works to be done on their behalf. However, an agent has a duty of care to take action in an emergency to arrange for at least the minimum work required to make a property safe or secure. Permissions are normally agreed in the agent’s service agreement and some landlords, especially those living overseas, will allow the agents to authorise works up to a certain monetary limit without needing to contact them in advance. This should also be written into the agreement.

Major worksOccasionally landlords will ask you to project manage certain works that are above and beyond the normal level of your property management service. These may include:

Complete redecorating

Major building work

New kitchen and bathroom installation

Rewiring or plumbing

Interior design, i.e. choosing fixtures, fittings and furniture on their behalf

This sort of work may require obtaining several quotes from contractors that may not already be on your qualified list, visiting the property with the contractor, comparing quotes, authorising the work and reporting to the landlord. The level of administration and responsibility will vary. Many agents offer this additional service and the line between general property management and major works project management will depend on your own service agreement. Generally an additional fee is negotiated and a specific new agreement is signed.


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Care should be taken when authorising contractors to carry out larger jobs. If the landlord decides not to pay the contractor, they may request payment from the agent.

Paying contractorsMost contractors have standard terms of ‘payment due 30 days from invoice date’. Some smaller sole traders will request quicker terms such as 14 or 7 days, or even payment up front. It is good practice to negotiate at least 30 days if possible, as this normally allows time for the next rental payment to be collected. The contractor’s invoice can then be paid by deducting it from the rent (minus the agent’s management fee first) before passing the balance of the rent to the landlord. Any larger invoices may require you to request additional money from the landlord or even payment in advance.

Tenancy renewalsThe dates on which the fixed period ends for the tenancies you have arranged should be recorded in the diary system. Near the end of the tenancy the landlord and tenant can then be contacted to see what their intentions are. This should happen in time for either party to serve the required notice period if relevant.

Contacting the landlord is recommended for both managed and let only properties. Proactively offering to re-let a let only property is better than assuming the landlord will come back to you if the tenants leave. Also some landlords forget or do not realise that the tenancy is up for renewal and some tenants will simply expect to leave at the end without giving notice. Therefore, they will appreciate the reminder.

There are different scenarios that can occur at the end of the fixed tenancy period:

The tenant wishes to serve notice or leave

The landlord wishes to serve notice on the tenant (they may wish to sell or move back in)

The tenant and landlord agree to sign for another fixed period


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The landlord and tenant agree to extend the tenancy, in which case it will become statutory periodic or periodic

These options should be explained to the landlord and tenant.

In the first scenario, you may need to arrange the check out procedure with the tenant and re-market the property if the landlord has requested it. If the landlord has served notice, then you will just need to check the tenants out (if this is part of the service agreement). In both these cases the deposit will need to be repaid to the tenant or a claim made against it on behalf of the landlord.

If another fixed period has been agreed then the new tenancy documentation will be needed and should be issued for signatures in plenty of time before the end of the current period. Most agents make a small charge to the landlord, tenant or both for the new documentation.

If the agreement is to allow the tenancy to become periodic then the terms of the tenancy remain the same without the need for additional or new documentation. However, the notice periods and methods of serving notice differ slightly and should be explained to both parties.

Rental increasesThe rent cannot be increased during a fixed period of a tenancy unless the tenancy agreement has a rent review clause. However, if a new tenancy document is drawn up for another fixed period then the landlord has the option to request a rental increase. This should form part of the negotiation of the new contract, as the tenant will need to agree or be given the option to leave at the end of the current fixed period.

If the tenancy has already become statutory periodic then a specific notice will need to be served under section 13 of the Housing Act.

The notice period for informing the tenant of a rent increase should be in line with the period of the tenancy, normally one calendar month meaning that the increase will be due on the rent due day at least one month after the notice is served.

Once a rent increase has been requested, another increase cannot be made for another 12 months.

Tenants have a right to appeal against the rent increase by referring the matter to the Rent Assessment Committee (RAC).


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Check out processOnce a landlord or tenant has given notice, the date the tenant will leave the premises should be established. This is typically the last day of the contract or period and normally the rent would have been paid up until this day. It is useful to give the tenants some guidance on what is expected of them at the end of the tenancy. Agents either visit the property to carry out a check out inspection with the tenant or ask them to return the keys on the last day and carry it out later.

Typically tenants are expected to leave the property as they found it, with all fixtures and fittings in place. This may include:

Thoroughly cleaning the property

Defrosting and cleaning the fridge/freezer

Cleaning the windows

Leaving the garden with the grass recently cut and weeds removed

Repairing any superficial damage such as filling screw holes

Replacing all furniture in the correct room identified on the original inventory

Removing all their belongings and any rubbish

Arranging a professional carpet clean

Most tenants that are moving arrange an overlap between the dates of moving into the new property and moving out of the current one (although this is not always possible). This gives them plenty of time to clear all their own belongings and clean the property.

If you are not meeting the tenants at the property then they will also need to take final meter readings and arrange for all sets of keys to be returned to your office the same day. However, I would recommend, whenever possible, to try and meet the tenant at the property once the cleaning and removals have been done.

During the check out inspection, the agent needs to check:

All items on the original inventory are in place and undamaged and/or clean

All the tenant’s items have been removed

General cleanliness, especially inside the oven, fridge, etc.


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The state of the garden

All rubbish is removed from the premises

Final meter readings

It is essential to take a copy of the inventory and useful to have a check out form. Our form contains space for:

Recording any damage or outstanding issues such as damage to furniture or overgrown garden

Final meter readings

The tenant’s forwarding address

A comments box for recommended action such as ‘oven requires cleaning’

A box for the tenant to agree or disagree with the recommended actions

Agent’s/inspector’s and tenant’s signatures

Care should be taken not to rush the inspection, look under rugs and move furniture to check for stains and damage. Look inside all the cupboards for items left behind. Look inside the oven and freezer, etc. Photographs may be needed as evidence for any claims against the deposit.

Claims for dilapidationsClaims against deposits have been one of the biggest areas of dispute between landlords or their agents and tenants. Much of this has resulted from misunderstandings of how much should be claimed for different issues. Property owners are naturally inclined to claim as much as possible to cover the costs of damage, and tenants will want to lose as little of their money as possible, leading to a difference of opinion between the two parties.

Previously, when agents or landlords held the tenant’s deposit, the only course of action for a tenant who disagreed with losing their deposit was to take the landlord to court. The new deposit regulations go some way to resolve these issues. In the


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case of a dispute, both parties can agree to abide by the decision of the relevant scheme’s impartial arbitration service, known as Alternative Dispute Resolution (ADR).

In the event of a claim, the arbitrator will require comprehensive evidence from the landlord or agent. This will include copies of:

The inventory schedule of condition including any photographs taken at the time

The final condition report and any supporting photographs

Quotations for repair

The tenancy agreement

Any recommendations about the deposit, such as full refund, full or partial claim, should be agreed with the landlord.

Often disputes occur over deposit claims because landlords do not understand what they are actually allowed to claim for. Many assume that if there is a stain on a sofa or carpet they can claim for the cost of a whole new carpet or sofa. There is also not a clear set of guidelines for landlords or agents to follow and therefore claims may often be inconsistent between agencies. The lack of guidelines is possibly due to the almost infinite number of different situations that can occur. However, The Association of Residential Letting Agents (ARLA) publishes a guide to dealing with dilapidations. Plus, the Dispute Service has published some examples of the disputes they deal with and the outcome of their arbitration. These are a useful reference and are available free on the respective websites (listed in the Useful Resources section at the end of this chapter).

In all cases the agents should act impartially and ARLA states that they should avoid betterment: ‘The landlord should not end up, either financially or materially, in a better position than he was at commencement of the tenancy, or than he would have been at the end of the tenancy having allowed for fair wear and tear.’ The agent should take into account fair wear and tear and the most appropriate solution to fixing any damage.

Many issues are to do with the level of cleanliness and may require some work to bring the property back to the state it was in at the start of the tenancy (allowing for wear and tear), such as a thorough clean of the oven, defrosting and cleaning the fridge or removing stains from carpets or furniture. These are usually dealt with by


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proposing a spot cleaning charge, that is, the cost to remove the stain or clean the oven thoroughly.

If there is a larger problem, such as more severe damage to part of the property or the furniture, then replacement may be more appropriate. However, the tenant cannot simply be charged the full cost of replacing new for old. The costs should be calculated taking into account depreciation using the age of the item and its useful lifespan – i.e. allowing for wear and tear.

EXAMPLE OF CALCULATING A CLAIM FOR DILAPIDATIONS

Laminate floor heavily scratched all over, which may make it difficult to let the property for the same price

Cost of original floor: £750

Age of floor: 2 years old

Estimated time before otherwise replacing floor: 7 years

Depreciation per year: cost of original floor ÷ estimated time before replacing = £1,000 ÷ 7 years = £107 per year

Total depreciation: 2 years x £107 = £214

Apportioned cost of replacing floor: original cost – total depreciation = £750 – £214 = £536

Therefore the tenant would be charged £536 towards the cost of replacing the floor.

Returning the depositIf you are not recommending a claim against the deposit for dilapidations then the repayment process is straightforward. In either case, any part of the deposit that is not in dispute should be returned to the tenant within ten days.

Depending on which deposit protection scheme the agent is using, the agent and tenant will have been issued with a tenancy code, repayment number and/or a deposit protection certificate.

The relevant scheme is informed of the request to un-register the deposit and either the deposit (or the undisputed amount) is refunded to the tenant. If the agent is registered with the Deposit Protection Scheme (DPS) then the money is physically


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held in the scheme and they will return it to the tenant. For the Mydeposits and Dispute Service schemes, the money is held by the agent and they must return it to the tenant.

If you are making a claim on behalf of the landlord, which the tenant disputes, then the portion of the deposit that is not in dispute should be sent to the tenant within ten days. The landlord and tenant then have the option of agreeing to use the Alternative Dispute Resolution (ADR) process and to abide by its decision. In this case the ADR panel may request evidence from both parties and will then make a decision. The rest of the deposit should then be apportioned between the two parties according to the adjudicator’s decision.

If the parties do not agree to use the ADR process then they will need to go through the courts, which is a costly process.

Dealing with problem tenants and other issuesIdeally a tenant will pay the rent on time, keep the property clean and tidy, not moan when something needs repairing and hand the keys back at the end of the tenancy on time while leaving the property sparklingly clean. However, although many tenancies will progress without any problems from the tenants at all, there are many issues that may arise that you will need to deal with as the managing agent. They will vary in severity and will all require slightly different approaches.

These issues might include:

Late rent payments due to bank errors

Late rent payments due to inability, or unwillingness to pay

Complaints from neighbours (or the police)

Over zealous complaints from the tenant about the property

Damage to the property

Illegal activities taking place at the property

Tenant abandoning the property and leaving their belongings behind

. . . the list of possible issues is almost endless!

The greatest skill required for dealing with tenant problems is diplomacy. Many issues can be dealt with effectively with clear communication between all the


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parties involved. As the agent you are the knowledgeable and professional party and therefore any issues should be dealt with sympathetically but assertively.

All communications should be recorded in writing and filed in the property or tenancy folder. Verbal discussions may need to be backed up with official letters or notices in writing depending on the situation.

Landlords should be informed of any problems as soon as possible, but preferably with a solution or planned response outlined. You are paid to deal with most problems and should not simply pass the buck. The exception being, any issues that require the involvement of court proceedings, which the landlord will need to process.

Useful resourcesGas Safe registered contractors


Guides for dilapidations


Deposit Protection Service – www.depositprotection.com


www.arla.co.uk

www.depositprotection.com

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12

CLIENT ACCOUNTING PROCEDURES

In this chapter:

Keeping the client’s and the company’s money separate•

Informing the bank•

How the company collects its fees•

Paying overseas landlords•

Handling clients’ moneyA letting agency will handle a vast amount of money on behalf of their clients (tenants and landlords). Typically, they collect this money from one client before passing it to another. While the money is in their care, they are essentially holding it in trust.

Care must be taken to keep client monies separate from the money that belongs to the business. Accurate records must be kept of all client money transactions and the records should also be separate from the company’s usual business accounts.

To do this, it is recommended that at least one physically separate bank account is set up, although two or even more physical client accounts may be required. One client account can be used for everyday rent collection and the other may be used for monies that may be held for longer, such as tenants’ deposits or overseas tax.

The bank must be informed that this is a client account and should acknowledge that it is ‘ring fenced’, i.e. that they cannot take bank charges from the account or take any other payments owed that may be owed by the company. All such transactions should only be taken from the company’s own business account.

While there is no specific law regarding how letting agents handle client money, the Estate Agent Act 1979 does have specific requirements for estate agents. Most of the regulatory bodies that govern letting agents, such as ARLA, NALS and OEA, insist that these rules are followed by their members. The rules include:

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Have appropriate client money protection insurance

Be able to identify each individual client’s money that may be held in a pooled client account

Not deducting any fees or charges from clients’ money without having their permission via the terms of an appropriate contract

Pay money owed to clients as soon as is administratively possible

Not authorising any expenditure on behalf of a client unless appropriate funds will be available when the invoice becomes due

Provide all clients with regular statements of all income expenditure

Carry out regular bank reconciliation

It is a recommended best practice that even non-members follow these accounting and money handling practices.

Administration feesAdministration fees paid by an applicant directly to the agent can be paid directly into the company’s main business account. These are normally paid to cover the costs of the application process, the check-in and sometimes part, or all, of the inventory. The fees are, therefore, income directly invoiced and received for work carried out by the agent and are not apportioned in anyway to the landlord client.

Holding fees and depositsMost agents take a holding fee from the tenant to reserve the property. This is often non-refundable if they decide to change their mind and serves as an incentive to follow through with the application. The holding fee should be refunded if their application is declined or the landlord backs out.

Holding fees are a grey area. The tenancy deposit regulations state that a deposit is the money paid as security for any obligations of the tenant in connection with the tenancy. A holding fee is normally paid before a tenancy agreement is signed. However, as a holding fee is non-refundable under certain circumstances and the tenant usually signs to this effect on the application form, then it could be argued that it is a form of deposit. However, the Dispute Service Scheme rules in particular, refer to a holding fee as not being part of the deposit unless it is retained once the tenancy agreement has been signed.


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The usual process is to receive the holding and application fees and then request the security deposit and the first month’s rent, once the reference and credit checks are complete, and in advance of the tenancy agreement being signed. The holding fee then becomes part of the deposit and the whole deposit must then be submitted to the relevant scheme within 14 days of receipt.

The agent does not have a claim on either the holding fee or the deposit at any time. Therefore, they remain the client’s money and should be paid into the client account before being transferred to a deposit scheme or to the agent’s client deposit account.

Rent collection and agency fee deductionsRent collected in advance and during the tenancy is effectively paid from one client to another – from the tenant to the landlord. As such, it is client money and all rents should be paid into the client account. It is, however, permissible for the agent to deduct his or her fees from the rent before passing the balance to the landlord. An amount equivalent to the agreed fee can then be transferred into the agent’s main business account.

To do this, the agent must have the landlord’s permission. Therefore your terms of business should clearly state that the landlord agrees for you to carry out this payment transfer.

Contractor paymentsThe agent may also deduct any monies outstanding for payment to contractors that may have carried out work on the landlord’s property. Again it is necessary to obtain the landlord’s permission in writing within your terms of business.

If the payment due to a contractor is larger than can be collected from a regular rental payment, the landlord can be asked to pay the contractor directly or pay the balance to the agent. In the latter case, the money should again be paid into the client account before transferring to the relevant contractor.

Overseas landlords’ tax paymentsIt is fairly common for letting agents to have clients that live or move overseas, while retaining a property for letting as an investment in the UK. Landlords are considered to be overseas residents if they are living abroad for more than six months of the year. As such, they are still required to declare all income and to pay tax on it when due.

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Overseas tax for landlords is handled by HM Revenue & Customs Residency department (HMRC), formerly the Centre for Non Residents (CNR). A landlord should apply to the HMRC for consent to receive the full rental income from their property without deduction of tax. The HMRC will issue the landlord with an approval number.

As an agent you should request this number from the landlord. If you receive it then you may pass on all the rent minus the usual deductions and the landlord will be responsible for informing the Inland Revenue.

If the landlord does not have an approval number then the agent is obliged to retain the tax due from the rental income and pass it to the Inland Revenue on a quarterly basis. The amount to withhold is calculated by deducting the current base rate of income tax from the net income (after subtracting any fees and tax-deductible expenses).

If you are not collecting rent or managing the property then the onus to deduct the tax falls on the tenant. The tenant should be informed of this obligation and the process before committing to renting the property.

Useful resourcesOverseas landlord tax information

HM Revenue and Customs Residency

Overseas tax webpage: www.hmrc.gov.uk/cnr/nr_landlords.htm#8

HMRC ResidencyUnit 367St John’s HouseMerton RoadLiverpool L75 1BB

Codes of practice

ARLA – www.arla.co.uk/infosheets

NALS – www.nalscheme.co.uk

OEA – www.oea.co.uk/code_of_practice_rents.htm

www.arla.co.uk/infosheets

www.nalscheme.co.uk

www.oea.co.uk/code_of_practice_rents.htm

www.hmrc.gov.uk/cnr/nr_landlords.htm#8

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13

ADDITIONAL INCOME SOURCES

In this chapter:

The importance of a good business network•

Creating additional income streams•

The advantages of passive income•

Achieving an income stream from a range of diverse sources rather than relying just on letting and managing property will help the company’s profits grow. Additionally, if good revenue can be built up from a number of sources it can help to bolster the finances if one area of business is slow.

Initially, you may wish to build a network of contacts that you can refer your customers to on a commission basis. Later you may wish to expand your services and offer some of these products yourself (see Chapter 14 on expanding the business).

There are many complementary service providers that you could work with to offer additional products for your existing customers including:

Insurance companies

Mortgage advisors (or banks/building societies)

Utility management companies (or utility providers)

Estate agents

Contractors (builders/plumbers, etc.)

It is important to build a good relationship with any company to which you are referring your customers and to get to know what level of service they provide. If they do a professional job, they will enhance your own image. If they provide a bad service, they may well tarnish your image. Customers naturally expect referrals to be a personal recommendation of a competent service provider.

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InsuranceCommissions can be earned from relevant companies for introducing clients that require policies for:

Landlord building and contents cover

Legal protection for landlords

Rental guarantee

Emergency repairs

Tenant contents insurance

Owner occupied insurance

A letting agent has a duty of care to make their clients aware that there are insurance products available, such as rental guarantee. Selling and administering insurance products, however, is regulated by the Financial Services Authority (FSA). To offer insurance products, the FSA requires an agent to be either:

A Principal Firm (PF) – who can offer, sell and administrate a full range of products. This requires the firm to be directly registered with the FSA

An Appointed Representative (AR) – who is governed by a PF and can actively recommend and offer the PF’s products and take payments for policies

An Introducer Appointed Representative (IAR) – who can give out promotional material from a PF and pass on customer’s details to the PF

An Introducer (I) – who can only give out promotional material

The IAR and Introducer cannot actively advise, compare prices or offer any insurance products.

Most insurance companies, especially those that also deal with tenant referencing, will have schemes for agents wishing to earn commissions in this way.

Mortgage referralsLandlords often require a buy-to-let mortgage or wish to re-mortgage their existing property. Being able to refer to a reliable mortgage advisor will add to the list of services you provide and gives a good impression that you have good local contacts and knowledge.


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Most mortgage advisors will work on a commission basis and will not charge the applicant a fee. It is worth making contact with those local to your area. Some will be willing to pay you a finder fee for any new business. If they are an independent financial advisor then they may also offer other useful products such as insurance, which may also be useful to your customers.

UtilitiesThe transfer of utilities from the landlord to the tenant, or from one tenant to another can be one of the most administratively time consuming areas for a letting agent. There are a number of companies that offer help in this area, as well as offering commissions to agents that use their services (see this chapter’s Useful Resources section). Some of these are utility management companies or discount clubs, that have arranged deals with energy companies, and others are new energy companies offering an alternative to the well-known brands.

Typically, you need the landlord or tenant to fill out a form from the company with the meter readings and they take care of the rest.

Some offer a flat fee for each new property or customer and some offer an ongoing commission, which can build up over time to become a good source of passive income.

Sales referralsIf you only offer a letting and managing service then it may be worthwhile building a good relationship with a couple of estate agents in the area. This can help on a number of levels, for example:

Buy-to-let landlords looking for an investment property

Tenants that now wish to buy a property

Landlords that now wish to sell their property

You may be able to negotiate a finder fee or, if you choose an estate agent that does not have a lettings service, then you may pick up valuable reciprocal leads from them.

SALES COMMISSION CLAUSE

Letting agents often place a clause in their landlord service agreement that entitles them to a commission if a tenant they introduce to the landlord later purchases

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the property. The percentages vary but should be lower than an estate agent’s fees, as it is normally just for the introduction and there will be no need to incorporate marketing or viewing costs that an estate agent would usually have to do.

In 2008 the Office of Fair Trading took a large agency to court under Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs). The case specifically referred to this type of clause in service agreements and the outcome may affect all estate and letting agents. Therefore, care should be taken if using a sales commission clause that the latest legislation is followed.

ContractorsIt is fairly common for letting agents to add a commission to the work carried out by contractors. It is not advisable to add a mark up to contractor invoices for managed properties (fully managed fees should include arranging for contractors to carry out repairs and therefore this could be construed as charging twice for the same job). However, you may find that many property owners want a let only style of service but then ask if you can arrange for a contractor to provide a gas safety certificate or an EPC. This type of service normally falls outside of a let only contract and, therefore, adding a mark up for arranging these works will ensure you cover your additional costs.

As discussed in Chapter 11, arranging for major works such as complete redecoration may also fall outside of your management service and a project management fee may be charged for this type of service.

It is advisable to ensure the customer is clearly informed of when additional mark ups are added and how much you will be adding on to any contractor invoices.


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Advantages of passive incomeSome of the additional income streams discussed above will give the company a one off payment, but others will provide a continuous trickle of small payments over a longer period of time. For example, some insurance companies will also pay you another commission when a policy is renewed and some of the utility management, or discount clubs, will pay you a continuous commission based on the customer’s usage.

Over several years, with potentially hundreds of customer referrals, this income can build up and usually requires no further work on your part – it is passive income.

Useful resourcesFinancial Services Authority

www.fsa.gov.uk

Companies offering insurance products

Endsleigh – www.endsleigh.co.uk/letting-agents.html

Homelet – www.homeletuk.com

Letsure – www.letsure.co.uk

Rentguard – www.rentguard.co.uk

Rentshield – www.rentshielddirect.com/agents.html

Utility management companies

The Utility Warehouse – www.utilitywarehouse.co.uk

Money Angels – www.money-angels.com

Hallmark Utility Management – www.hallmarkcorporate.com

Spark Energy – www.sparkenergy.co.uk

www.fsa.gov.uk

www.endsleigh.co.uk/letting-agents.html

www.homeletuk.com

www.letsure.co.uk

www.rentguard.co.uk

www.rentshielddirect.com/agents.html

www.utilitywarehouse.co.uk

www.money-angels.com

www.hallmarkcorporate.com

www.sparkenergy.co.uk

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14

THE NEXT STEP – EXPANDING AND DIVERSIFYING

In this chapter:

Buying another agency or portfolio•

More branches – new locations•

Franchising the brand and business model•

UK and overseas sales•

As a start-up company it may take a couple of years before you are ready to expand and open a new branch, or diversify into other areas of business. However, unless you are happy ticking along with a small but steady income you will probably wish to continue to grow and expand the business at some point.

If you have an established business with a large market share or a good level of core systems and staff in place, you may be thinking about franchising your successful business model or diversifying into sales. Many companies offer a full range of property-related services, including:

Residential sales and lettings

Commercial property sales and lettings

Mortgage and financial advice

Overseas sales

Block management

This chapter gives a brief guide to some of the options available and some resources to help you. Most will require significant re-investment and training or employment of staff with relevant knowledge in the various different sectors.


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Buying a competitor or portfolioOne way to expand quickly is to buy another agency. This may be by buying a small company with few assets or staff, where you are basically obtaining their portfolio of landlords. Alternatively, it could include taking over a branch or several branches with leasehold or even freehold offices and many staff. Buying a portfolio is a good way to expand if you are looking to increase market share in your current area. It not only increases your customer base but removes a competitor from the market. There may be some smaller agencies or even some estate agents with small lettings departments that wish to concentrate just on sales.

Businesses for sale are unlikely to be advertised locally. Therefore, if you are looking for a local purchase then the best way is to keep your ear to the ground, build a professional relationship with other letting and estate agents in the area, and use your networking contacts to get advanced warning of when something may be available. Alternatively, call or send out a prospecting letter to the directors of several businesses that you may be interested in.

Larger agencies may be advertised in the national press, business websites or via specialist business transfer agencies.

You will need to have finances in place for any purchase so a good business plan and preferably a good relationship with your bank are essential.

Take specialist advice on the valuation and purchase of any business. There are specialist agencies and solicitors that deal with buying and selling businesses, as well as experienced accountants, solicitors and tax advisors.

No matter how big or small the business you are buying is, it is important to carry out due diligence before committing to any purchase. The larger the business, the more complex the due diligence process and expert help that may be required. You may need to employ the services of a specialist accountant and solicitor as well as seeking advice from the bank.

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In all cases it is worth investigating:

The history of the company

The accounts for several previous years – cash flow, profit and loss, balance sheet, loans and debts

Building – lease or mortgage payments and terms

Other capital assets – computers, cars, furniture, fixtures and fittings, etc.

Employees – numbers, duties, skills, length of service, contracts, salaries

Size of managed portfolio and let only customer base

Also consider if there has been any litigation against the company in the past and its perceived reputation.

Do not expect that every customer in a business you take over will automatically want to stay using your services. Typically the previous agent will not advertise the fact until the business is sold, and some may be upset by the previous agent selling. Others may be personal friends with the previous owner. You will need to demonstrate quickly that you can offer the same or a better service than the previous agent. Calculate some attrition from the customer base into your valuation of the company.

VALUATIONS

There are several methods used to calculate the value of a company and, again, specialist advice is recommended to establish a fair price. No two businesses are the same and a business will always be worth more to one person than another. Therefore, no method of calculation can produce an accurate price acceptable to everyone. Also, evaluations are based on historical data and any future predictions are uncertain. Therefore, the price will normally be set by negotiation.


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A second branchOpening a second branch in another location is fairly straightforward compared to some of the other routes to expansion discussed here. You will already have been through the process once with the first branch and, therefore, the second should be a smoother process, using the knowledge and lessons learned the first time around. You may also be in a better position financially or able to borrow more this time to fund the process.

However, there are some additional pitfalls to consider such as:

Choosing the right location (again!)

The need for very reliable and dependable staff

Over borrowing

Cash flow issues

Market trends – is trade increasing or decreasing?

Careful planning is required to avoid any problems. By this stage, if you have built up a good team of staff, then it would be a good idea to include them in the planning process.

Assuming at this stage that you are still directly involved in the day-to-day running of the business, you will need someone to manage at least one of the offices. Therefore, you might consider asking a current staff member, or more than one, to help set up and run the new branch, as they will already know your systems and can help train other new staff. Alternatively, you may wish to leave your current staff to run the existing branch and look after the start up of the new one yourself. Of course, you may appoint a manager in both, leaving you free to concentrate on the overall strategy. In all cases, you will probably need to recruit extra staff. A new level of trust will also be called for to let go of the day-to-day aspects of part of the business.

Hopefully, the company will be able to demonstrate an effective business model and the banks will fall over themselves to lend you the money this time! Developing a second branch may, however, involve taking a larger financial risk than when the business started. Inevitably, this time around, you may be borrowing more money, aiming to get the office set up faster, with larger premises, or more staff than the first time.


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FranchisingA lettings business can be a great business model to franchise and there are several established franchised brands of letting businesses with branches nationwide. A franchise model usually works on the principle of the franchise owner supplying the brand, knowledge, systems, training and support under licence to franchisees. The individual franchisees then operate in a restricted geographic area. They usually pay an initial set-up fee and an ongoing licence fee based on a percentage of their turnover or profit.

Franchising is recognised by banks and other organisations as a business model with a high success rate compared to businesses starting up on their own. Quite often banks will be more willing to lend to someone that wishes to take on a franchise licence with the support of a franchisor with a successful business model.

The advantages with this method of expansion over setting up new branches are:

Faster growth

Lower direct and overhead costs

Franchisees use their own money to set up the individual branches

Highly motivated ‘employees’

Fewer staffing issues

The disadvantages are:

Relatively high investment of time and money before receiving any return

You have less control over individuals that represent your brand and reputation

Income to the company from each branch will be less than if you owned them

Fast growth may be more risky than slower, organic growth, by conventional branch expansion

Franchising requires a lot of preparation and considerable investment at the start. Specialist advice should be sought from solicitors and accountants experienced in the franchising model. Some banks also offer help in this area. Also consider joining


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the British Franchise Organisation, which is a self-regulating body for franchising and offers advice, seminars and training to prospective franchisors.

Sales/Estate agencyThe sales market can go through very good and very bad cycles. When downturns in the market are predicted, estate agents often expand into lettings to give them some guaranteed cash flow through the bad period. Many large chains and even some franchises offer both services. Therefore, there is no reason why an established letting agent should not expand into the sales market. You will also no doubt find that some of your landlord clients will eventually sell their property and, if you can offer this service as well, the loss of earnings from letting will be compensated by the sales commission.

Many of the skills required to sell a property are the same as letting. These include:

Marketing of property details

Appraisals and viewings

Effective communication

Advising on current legislation

The differences are mainly in the business model and the tighter regulations on running a sales agency compared to a letting agency (which is still a fairly unregulated business).

Estate agents will normally carry out far more viewings for each sale but receive a higher commission per property. Sales income can be less predictable than for a letting agent with an established management portfolio. Therefore, the highs and lows in income tend to have higher peaks and troughs for an estate agent.

One of the main Acts regulating the work of estate agents is the Estate Agents Act 1979. The Office of Fair Trading (OFT) has the authority to supervise and enforce the requirements of this Act, which cover areas such as:

The information given to clients

Declaration of personal interests

Client money handling

Negotiations


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The OFT also publishes The Estate Agency Guide for anyone working in the business, which is available on their website.

Other legislation that estate agents need to adhere to includes the Property Misdescriptions Act 1991 and the Consumers, Estate Agents and Redress Act 2007. These can be read on the Office of Public Sector Information (OPSI) website.

Professional guidance to estate agents is offered by:

Royal Institution of Chartered Surveyors (RICS)

National Association of Estate Agents (NAEA)

Ombudsmen for Estate Agents Scheme (OEA)

Both RICS and the NAEA provide training and professional development courses for estate agents and if you are unfamiliar with the practice then gaining a suitable qualification would be an ideal place to start. Alternatively, you may have staff that do have a sales background or you may consider specifically employing someone to run this new area of business.

The scale of investment depends on whether you are considering opening a separate sales branch or operating from existing premises with existing staff. The costs will, therefore, vary enormously but may include:

Increase in staff salaries

Increase in rent

Cost of updating or creating a new website (e.g. you may need to establish a ‘properties for sale’ search function)

Increase in press advertising

Increased cost for property portals (most charge separately for property for sale and charge a lot more than for lettings)

‘For Sale’ boards

Training

Marketing literature


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Commercial property agentAnother fairly natural expansion route is into the letting and even sale of commercial property. However, commercial property does tend to be more complicated than residential property. This is especially true for letting and is due to:

The nature of the buildings and premises involved

The different types of businesses and the requirements they have for the commercial property

The complexity of the leases and the longer lease periods involved

Commercial premises vary a great deal and may include:

Shops

Offices

Workshops

Factories

Warehouses

Yards

Industrial units

These may be let whole or in part and even sub let by the existing tenant, whereby the tenant effectively becomes the landlord to the sub tenant. Some premises may be mixed use, for example shops downstairs and offices upstairs.

Businesses tend to want stability; setting up in new premises (especially large factories and so on) can involve a huge financial commitment and the last thing they want is to be evicted after a few months. Therefore, commercial leases tend to be for much longer periods than residential – typically a minimum of three years and often ten years or more. Longer leases tend to include break clauses to allow for changes in circumstance. They also give the tenants certain rights to renew the lease.

Unlike a tenant in a residential property, businesses may often need to alter the structure or fixtures, fittings and décor of a commercial building. They may need to operate machinery, and have multiple and varying occupants (staff) and visitors.


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Goods may need to be delivered and collected, etc. Therefore, leases often require the tenant to be responsible for the upkeep of the building, internally and sometimes externally as well. They usually allow the tenant to make alterations to the internal, non-structural elements of the building.

Due to the complexity, a draft or summary version of the agreement between the landlord and tenant is normally drawn up – known as the Heads of Terms. After all the terms of the lease have been negotiated, the final lease is produced by a solicitor, which supersedes the Heads of Terms.

A commercial agent may offer similar services to a residential agent: finding tenants, rent collection or full management of the premises. Although many of the skills and knowledge associated with residential letting will cross over, specialist knowledge may be required in the following areas:

Planning

Building regulations

Lease negotiations

Health and safety

Block managementThe modern trend to save space and increase profit from land available is to build flats or apartments. Many larger homes are split into several smaller studios and apartments by developers. Old warehouses are converted and bespoke blocks are built on brown field sites.

No matter what size the development is, most blocks of flats have communal parts and areas. These areas are either the responsibility of the freeholder or the commonhold responsibility of all the leaseholders. Typically all the leaseholders are charged a ground rent or maintenance fee, which goes towards the upkeep of the building and may cover:

Structural repairs

Maintenance within communal areas

Replacement of carpets

Decorating


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Cleaning of communal areas

Gardening

Management company’s fees

Some agents specialise in managing these blocks and will take care of issues such as those listed above. They may also look after the accounts, collect the maintenance fees, provide regular inspections and act as advisors to commonhold committees.

Overseas salesExpanding into the area of overseas sales can actually be easier to achieve than creating an estate agency arm to the business. Many overseas developers offer commission to agents that simply refer prospective customers to them. This means that it is possible to earn lucrative commissions just for passing on a contact name without having to take care of viewings, paperwork or as much legislation. Plus, as a letting agent you will already have an ever growing list of potential investors that are already used to buying property in the UK and may consider looking further afield to expand their portfolios.

Developers tend to offer properties off plan, in phases, with prices going up at each phase. People buy early hoping the property will be worth much more when the development or resort is finished.

Despite the lucrative rewards, there tends to be a higher risk with overseas sales. There has been a lot of bad press about cowboy developers and the nightmares some people have when buying abroad. Also, even with the good developers, building overseas is a complicated process in which many unforeseen problems can occur, such as:

Local bureaucracy

Wars and terrorism

Local builder going bankrupt

Earthquakes and hurricanes

All of these can lead to building delays and increased costs, causing established developers with good reputations to go out of business amongst other issues.


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Therefore, it is wise to consider carefully if you want to enter this business and, if you do, to carry out as much due diligence as possible before picking developers to represent. The last thing the company needs after it has built up a strong reputation locally for letting property is for you to persuade customers to invest in something they lose their money in.

Consider representing just one or two developers at the start. Look into their business and financial background. Ideally the companies should be recommended from personal experience or from friends or colleagues that have purchased property from them without any issues.

There are many new developers that have glossy websites and brochures with lots of computer imagery, but have they actually built what they promised to deliver? Was it delivered on time? Were the properties as advertised? Are they worth more now than when they were first bought? Search news articles and the internet for any bad press. There are many forums where people point out problems they have encountered with different companies.

Selling overseas property as an add on to the business can provide a useful increase in the company’s turnover. This can be achieved by marketing to existing clients locally and adding pages to your existing website. However, overseas sales on a large scale will require considerable investment. It means a national advertising campaign and competing with large companies, including the developers themselves, that dominate the internet, place large adverts in the national press, as well as attend overseas sales exhibitions and use television advertising.

Mortgages and financial adviceMany estate agents offer mortgage and associated financial advice. If you are moving into the field of sales, it may be worth considering employing an experienced mortgage advisor to complement the other services the company is offering. Alternatively, it may be possible to offer desk space to an independent financial advisor, especially if you have built a good relationship in the past by referring customers to one or two advisors (see Chapter 13).

If you are used to offering insurance products as an introducer or appointed representative, you might also consider making the company a principal firm, which will enable staff to offer a full range of products and advice.

If the company is going to be offering financial products, it will need to be authorised by the Financial Services Authority (FSA) and abide by their code of


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conduct. The FSA authorisation process involves submitting an application with supporting documents including:

Staff organisational chart

Business plan information

Compliance procedures

Details of your professional advisors

Opening balance sheet

Profit and cash flow forecasts

Professional indemnity insurance quotation

An application fee is also due, ranging between £1,500 and £25,000, although most small firms will be charged the lower fee. There is also an annual membership fee. Full application forms and an online process, as well as full information, can be found on the FSA website given in the Useful Resources section.

Useful resourcesFinding businesses for sale

Daltons Business – www.daltonsbusiness.com

www.uk.businessesforsale.com

www.business4sale.co.uk

Franchise information

British Franchise Association – www.thebfa.org

The Franchise Magazine – www.thefranchisemagazine.net

What Franchise magazine – www.whatfranchisemagazine.co.uk

Estate agency information

Professional bodies

Royal Institution of Chartered Surveyors (RICS) – www.rics.org

www.daltonsbusiness.com

www.uk.businessesforsale.com

www.business4sale.co.uk

www.thebfa.org

www.thefranchisemagazine.net

www.whatfranchisemagazine.co.uk

www.rics.org


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National Association of Estate Agents (NAEA) – www.naea.co.uk

Ombudsmen for Estate Agents Scheme (OEA) – www.oea.co.uk

Legislation

Office of Fair Trading – www.oft.gov.uk

Office of Public Sector Information – www.opsi.gov.uk

Commercial

Code for Leasing Business Premises – www.leasingbusinesspremises.co.uk

British Property Federation – www.bpf.org.uk

Financial

Financial Services Authority – www.fsa.gov.uk and ww.fsa.gov.uk/smallfirms

www.naea.co.uk

www.oea.co.uk

www.oft.gov.uk

www.opsi.gov.uk

www.leasingbusinesspremises.co.uk

www.bpf.org.uk

www.fsa.gov.uk

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Accommodation Agencies Act 1953, 115

accounts, 86, 128, 147, 171, 172, 204–7

accounts, client, 204–7accreditation, 57additional income sources, 209–12angry customers, 109appraisals, property, 54, 138appraisals, staff, 102assessing your suitability, 6Assured Shorthold Tenancies (AST’s),

162Assured Tenancies (AT’s), 163

banking, 29block management, 222bonuses, 101bookkeeping, 86, 104branding and identity, 37business documents, 38business plan, 26buying a company, 213

carbon monoxide, 124, 126, 192cash flow, 81check in process, 170check out process, 198client money, 36client registration, 136, 146cold calling, 70commercial property, 220communication, 108, 159

company formation and legal structure, 33

company tenancies, 163competition, 4, 11, 19complaints, dealing with, 108complaints, policy, 109consents to let, 140costs, operating, 27, 78costs, start up capital, 27customer service, 106–13

Data Protection Act 1998, The, 117deposit, claims, 199–202deposits, tenancy, 104. 128–9, 165,

168, 171, 172, 197, 199–202, 205Diploma in Residential Letting &

Property Management, 10direct mail, 72discrimination, 120

Electrical Equipment Regulations 1994, 125

employer responsibilities, 98Energy Performance Certificates

(EPC’s), 129equipment, office, 51estate agency, 218expansion, business, 213experience, 8, 9

fees, 56finance, 31franchises, 22–4, 217, 224

Index

227

I N D E X

franchising, 217Furniture and Furnishings Regulations

1998, 127

Gas Safety Regulations Act 1998, 123goals and objectives, 102guarantors, 158

health and safety, 114Health and Safety at Work Act 1974,

114Houses in Multiple Occupation

(HMO’s), 130Housing Acts, 1, 122, 128, 130, 162,

164, 165, 167, 173–6, 197

insurance, 36–6, 57, 104, 126, 141, 155, 193, 209, 223

interviewing, 94insurance, 35inventory and schedule of condition, 3,

56, 71, 104, 159–61, 170, 198–200

keys, security, 146, 170, 171, 198, 202

leaflets, 68letting and managing services, 55limited company, 34limited liability partnership (LLP), 34location, business, 13lodgers, 147, 164

maintenance and repairs, 11, 19, 61market trends, 1marketing, 60–77minimum wage, 100Money Laundering Regulations Act

2007, 118mortgages, 223mortgage referrals, 209

motivation, of staff, 100, 101–4, 113

National Insurance, 83, 98networking, 67notice periods, 173notices, section 8, 175notices, section 21, 175notices, serving, 173

overseas landlords, 206overseas property sales, 222overseas tax, 206

passive income, 212photographs, 144Plugs and Sockets Regulations 1994,

125possession, grounds for, 166, 173,

176–82premises, type, 13, 50premium leases, 164press releases, 64–6, 74problem tenants, 202profit and loss, 83property inspections, 187property management, 184–203public relations (PR), 64

relationship building, 110references, tenant, 54, 158rent, collection, 185, 206rent, increases, 197rent, late payment, 186rental valuation, 138

safety and security, 154–5safety regulations, 123–8salaries, 100search engine optimisation (SEO), 47service agreements, 146


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signage, 40smoke detectors, 126software, business, 52, 87sole trader, 34staff, 90–105Stamp Duty Land Tax (SDLT), 132subcontracting, 104subcontractors, 192

targets, sales, 80tax, corporation, 83tax, income, 83Technical Award in Residential Letting

& Property Management, 10tenancy agreements, 162–7

tenancy renewals, 196To Let boards, 41, 70Trades Descriptions Act 1968, The,

116training and qualifications, 9, 103, 113turnover, 81

unfair terms in contracts, 132utilities, 171, 172, 210

VAT, 83viewings, 150–3

website, 42–8word of mouth, 67

start and run a residential letting agency (small business starters)

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