Should you be renting to families?

New research from the National Landlords Association (NLA) illustrates the perks of being a landlord to families. According to the findings, renting property to a family costs landlords the least amount of property management time in comparison to other tenants.

Below is a summary of the research results plus a few of my thoughts on what they mean.

The NLA secured over 1,000 responses from its latest quarterly landlord research panel. Landlords were asked how long they spent on property management, ranging from maintenance to tenant queries.

Landlords who have executive lets, or rent to migrant workers and benefit recipients spend around 12 hours per week on property management. On the other hand, those letting to young couples or families only manage property for about eight hours each week.

Time spent by tenant type

Commenting on the findings, Dorian Gonsalves, CEO of Belvoir says: “When a landlord has a reputable agent on board they can rest assured that their that the agent will ensure the property complies with health and safety regulations, and it is a safe place for tenants to live.

“A professional agent can save time and money by dealing with problems on behalf of the landlord.

“The agent will liaise with the tenant on behalf of landlords, and ensure that any emergency and standard maintenance issues are dealt with promptly and efficiently. They will also make sure that the landlord is not made responsible for anything that they are not legally responsible for.

“An agent can ensure that all matters of legal compliance are dealt with, including things such as deposits, tenant agreements, and comprehensive inventories to help avoid costly disputes at the end of tenancies.”

If we take a look at the various regions of England there is quite a big variety in the time landlords spend on their rental properties each week. Landlords in the North West spend the most time on property management, around 10 hours each week whereas those in the East of England have it relatively easy at just five and a half hours per week.

Time spent by region

Landlords who have mortgages spend more time on management than those without a mortgage; an extra 3.5 hours per week… which adds up to an additional working calendar month over a year.

Renting out a property with a higher energy efficiency rating is also a time-saver; landlords with an EPC rating of E or below spend an extra two hours each week on property management.

Time spent by energy efficiency rating of properties

Commenting on the research, Richard Lambert, CEO of the NLA, said:

“This data reinforces the fact that families make good, reliable, and long-term tenants, but some landlords can be put off by the perceived risk of more damage or wear and tear to the property or its contents.

 “Landlords who rent to migrant workers or provide executive lets may find it takes up more management time because there’s a greater churn of tenants which means re-marketing the property, drawing up tenancy agreements, and conducting property viewings more regularly.”

The NLA also says that another big cause for concern is that those in receipt of benefits take up more management time for landlords. Mr Lambert continued:

“The combination of welfare cuts and the introduction of Universal Credit make it difficult for some benefit recipients to keep up with rental payments and that often means taking more time for the landlord to manage. It’s frustrating for everyone because the issues can be outside the control of both tenants and landlords.”

Kate’s thoughts
If these figures are accurate, then the value of employing a letting agent has just shot up! Especially as their costs can be deducted from income, making even greater savings. Even if we assume they have a portfolio, paying 10-15% of rental income and applying the deduction in tax means that many agents are taking a huge weight of landlords’ shoulders.

Carrie Alliston, head of lettings at Hunters says, "Property, and especially lettings is all about people. So Landlords should always choose a good agent and a good agent helps and connects with their customers. Start by looking at the agents website. Does it look like they take their role seriously and professionally? What kind of information do they offer on line to help tenants and landlords, if its helpful on line it will be twice as helpful in person. Mystery Shop the agent, ask them what training they do or look for their membership of ARLA or NALS and which deposit schemes they sign up to, which redress schemes are they a member of? Look to see if fees are displayed or if they have a complaints policy. All these things demonstrate a good agent and the landlord has peace of mind that their property is in good hands and the agent takes their role as a property professional very seriously."

Theresa Wallace, Head of Customer Relations - Lettings at Savills added, "There are a vast number of reasons why a landlord should take up a professional management service. The time and knowledge required to manage a property economically, effectively and to ensure that all legal requirements are fulfilled is significant. A small error when it comes to registering a deposit or providing a tenant with the correct documentation cannot only have sizeable financial implications but can have effects as severe as not being able to secure possession of the property at the end of the tenancy.

Over the past 10 years the legislation governing the lettings industry has increased enormously. Consequently the role of a landlord has changed dramatically. It is no longer enough just to arrange swift repairs. It is essential that a landlord has a substantial knowledge of the legislation surrounding letting and managing a property in order to comply with their legal obligations.

For most landlords letting their property is a side enterprise in addition to their day job. Unless a landlord is both willing and able to spend a significant amount of time learning and keeping up to date with changes in legislation, building a relationship with a variety of local contractors whom they can call at any given moment and being available for their tenant at any time of day or night to address any issues which arise, they may well find themselves out of pocket or, even worse, suffering more far reaching consequences.

In light of this the small sum spent on the management fee is minimal when compared to how much money the management service could potentially save a landlord."

Choosing a letting agent - Belvoir	Top 10 tips for managing a successful let - Hunters