Are you thinking of self-managing your buy to let properties? With increasing interest rates squeezing margins, managing your own rental property yourself is an easy way of increasing profitability and net cash flow.
However, most letting agents will tell you that managing buy to lets is something best left to them. After all, the legislation keeps changing, and if you drop a ball, you could land in hot water.
That may be true. But you can save an average of at least £2,000 every year by managing your properties yourself. It’s also not actually that difficult. Especially if your property has been recently refurbished .
The good news is that I go through the practicalities of managing your properties yourself, in this blog post. I also get rid of the smoke and mirrors used by agents to make out it’s too difficult for landlords to manage their own rental properties.
But first, I’ll go through the cost and services provided by letting agents. I’ll then share some tips from my four years of self-management, and you’ll see it really isn’t difficult to manage rental properties yourself.
At a glance
This blog post contains affiliate links. If you buy something after clicking through, you’ll be supporting this free blog. Thank you!
How much does property management cost?
Most agents charge landlords a set fee to provide a full management service. The fee is usually a percentage of the rent and is like commission or a retainer.
Fees for full management tend to be around 12% + VAT (ie 14.4%) of the gross rent per calendar month. This means that on average landlords spend over £2,000 each year per property on the management fee alone. (I use the average fee of 14.4% and the average national rent of £1,190 in Q1 2023, according to Rightmove).
Landlords pay this fee, even if nothing goes wrong with the property, for so long as these tenants rent the property. (Unless you terminate). The agents deduct this fee from the monthly rent which they collect on than landlord’s behalf. If the rent goes up, the fee goes up in parallel, just like commission.
What’s usually included?
On average, these services come as part of the fully managed service option:
These are just averages, so do check the list of services, as they do vary considerably.
What isn’t usually included?
The fully managed service is a bit like full board at a hotel. Your food is included, but you’ll need to pay for drinks and a long list of extras. In other words, it’s not all inclusive!
This means you’ll need to budget for third party costs, as these are charged separately. Often the agents add a mark-up to repairs (Connells add 10% over £750, which can add a lot if they organise a new boiler). Again, check the small print.
Here’s a list of the extras that are NOT usually included in the fully managed fee:
Often other items are billed as extras, so it’s very important to check the small print. As an example, I’ve cut and pasted the extras in the small print of an agent’s terms and conditions (Connells in Maidstone). These services are considered ‘additional’ and aren’t included in the management fee. Again, it varies considerably per agent, so don’t be afraid to ask for clarification.
Do try to negotiate lower rates before you sign up. It’s usually easier then, as they are keen to win your business. Just like negotiating car insurance! And do read the small print before you sign off.
Terminating managing agents
Many people come to regret outsourcing management to letting agents, as the service isn’t always what it should be. In fact, this is the subject I get the most DMs about. Unless you’re very lucky, the agent won’t care about the property as much as you. And unfortunately, some are just not very good.
The best thing is to negotiate your termination rights up-front, before you engage agents. They tend to be more flexible with termination provisions in a bid to win your business. But usually landlords don’t think of this at the time.
It can be difficult to extricate yourself from managing agents, without paying a fee or giving due notice. However, it has thankfully become easier since the Office of Fair Trading won a landmark case against Foxtons in the Court of Appeal in 2009 banning unfair tie-ins.
They may try to talk you out of it, using the standard scare-mongering tactics about the “170 pieces of legislation” and “how will you deal with emergencies?”
However, you will be able to terminate your agreement. Just be determined about it. Most management contracts require landlords to give a certain period of notice , ranging from 2-6 months in my sample above. During this notice period, you may have paid another 7% of your annual rent in fees, but then you’ll be free. You can argue it’s an unenforceable penalty to negotiate an earlier exit, but it’ll be a hassle.
The easiest way is to wait until the tenants move out, and then go it alone. Above all, don’t worry about finding the next lot of tenants. You can either do a “let only” service with an estate agent, or use an on-line letting service. I personally find tenants myself for only £49 using OpenRent’s Rent Now service. If you’d like to know more about self-letting, take a look at my detailed guide on how to do it.
Tips to help you self-manage your buy to let properties
Let’s now turn to how to self-manage your buy to let investment properties. Is it really as hard to manage your own rental properties as the letting agents tell us?
Before getting into the detail, I’d like to stress the importance of educating yourself about your landlord obligations. This applies even if you use letting agents, as the buck ultimately stops with you. That doesn’t mean going on an expensive training course. You can become an Accredited Landlord with the NRLA after taking their Landlord Fundamentals module. This currently costs £64 for members, and membership comes with other benefits. For instance, you’ll have access to their landlord helpline and get discounts from Carpetright and B&Q Tradepoint. Here’s my referral code for £15 off membership if you join the NRLA: UYN-702.
I’ll now move onto my 8 practical tips to help you self-manage successfully.
1. 8 practical tips to self-manage successfully
You’ll see from this handy list of tips on how to successfully self-manage a buy to let, that organisation is the key to success. Prevention really is better than cure. You can head off many problems by sorting them out before they get expensive to fix.
I really value doing the six monthly inspections myself. I call these ‘maintenance visits’, as it sounds more collaborative. Not only are they a great opportunity to see how the property is being looked after, they’re also time to check what should go on the maintenance to do list.
I always ask the renters if there is anything they’ve noticed that they think I should know about. And they invariably do mention something. I can also give them tips about the house. For instance, in a recent inspection, I explained why they should leave open the trickle vents in the cellar window.
I like to see the condition of the property myself, and not have it filtered through the eyes of a letting agent. If something needs repairing or replacing, I want to be the person who makes the decisions.
If you keep on top of repairs and maintenance, not only will your renters be happier, you’ll also be looking after your valuable asset for the future. Being a good landlord helps maximise future income. It’s good business!
One of the things that letting agents stress is the hassle of dealing with emergencies. I don’t get this. Sure, emergencies happen, but it’s hardly difficult for a landlord to call a plumber, gas engineer or locksmith. The letting agent would do the same thing. If something goes wrong, I first call the regular trades people I use. If they aren’t available, I try the Checkatrade website, as they provide landlords with guaranteed trades people who will be happy to help.
2. Checklist of regular landlord safety checks
In terms of safety, the graphic above shows the key regular safety checks that must be done for rental properties. Some need to be done once a year (eg gas safety certificate, carbon monoxide alarm testing, smoke alarm testing, PAT testing), and others every 5 or 10 years (EICR and EPC respectively).
To ensure all the checks are done on time, I put a reminder in my calendar for a month before each one is due. I then contact the tenant to arrange for the trade person to carry out the check by the due date, all from my mobile phone. I also have a list in an excel spreadsheet. It’s a question of getting organised.
The law imposes lots of repairing obligations on landlords. It’s not rocket science though. In a nutshell, landlords should ensure their rental properties are well maintained, fit for human habitation, and don’t contain serious hazards that may harm the people living there. And when a tenant reports an issue, it’s important to respond promptly. Take a look at my practical guide on landlords’ repairing obligations and what they mean in practice.
3. Organise back-up management
One of the big worries if you self-manage a buy to let is wondering what will happen if something goes wrong at one of your properties when you’re away. Or perhaps if your properties are not local to where you live. Although it’s easy to arrange a plumber to go round by telephone, what if there’s a more serious problem and you need someone there you can trust?
I came across Viewber when one of my rental properties was unoccupied prior to selling, and I needed someone to read the meters. (Click here for tips on managing unoccupied properties).
Viewber provide a service for landlords to book a DBS-checked property professional to visit the property and carry out a task for a very reasonable fee. For instance, they can carry out routine or one-off property condition checks, unoccupied property checks and key management with builders. They can even host viewings.
It’s a great service as it turns a fixed cost of managing agents into a variable cost, because you only pay for what you use. Importantly, it gives peace of mind that if something goes wrong, you have back up, with a trusted port of call if something needs attending to, but can’t get to the property for any reason.
You can register with Viewber all of your properties on the service, free of charge, with no obligation. Then, if you need them, it’s simple to book a ‘Viewber’ online.
If you’d like to find out more about Viewber, you can click this affiliate link here to register with Viewber, and also help support this free blog at the same time.
Final thoughts
Being a successful self-managing DIY landlord requires organisation and a willingness to engage with tenants during six-monthly checks, and by phone/text. While this is not for everyone, I for one do not see that letting agents add value to the process for my small portfolio. Simple repairs are easy to organise, and anything more complex would require my approval anyway.
I would rather spend the £2k=+ I save on average on the repair and maintenance of the property, and spend a bit of my time organising the odd repair. Having a service like Viewber is a game-changer for me, as it means I always have back-up.
Some people don’t want to deal with renters directly, and value a buffer. Or they have busy jobs and don’t want the hassle. My decision to self-manage is made easier as I have the inclination (being a former lawyer!). I also have the necessary time on my hands. Having the properties near my home also helps considerably. I also appreciate having Viewber as a back-up.
Finally, if you’re wavering, ask yourself whether you get value for money from outsourcing management. Maybe you’d be better off all round if you take control, and self-manage your buy to let investments.
You may also find helpful
Landlord Essentials: Tips on what you need for your Buy to Let
How to shop around for competitive Landlord Insurance
How to achieve Social Media Success for your Property Business
What all new landlords need to know
What should landlords put in unfurnished properties?
How to get the best out of managing agents
How to find renters without letting agents
Which repairs must landlords carry out in the UK?
