We have just taken over the management of some properties, which have been managed by a company which advertises some of the cheapest rates in the town. The challenge that we and many others discover with cheap is that it invariably works out as more expensive and it is quite amazing what the repercussions are.
In this particular case, the main challenge was, that once the decision had been made by the owner to transfer the properties to us, it has taken just over three months to receive just some of the paperwork, with the promise that the remainder should come in another month! Not only that, but we only received copies rather than the originals, we were still missing important documents like electrical and gas certificates and a complete mish-mash of piles of paper, rather than being nicely organised.
Looking through what we have received, we are not looking forward to our first inspection, as it seems to have been treated like a cash cow. The rent is unbelievably cheap for the area and so it appears that it has been the result of a sales strategy of “low rent to let quickly”. The problem with this is that, yes the property lets quickly but look at the cost to the owner. The tenancy began a few years ago and since then the owner has possibly lost about £100/month and there has been no rent increase since.
One of the other challenges of extricating oneself from a cheap deal is invariably the exit cost. There are always hidden clauses somewhere in the agreement that make for eye-watering reading. In fact, I remember telling one landlord a couple of months ago, to always look at the small exit print, as one never gets anything for free and the hidden exit expenses are always part of the sign-up costs.
One of the key disadvantages of cheap rates is the resultant lack of maintenance charges and repair costs. These tend to be stored up by bad agents until they are no longer the agents. The thing is that when you let a property cheaply, the owner is expecting some return and the only way to keep the income as high as possible is to ensure that maintenance charges and repairs are kept to an absolute minimum.
This means that requests from tenants are invariably rejected, with the reply that the owner says “No”, even though they probably have never been informed. This includes safety certificates, which tend to be forgotten as the mantra is keep the costs down! Eventually, the chickens come home to roost when the property moves on and the hidden cost of cheap rates are exposed by a long list of expensive repairs.
Property is a tough sector and certainly not the easy “paved with gold” scenario that attracts so many buy-to-let landlords. The uninitiated are caught out by the nice smiles, sugary words and empty promises of the sales team. Please do take care and make sure that you read the small print and all the clauses. Better still visit the smaller family agents, like ourselves where you will be a name and an important client, rather than just a number.