Your property management company is often responsible for the biggest investment you will ever make. In the UK, the largest percentage of managed properties are actually residential premises owned by individual landlords with fewer than ten properties.
Venture into the centre of London and you may have many commercial properties with property managers that have slightly different priorities, but if you are considering collecting rent each month in a hassle-free manner then you need to be able to vet your property manager beforehand.
What Should your Property Manager Handle for You?
If you are the freeholder of your property, you are responsible for its upkeep and there will usually be a charge collected each month by your property manager to contribute to any repairs or general maintenance. Many property management companies that handle a large number of premises on behalf of their owners will have agreements in place with maintenance companies and that should take care of your obligations in most instances.
Maintenance
There have been some glaring cases where letting agents or property management companies have collected this payment, but nothing is actually spent on the property. Always ask to speak to both landlords and tenants of properties that are currently managed by the property management company for references. If the property management company cannot provide any references then look elsewhere.
Maintenance is more than a lick of paint every twelve months. It also involves taking an inventory of fixtures and fittings and organising a plan where inspections and remedial work will take place if the need for such work arises.
Occupancy
Some property managers do more than simply ensure your property has high occupancy and rent is collected on time. If your property is in a highly sought after area, you may be able to negotiate an insurance or sometimes a guarantee that your property has a certain level of occupancy. After all, if a company overstretches itself and is unable to fulfil its end of the bargain, it costs you money and there should be some way to guarantee against that loss.
Obviously, if you have a block of flats in the back of beyond or you are determined to stick with the seventies kitsch look then don’t expect miracles. Also, you can’t expect to attract respectable tenants in the middle of the local red light district. The agreement for occupancy has to be fair for both parties.
Legal Issues
The last thing you want to deal with as a landlord employing a property management company are legal issues that arise because of a lack of attentiveness or a failure to meet obligations from a landlord perspective and neither do you want to deal with unruly tenants. That’s why it’s essential for your property management company to have these bases covered either by their own legal department, a solicitor on hand or an insurance policy that provides cover for these eventualities.
Cheapest is not Always Best
Selecting your property management company is a critical task that needs proper attention. Don’t be tempted by low cost companies and don’t be afraid to ask awkward questions. Find out how they instruct maintenance companies now, rather than pay extra to have work done properly later. It’s not a good idea to allow a property management company complete control without occasional inspections and asking if you are able to see tenders for maintenance work before a decision is made is your right as landlord.
After all, the temptation to cut corners for profit is ever-present and the property management industry is no different. It’s not unknown for property management companies to hand maintenance contracts to businesses that they are familiar with rather than obtaining the best deal or best service for the landlord. An open tender process where at least three different bids are presented either on a job-by-job basis or an annual contract is a transparent process that any decent property management company would insist on.
The Bottom Line
In fairness, this piece has covered the worst side or property management, but the vast majority of businesses are exceptional at what they do and save landlords a great deal of effort and often create a more regular and reliable income – something few landlords would ever complain about.
Sam Mulder is a retired father of four who is now a landlord who spent many years as a property manager delivering Body Corporate management solutions for landlords.