ENLISTING A LETTING AGENT...

Why use a Letting Agent? What do Letting Agents usually charge / what is the cost involved? How do I choose a Letting Agent? What should I look for? To answer these questions...

WHAT IS A LETTING AGENT?

A Letting Agent is a person who has been trained in specifically dealing with rentals – marketing properties for rent, negotiating the entire Letting process from screening Tenants to providing and assisting in the signing of a comprehensive Lease Agreement, and property management thereafter.

WHY USE A LETTING AGENT?

Home Owners choose to use a Letting Agent for several reasons:

1.    Owners who are not based in the same area of their property.
2.    Owners who do not have the time to market their property, screen Tenants and conduct viewings.
3.    Owners who do not have the essential legal knowledge or experience to ensure the process is done properly.
4.    Owners who are battling to find suitable Tenants and are under pressure to fill the property as soon as possible.
5.    Owners who have had a bad experience with Tenants in their property and want some-one with the expertise to find the correct Tenants and safe-guard them as much as possible from further problems.
6.    Owners who have several properties as investments.

A Letting Agent will save a Home Owner time, effort and the stress and anxiety involved in marketing and letting their property. With the Letting Agent’s experience in, and knowledge of, the current rental market they are able to advise Home Owners on what sort of rental amount they can expect to secure, and also suggest any maintenance that should be sorted out before Tenants are found. A good Letting Agent would be able to provide reliable and affordable suppliers with whom they have built relationships with, who can conduct any maintenance required for the Home Owner. This added benefit offers the Home Owner some peace of mind – any-one who has done maintenance on their home will know how crucial a good supplier can be! 

Letting Agents are experienced in screening Tenants and will usually conduct credit checks, employment verification, gather references and other such documentation to find Applicants who are good prospective Tenants. They can look for specific Tenants that will match the Home Owner’s needs or wants, such as a professional couple, or a single person without children or pets, etc. Letting Agents will also have an existing database of Tenants looking for property.

Once a suitable Tenant has been secured, the Letting Agent will provide a comprehensive Lease Agreement which covers all aspects required by the laws governing the property industry, most notably the Rental Housing Act 50 of 1999. They will be able to guide both parties through the Lease Agreement and also offer advice and assistance with various procedures that need to be followed, such as ingoing and outgoing inspections, changeover of utility accounts, etc. The Letting Agent will collect the first month’s rent and the deposit on behalf of the Home Owner, before the Tenants take occupation. Some Letting Agents may offer to hold the deposit on behalf of the Home Owner (in an interest bearing account as per the law), others may only offer this option on a managed deal.

The Home Owner may choose to take over from the Letting Agent and manage the property independently once a suitable Tenant has been secured and the Lease has been signed, or the Home Owner may enlist the Letting Agent to manage the property on the Home Owner’s behalf for the duration of the tenancy. In the case of a managed deal, the Letting Agent will conduct the ingoing and outgoing inspections, as well as interim inspections on the property during the tenancy duration. They will collect the rental amount from the Tenant on a monthly basis (including invoicing and receipting the Tenants), ensuring that the Home Owner receives their rent on time, without the hassle of ever having to follow up with the Tenants personally. The Letting Agent will also assist in sorting out any maintenance issues that arise.

Renting out a property is a risk. Regardless of how credit-worthy a Tenant appears, there is not much one can do to predict such situations as the Tenant unexpectedly being retrenched, transferred to another city, or any of the many sudden changes in circumstances that can arise. In any of these situations, a good Letting Agent can assist a Home Owner in referring to the Lease Agreement in how the particular situation can best be handled, what legal recourse a Home Owner can take if a Tenant stops paying, etc. Once again a comprehensive Lease Agreement provided by the Letting Agent is crucial and should cover most such circumstances.

THE COST:

A Letting Agent will charge either a set fee (such as one month’s rent) or a percentage based on the duration of the tenancy / the total value of the Lease Agreement (which can be anything from 8% to 15%). Some Letting Agents will add a charge for renewal of Lease Agreements. The Letting Agent will also invariably charge the Tenant a once-off administration fee (usually between R500 and R600). All fees are usually paid only once a Lease Agreement has been signed by both parties, however there are some Agencies who charge an initial fee to list and market a property, regardless of whether a Tenant is secured or not.

Managed deals will be an additional charge (usually paid monthly) which the Letting Agent will deduct off the rental amount before depositing the balance into the Home Owner’s account.

Be sure to investigate and have a very clear brief from the Agent BEFORE any work is undertaken, on exactly what costs will be incurred to avoid hidden cost surprises.

CHECKPOINTS:

There is a proliferation of Letting Agents in the industry, from solo Agents, to Letting divisions in Real Estate Agencies, to Agencies who only do Lettings. Choosing a suitable Agent can be quite a daunting task! In addition, there is nothing stopping a Home Owner from enlisting the assistance of more than one Agent. Here are a few checks a Home Owner can do to ensure the Agent is suitable:

-    What online presence does the Agent have?
The majority of Lettings are now marketed online, as Tenants have the ability to surf the net whilst at work, look at multiple pictures of the property, and send e-mail enquiries. What online presence does the Agent have? Where do they advertise their listings? Is their website up-to-date? Their website should also give you an idea of what sort of properties they deal with – if they have properties similar to yours, they will most likely have possible Tenants in their database. What do their current properties listed look like – have they been presented well, are the photographs and descriptions clear and appealing? What else does their website tell you – are they professional, informative, is there attention to detail?

-    Is the Agent well versed in the legal aspects of Letting?
Is the Agent familiar with all the aspects of the Rental Housing Act? What about the Estate Agency Affairs Act? Is their Lease Agreement in accordance with these legal requirements? Do they collect FICA documentation? This is THE most critical aspect of choosing an Agent – a legal and comprehensive Lease Agreement is the crux of a successful tenancy to ensure both the Home Owner and the Tenant are protected and aware of their respective obligations.

-    What is the Agent’s existing reputation?
Word of mouth is the most powerful reflection of any company’s performance. Bad news always travels faster than good, and you can be sure that if an Agent or business has a bad track record, you’ll find it on the web. Google the name of the Agent or Agency and see what sort of name they have for themselves. You can also check sites such as Hello Peter or TPN. Does the Agent offer any references, either on their website, or if you request them?

-    Care & Assistance
Is the Agent easy to get hold of, and do they get back to you promptly? Do they answer your questions comprehensively and openly? What happens once the Lease is signed (in the case of a non-managed deal) - what sort of after-care and assistance (if any) does the Agent offer? Are they available and willing to assist in legal queries, and give advice and guidance on any problems that crop up? If they cannot assist you with a particular query, are they able to refer you to some-one who can?

-    Fidelity Fund Certificate
The Estate Agency Affairs Board (EAAB) of South Africa have put into place new legislation which requires all Agents, whether in Lettings or Sales, to be in possession of a Fidelity Fund Certificate and be appropriately qualified through them. The positive effect of this law aims to weed out those Agents who are acting surreptitiously and undermining the industry as a whole, which is certainly a worthwhile and needed cause. Do enquire as to whether the Agent is affiliated with the EAAB, in possession of a Fidelity Fund certificate, or in the process of qualifying for this.