Private Property Rentals VS Property Rentals Management
Pros and Cons of Private rentals VS Hiring a Letting Agent
Renting a house privately is not unlike representing yourself in court. Unless you have studied up on and are familiar with the intricacies of today's quagmire of South African laws and bylaws, past cases, precedents, amendments and other complexities - don't expect to win your case.
Similarly, when renting or letting out property without the help of a professional rental agent, the chances are that mistakes will be made and someone, probably you, will have to pay.
This topical piece by Chas Everitt Property Rentals Group highlights some of the pitfalls of opting for private property rentals, as well as the associated advantages of enlisting the services of a property rentals specialist.
Greg Harris – CEO of CEPR – cautions the public against the risks of bypassing the experts.
“Tough economic times may have caused households to re-evaluate their spending habits. However, sourcing a suitable tenant for your property, as well as managing the contractual relationship during the lease, is not to be taken lightly. The small financial saving cannot reasonably justify cutting out the estate agent and therefore the many advantages of property rental services”, said Greg.
CEPR charges a varying percentage (according to services offered) of the accumulated lease value to advertise the opportunity, shortlist, screen prospective tenants, take care of the paperwork and present the most credible tenant options to the landlord of the respective commercial or residential property. The management fee for the entire contracted arrangement between lessee and lessor could also include managing collections and utilities.
Although the temptation exists to try and avoid these costs, prospective Landlords may find that the ultimate cost in time, money and heartache of choosing an unsuitable tenant is far more expensive. As the old adage implies, it’s rather futile to be pennywise yet pound foolish.
Landlord and tenant benefits of enlisting a property specialist
Client Service Manager of CEPR, Paula Harding added, “Yes, by eliminating an agent, you may save a little, but end up paying a lot in many ways – in terms of time, money, risks, legalities (a quick read of the Rental Housing Amendment Act 2014 can be an eye opener) and so on.
People tend to make a purely financial decision, rather than take an objective medium to long term view."
Barry Davies, Franchising Director at Chas Everitt International Property Group, provided a little insight into the benefits that the presence of a property specialist offers - specifically to tenants.
“As a tenant the advantages of dealing with a property rental professional are obvious. You are dealing with a neutral third-party intermediary who is a property specialist and understands the details influencing the rentals sector - someone who is also able to deal with complaints and maintenance issues. Compare this to working directly with the owner of the premises, who is not an industry expert. A good estate agent seeks to match your needs to suitable rental spaces, whilst with many individual owners their main objective is often just to conclude a lease”, said Barry.
Next we explore some of the specific advantages of enlisting a professional letting agent alongside the disadvantages of private rentals.
Managing the contract, ensuring legitimacy and performing the legal legwork
The reason that many people elect to utilise rental agents is that contracts can become complicated in terms of drafting, interpretation, enforcing certain conditions and clearly understanding the fine print, including any loopholes.
This can potentially negatively affect one or both parties. With a rental agent, however, you can be sure that the contract is sound, comprehensive, legally compliant and so forth.
Here are some of the benefits that professional letting agents offer:
- Provide and explain personalised contracts.
- Facilitate signatures and deal conclusion.
- Mediate between parties to ensure both sides are in agreement with the contract.
- Act as premises inspectors to objectively check for damage or misuse.
- Enforce the contract and all regulations, requirements and rules.
- Provide access to a large database of prospective tenants or properties on the market.
- Represent you when problems arise that you have not been trained or prepared for.
Backgrounds, credit ratings and rental history
Dealing with strangers always has a unique set of risks involved. The person you are dealing with could have a history of skipping payments, damaging property or being dishonest about particulars.
With a professional agent, however, they will have already screened and done thorough background checks on all potential tenants, affording you complete peace of mind.
The benefits of the estate agent here are priceless and are summarised below:
Pre-screen risky or dubious tenant applications.
Protects landlords from unsavoury individuals or companies with poor credibility or financial history. Credit checks and criminal records are appropriately evaluated. Tenants can also more openly and comfortably consult with the agent on the landlord, prior tenant histories and so on.
Mutual interests of parties are better looked after, thanks to the third party agent.
Tenants that cannot afford the rent or who have poor repayment histories will in a sense be shielded from making a regrettable decision, while landlords can avoid tenants who may prove to be a liability rather than hassle-free occupants.
Specialised Lease Agreements
Another major challenge that can arise when choosing not to utilise an agent is that most private property rental agreements are concluded with stock standard contracts. These don’t allow for particular specifications to be included, and can end up causing disputes or losses down the line.
Rental agents, however, are highly knowledgeable when it comes to specific rental terms and conditions, including clauses for specialised requirements. For instance with a specialist involved you can be certain of the following:
The rental agreement will cover all eventualities including rights, duties/obligations as well as regulation and recourse. This can relate to damage of property by tenant, landlords failure to attend timeously to an obligation, the applicability and implications of local and municipal legislation and so forth.
The lease may be between an individual and a juristic body or entity. Certain stipulations and details will have to correspond accordingly based on the specifics of the parties.
In conclusion, aside from saving a nominal amount - the absence of training, knowledge, expertise and legal backing when concluding private property rental agreements can be a costly decision in the longer term.
Prevention is better than cure, so it is imperative to make a prudent decision upfront when it comes to concluding agreements of any kind. And this couldn’t ring more true for landlords leasing out their properties or tenants renting spaces.
Chas Everitt Property Rentals Group is your real estate rental agency of choice, with a growing national footprint and ever expanding group of loyal clients hailing from the broadest demographic and geographic spectrum nationwide.
If you are looking for property rental insights or for expert assistance with your property transaction from rental to acquisitions, contact our leading professionals today on 0860 104 355 and “let” us manage your Rental Property for you.
Author: Barry Davies