Benefits of professional property management
In our opinion and experience, property management is a topic that sometimes gets relegated to the back-burner, particularly by newcomer landlords.
When starting out in property investment, many people focus solely on the acquisition of the property, a process which takes a few months.
However, once acquired, the landlord is going to be in a commercial relationship with that property for up to 25 years, yet little thought is given to this part of the landlord lifecycle and how it might influence the overall profitability of the activity over the long term.
Many first timer landlords are under the impression that you rent out a property, sit back, and watch the rent come in. They believe this is a passive phase when in fact it is the start of managing and protecting both your tenant and your prize asset!
It is always worth remembering that tenants are people, not a rent payment.
As a landlord, you are legally obliged to provide a safe and compliant home and also a service to your tenants, such as undertaking repairs and maintenance in a timely manner, and ensuring that your property is safe for your tenants to reside in.
Failure to do this can result in penalties of up to £30K, and, in very extreme cases, your tenant being injured, harmed, or even killed as a result of your failure to meet your legal obligations.
This blog is posted on the one year anniversary of when a family of four from a rental home in Bishop’s Castle, a small market town in the southwest of Shropshire, were saved by smoke alarms after their house caught fire.
The above story contrasts with one from three years ago when two small children died in a rental house where smoke alarms were not fitted.
So fitting smoke alarms is just one example of how important compliant property management is. Lives literally are at stake!
No landlord EVER wants to receive a phone call notifying them of some tragic event at their property and this is why we believe landlords should place more importance on ensuring their property is professionally managed.
Aside from ensuring compliance, there are many other benefits of professional property management.
1. Tenants stay longer
If repairs and maintenance are undertaken promptly, it stands to reason that tenants will stay longer as they are happy in their rental property and know that they are renting from a responsible landlord. Happy tenants are more likely to pay the rent on time and also look after the property.
2. Maintenance costs are actually reduced
Fixing and repairing issues when they first occur means that costs are actually reduced. This is because, if something – for example a water leak – is not dealt with quickly, it can escalate and cause far greater damage.
3. Less voids
A well maintained property presents well on viewing to prospective tenants, meaning that it will let more quickly and therefore will suffer fewer void periods.
4. Achieve higher rents
A well maintained property will be able to achieve higher rents. However, if a property starts to deteriorate, the rents it can achieve will decrease and this tends to be a downward spiral.
5. Nip problems in the bud thereby reducing costs
A good property management company will encourage mid-term property inspections to see if the tenancy is running smoothly and how the tenant is living in the property. The Happy Tenant Company outsources this service as they feel it’s a specialist role and the level of detail in the report could be the deciding factor in a dispute. They have a panel of clerks who offer discounted rates for their landlords.
Mid-term property inspections will flag up such issues as repairs or maintenance that the tenant has failed to report, or, for example, if the tenant has sub-let the property, become a hoarder, or is not keeping to the terms and conditions of the tenancy.
One huge issue for landlords is rental properties developing condensation and/or mold. Mould and damp is very dangerous to health, particularly in respect of young children, elderly, or infirm people, and it is one of the commonest complaints against landlords by tenants. However, in most cases it is usually caused by the tenant not ventilating the property properly and/or drying clothes on radiators.
A professional Property Manager will notice this problem occurring and advise the tenant how to ventilate the property properly by opening windows, turning on extractor fans etc. If the damp and mould is caused by a fault in the building fabric itself, this can be identified, and the landlord will have to undertake some remedial works to get rid of it. One thing is certain – damp and mould are a big issue and one that tenants can go to the local authority with as a disrepair claim – so dealing with it quickly and appropriately is very important to protect the landlord from penalties (see below).
Again, addressing these issues as soon as they are seen to arise will ultimately mean the costs of resolving them are far less than if they are allowed to fester and/or escalate.
6. Protect the landlord from fines and penalties
Landlords can be fined up to £30K for not providing a compliant and safe home and attending to dis-repair issues. The tenant can bring a dis-repair claim via the local authority against the landlord and these costs can escalate and become very significant. So Professional Property Management protects the landlord against legal risk and also gives peace of mind that the property is safe and legally compliant.
7. Keep costs reasonable
A professional Property Manager will have a good understanding of how much repairs and maintenance cost and have contacts with trusted tradespeople to undertake repair and maintenance work.
Many novice landlords are taken advantage of by unscrupulous trades who over-charge for work, so a Property Manager can ensure that all costs incurred to maintain and repair the property are fair and reasonable and also that the tradesperson is fully insured to undertake the work.
At the Happy Tenant Co. we only charge our landlords the exact amount invoiced by the tradesperson i.e. we do not add on “commission” or admin charges, unlike some other firms.
8. Maintain asset value
A property is probably the biggest investment that any individual will make. It therefore makes sense to repair and maintain a property as this helps maintain the value of the asset over the long term.
A property that goes into a state of dis-repair will start to lose value and desirability within the marketplace for both sale and rental.
8. Property management is tax deductible
When the tax landscape for landlords is becoming increasingly onerous and hostile, it is worth noting that any fees spent on professional property management are tax deductible and can therefore help reduce a landlord’s tax liability.
The Happy Tenant Co. specialises in professional Property Management within London and the M25. We have built up relationships with trusted tradespeople and suppliers and we ensure that all properties and tenants in our care are treated to the highest standards of service.
Happy Tenant Co. CEO, Adam Joseph, was recently interviewed by Property Tribes landlord community on the important topic of Property Management:
If you have a property portfolio in London or within the M25, why not give us a call to discuss how we can take over the property management of your portfolio, so that you can enjoy all the benefits outlined in this blog, including, of course, that all-important peace of mind – and there really isn’t a price that can be put on that!