A new company is offering London landlords a real alternative to the rip-off letting agent reports JANE SLADE
The change in tax legislation announced in July, which removes the perk of deducting mortgage interest payments from rental income when calculating a property’s taxable profit, has not dampened our enthusiasm for buy-to-let.
In fact London remains in the grip of a BTL frenzy with sales soaring by some 72 per cent in the past year according to data from Equifax Touchstone which analyses mortgage figures investment.
Of the 900,000 properties in London in the private rental sector some 85 per cent are owned by individuals who have just one property.
But this number is increasing due to retirees investing some of their pension pots in a BTL or two.
This group is particularly vulnerable to being ripped off by letting agents who can charge extortionate fees to look after your property, as well as marking up bills for repairs and charging extra for renewals.
Jonathan Monjack set up the Happy Tenant because he was fed up with being ripped off by letting agents managing his four BTLs in North London. Instead he charges landlords a simple one-off annual fee from £750 depending on the weekly rental of your property.
What’s more he also ensures landlords get the best deals and quality of work from tradesmen hired to do repairs and passes the bill to you without adding any mark-ups.
“Our membership comprises one-person landlords who would find it hard to do deals unless they had lots of properties,” explains Jonathan. “We are that equivalent as we look after lots of properties.”
Jonathan set up the company in 2011. He employs 14 people and manages some 400 properties within the M25.
“We are totally transparent,” he says. “We do not do kick-back mark ups but we do charge extra for finding tenants. My family have a number of buy to lets and they were subject to outrageous agency fees for work carried out on their behalf and then charged renewal fees plus VAT on their contract.
“Our philosophy is simple if your tenant is happy then you will be happy. I owned one property and had a very easy tenant for four years. One day, I received a renewal fee from the agent and just thought, ‘why am I paying him eight per cent plus VAT?’.
“I decided to set up The Happy Tenant Company for people like me because agents offer limited options.
“It can depend on whether the agent is a big chain or a high-street shop, but they are often overwhelmed with work, understaffed and contract out their responsibilities to make a marginal profit.
“The landlord just doesn’t get the property management service they have paid for.”
Jonathan doesn’t see any let up in demand for good quality properties to rent in the capital. “Indications show that a few more million people are going to be living in London over the next few years so I don’t see any let up in demands for rental property.
“If a property is well managed and tenants are happy they will look after your property which is important for landlords to know.”
The Happy Tenant can do as much or as little as you want but unless you know what you are doing it is best you leave it to them, or an agent you trust.
“We have a tremendous network of trades people and developers we can call on to ensure you get the best job at the right price,” adds Jonathan. “Problems occur but it is about how you deal with them that matters.”
“We believe we have to be totally transparent with landlords. We don’t load up fees. Some agencies’ behaviour is bordering on fraudulent. A lot of questionable practices are going on.
“I’m shocked the industry hasn’t been cleaned up, especially when people are investing their hard earned pension pots in properties not just in London but in the UK and further afield.”
One happy landlord who has several properties with Jonathan’s company is Londoner Mickey Green 68. He has owned several BTLs with his brother in Wansted, Shoreditch and Hackney for the past 15 years. “We don’t want to run things ourselves and get late night phone calls from tenants complaining the boiler has broken down,” says Mickey.
“We want someone who can look after everything. Trouble was our previous agents always charged so many fees.
“And all the repair bills seemed very high. I discovered the Happy Tenant through a friend. We are always a bit cautious about new things but these guys seem the real deal. We went to their offices in Finchley and liked the set up.
“As you get older you develop a sixth sense about these things. These are experienced property guys. We gave them a couple of properties to see how it went. They charged a flat fee, kept us informed; didn’t add on any extra charges. I can’t believe they didn’t exist before.”
Mickey warns that you have to know what you are doing if you want to manage your own property – know all the right contractors, rules and regulations. It isn’t that easy. So it is best to put them in the hands of a trustworthy agent.
Two important considerations when choosing a BTL is the location and finding the right tenant.
According to Mickey, Canning Town will be the next hot spot in the capital and Hackney Morning Lane the new fashion hub of London.
“I assess the situation every year,” he says.
“I like the Happy Tenant as they treat everyone the same. They’re not interested in just looking after the big guys. I’ve no complaints and think I am getting a very good service.”
Jonathan adds, “There is a desperate shortage of quality housing in London and I don’t see that changing. Landlords can save around 20 per cent of their annual rental income with us; we can increase their revenue via their assets by handholding them through the process.
“Partly furnished one and two-bedroom properties do well,” he advises. Install good quality white goods and good quality beds.”
For more information visit www.happytenant.co.uk
Letting agents normally charge a percentage of the rental income over the letting term, starting from 10 per cent of the rental price achieved. This covers the cost of marketing a property, finding and vetting a suitable tenant, obtaining references and preparing a tenancy agreement and inventory. For a full management service, fees can start from 15 per cent of the rental price.
It is always advisable to choose a letting agent who is a member of a professional organisation, such as the Association of Residential Letting Agents (www.arla.co.uk), the National Association of Estate Agents (www.naea.co.uk) or the National Approved Letting Scheme (www.nalscheme.co.uk). All are bound by a code of practice.