I originally wrote this post in November last year but things overtook me and it is only today that I have had a chance to revisit it. I am taking the time to pause and reflect on the last year.
At the beginning of the year I knew a little about serviced accommodation and apart from helping to assist with a few houses that was it. That all changed in February when one of my clients took on a new block of apartments, which had been delayed from last summer. It was baptism by fire. I am experienced in dealing with people but some of the guest expectations were like nothing I had ever seen. With multiple maintenance issues it certainly took a few months and a long snagging list, before everything was fixed. The heating there is not the easiest to operate, so we all learnt how to do this from videos and now can repeat the instructions in our sleep. Then summer arrived and the requests for fans came with it and several times staff were dispatched for more! As winter arrived we laughed about the need to remind ourselves how the heating works. The number of people who call and message telling us the stove is broken - no it's not please have a look at the video we sent you! The child lock was on or you hadn't got a pan on the ring. The joys of induction hobs!
On the plus side I can now list properties on booking channels and connect to the software of choice. The software my clients use is not particularly user friendly unless you are technical, at times we are convinced the only people who understand it are the developers! I've gone from the time it connected to the wrong listing (there was a problem with the channel we were connecting to, not the software or users) and caused us chaos for days and weeks to follow, even though it was only connected for 2 hours to being fairly laid back, sometimes, when connecting to the channel manager. I now make sure I do all my listings and pull them through undisturbed. I've also learnt about different software associated with serviced accommodation.
I have also continued working with clients on managing their HMOs, which come with a different set of challenges. To help with my knowledge. I took my Level 3 NRLA Property Management and Lettings, which I am incredibly proud of. The biggest issue was breaking a charger when trying to make sure I could be seen taking the exam. It was elevated on a shelf and dropped off part way through!
The biggest challenge with the HMOs has been guarantors. From personal experience I know that some agents won't consider guarantors unless they are home owners, or accept guarantor companies. This is a regular discussion in some groups where parents talk about university. This year I've seen people try to give guarantors who haven't agreed to act as a guarantor, people who aren't eligible to act as a guarantor for a number of different reasons ranging from not having a regular income or the right to live and work in the UK for the period of the tenancy.
While I rent my own home and am familiar with ASTs this year I have looked at it from a parent's perspective and having to try to be Mum, rather than look at it from a professional perspective! Are you sure you really want to put that up there? While really thinking how much painting is going to need to be done when you leave to ensure you get your deposit back? The indoor water feature was an unwanted additional feature, (leaking sky lights) along with the lack of regular heating (2 hours morning and 2 hours in the evening) included in their tenancy!
The mould in her room, due to maintenance issues was the final straw and yes she did open her window regularly! The issues have now been sorted except they never want to get up as the house isn't very warm. Who puts the thermostat on the unit above the tumble dryer near the 2 ovens! This is my daughter's real experience in her shared house. She now has a heated throw and I tested it the last time I went to visit and it is better than being cold when she puts it on high!
With January closing I am thinking about the next few months and what I want from my business. I am looking at not only the services I offer to my clients but how to schedule time to work on my business. Basically getting organised. I am great at organising my clients but not so great at making sure I work on my own things.
While as a freelancer I am used to the lulls in work, especially around this time of year and working flat out when needed, I have already decided not to take time off during the busy time of year when students are moving in and out of their rental properties (note to self I am allowed to have a day off to move my own university student)!
I recently had a conversation with someone who had attended several property webinars and wanted to manage serviced accommodation (SA).
At this point my heart sank, especially as they had no previous property management experience and wanted to manage it from another country. They had been sold the concept of it as easy to do and a great way to make money! The conversation then continued with what did I think and would I be prepared to help them manage it. My piece of advice as I like to be positive is it's a great idea but you need to build a reliable team who are available to do the turnarounds for you. This includes a great cleaning team and also a reliable maintenance teams, as we all know things break when you least expect it. The key to SA is high standards and good customer service.
I've seen good and bad SA, from the accidental SA provider, who thinks it is a great idea to deal with a void letting it as a SA unit to organisations who specialise in SA.
Personally I would rather work with the organisation, who specialise in SA. The reasons why include they have taken the time to build a reliable team around them and understand that the ethos is totally different to providing long term accommodation. The market is very different with higher expectations than traditional letting. People are looking for an experience similar to that they get when they check into a hotel. Of course issues do happen and they have to be addressed quickly and great communication is essential.
Although at times there is a need to manage expectations. I recently saw a message from someone demanding we answer their questions late on a Sunday evening about their upcoming reservation. They also rang the emergency out of hours number demanding we call them back urgently. It wasn't urgent it was asking if there was a window in the bedroom and if not that they wanted a fan! Needless to say they continued to send messages saying that we should be available 24 hours a day to answer their questions and it wasn't good enough. Luckily they cancelled their reservation!
Starting small is a good idea with one or two units and then once you are comfortable build up what you have. It is much easier to learn and perfect the service with less units, otherwise your team can feel overwhelmed.
Expect to get issues when you onboard new properties, nothing is ever perfect but learn from it. I've recently been involved in a large project and although we had created a frequently asked question section, each day was a learning curve because we hadn't thought of all the questions that might come up. Each time we were asked a question we added it to a folder to share with the guests before their stay. We have modified it and added videos from how to use the sofa bed to getting to the property from the local train station. Heating - every system is different and thermostats are as well. We added a video and are now on version 3 as we have found it was still too complicated on version 1.
Supporting the housekeeping team as well is essential. Initially with a few units it is much easier to manage but as you onboard new properties it is essential to ensure they are managing. My clients use a platform to manage their SA and our housekeeping team have access to their own section. However, it doesn't show them when a booking has been extended only as a check out and check in. We also use WhatsApp to ensure they are aware of any extensions, so that they can schedule their cleaning. Again if we get an early check out we let them know, as some days they have more capacity than others.
The same goes for the rest of the team. Mondays and Fridays are the busiest, so I make sure I am available later on in the day, for the check ins. Although we do give the guests the out of hours number they tend to try and phone the mobile number instead. With bank holidays we make sure someone is around for check ins and issues.
The key things I have learnt are:-
That particular Sunday morning resulted in me standing on a train platform, waiting for a family member trying to sort out numerous issues caused by the power cut. That is one weekend I will never forget, as I had never experienced anything quite like it in all my years of property management! But I still love that every day is different.
To take a deposit or not as a landlord? The choice is yours. Some landlords and agents choose to use deposit free schemes, while others prefer to take a cash deposit as they feel that if a tenant can pay the first months rent and a security deposit upfront then they must be fairly okay as they have the funds available. However, this is not always true and I have seen it backfire spectacularly, after just a few months.
The deposit free schemes work instead of the cash deposit and the tenants needs to meet the criteria of having a clear credit history, although I have seen rare incidences where people with a poor credit history have been accepted as members. The tenant's pay a membership fee to the scheme and the landlord is covered for a set period of time if the tenant defaults on the rent or fails to leave the property in a satisfactory condition. There are pros and cons to this and often tenants fail to read the small print and don't realise they are liable for any costs paid out by the insurance scheme to the landlord.
However, if you decide to proceed and take a deposit, the maximum that can be taken for a holding deposit in most cases is the equivalent of one weeks rent. There are laws around when the holding deposit can be withheld. Most agents and landlords suggest that if you have failed to declare your adverse credit history and if you change your mind at any point during the referencing process. A lot of prospective tenants pay their money but forget that you don't actually work for free and will argue about wanting it back if they pull out. I have seen a run on this over the last few months, with tenants assuring you they have a creditworthy guarantor but when you actually reference the guarantor they aren't creditworthy. The next conversation from the prospective tenant is that they want to change who their guarantor is. It is not until you take the time to explain in great detail that they only have 15 days from paying their holding deposit and to complete their application and that on day 15 this really is too late and no the landlord isn't prepared to give them extra time to complete their application. And guess what you actually completed your application form signing to say you agreed to the terms and conditions which state you have 15 days from paying your holding deposit to complete your application.
At this point they then ask for their deposit to be returned and the standard phrase recently is 'you haven't done that much work!'
When you ask for the remaining funds you ask for traditionally you ask for the first months rent upfront and the deposit. In total, legally the maximum amount of deposit you can take is 5 weeks. So you need to take of the holding deposit and work out the remaining amount. Also a note on calculating holding deposits is monthly rent x 12 divided by 52. When it comes to rents some landlord like to collect all their rents on the 1st of each month, as it helps with the tenant's finances, so it is not uncommon to need to pro-rata the rent. A rule of thumb is if they move in after the middle of the month to collect the remaining rent for that month and the full rent for the next month.
There are a number of different tenant deposit schemes authorised by the government and they offer both insured and custodial schemes. The former the landlord or agent hold the deposit, in their bank account and the later the scheme itself. As with everything relating to tenancies there are laws relating to the registering of deposits. From the payment of the deposit you have 30 days to register the deposit in one of the schemes and during this time you need to send out the prescribed information to tenants for signing.
A note on prescribed information some deposit schemes provide you with the prescribed information and you fill in the information, relating to the tenancy. While others provide you a template document which you need to customise. Unfortunately I have seen some less experienced clients not realise it is a draft document and that they need to edit it before sending it out to their tenants for signing.
We are all human and make mistakes but this can be quite a tricky one to unpick, as it doesn't look professional and reflects badly not only on them but the people supporting them. Of course if you don't know or unsure there are some great organisations around who can help you comply with all your legal obligations.
Congratulations you are a landlord and have found your tenants, but are new to the industry and unsure of how to get started and what you need to do.
Of course there are different options. You might have decided to use a letting agent and go fully managed or you might decide to opt for a tenant find or decide to self manage. Whichever option you have decided to go for my suggested starting point is to the join the NRLA. Their advice is invaluable and the templates mean you don't need to reinvent the wheel. The hard work has been done for you.
But knowledge is power and keeping up to date requires time and effort. Some tenants are very savvy and some organisations love to portray landlords as the baddie! Only a very small minority of landlords are bad and the same applies to tenants but these create news headlines.
From drawing up your tenancy agreement and sending out the right documentation, to managing your tenants throughout their tenancy and just as importantly after they leave returning deposits in a timely manner.
Communication is key between landlords and tenants to a successful tenancy, but nobody wants to be disturbed at 10pm on a Saturday night reporting that a lightbulb has blown. By setting boundaries and putting processes in place for out of hours emergencies, as well as what constitutes an emergency this can help. We all appreciate how frustrating it is when the washing machine breaks, but it is not in most cases an emergency, unless there is water flooding out of it.
There is a tendency now to believe everything needs an immediate response and that we are surgically attached to our phones! I was recently talking to another business owner who told me that she regularly receives messages at all times of the day and night, seven days a week.
Instant messaging is great but there is a limit. I suggest that my clients set up an out of hours telephone answering service, where a message is taken and then you receive a text alerting you to an issue. This adds a boundary and means that you are not always available for less urgent issues.
The kind of calls my clients get include lockouts and heating and hot water issues and also means that tenants are aware that we do not work 24 hours a day 7 days a week and won't reply to instant messaging platforms outside normal working hours but still provide an emergency service. This has worked well with the clients who have implemented it and does mean that time is protected outside normal office hours.
With the additional layer of the out of hours number you can decide if it is a genuine emergency and which member of the team is going to respond and sort out the issue. Providing an on call service is physically and emotionally draining and means that you never have any time to yourself. I personally keep a separate number for each of my clients and also make sure to turn the phone off at the end of my work hours.
I never fail to be amazed by the number of people who think that it is fine to contact you at any time day or night and on a Monday morning regularly find messages about all sorts of different things, from the kitchen is dirty to have you had my rent payments.
Your new prospective tenants has viewed your property and fallen in love with it!
There are lots of different options when referencing your tenants from done for you, to undertaking the task yourself. Depending on your time you might decide to outsource it, where you see the completed report and the tenant deals directly with the referencing company or if you have more time you might opt to collate all the information yourself and get the tenant to complete their application on the referencing portal and upload their documents.
There are pros and cons to both, but personally I prefer to see all the information and then upload it our end. Recently I have seen a number of prospective tenants actually lying to get through the door to view properties (2 in one week, for the same property)! I understand there is a shortage of rental properties and a surge in demand, but I am not sure how they think they will secure the property once you start the referencing process. They tell you they earn a certain amount and it is for 2 people, yet from the information they give you verbally, then it is doubtful they really do earn this. By asking them to complete a tenant application it is possible to find out before you start their tenancy application whether they are likely to pass the affordability or have any credit issues. At which point the salary drops significantly and it becomes just for one person.
I recently learned of one company where the prospective tenants can choose the information they choose to share in relation to their bank statements. Having referenced lots of tenants over the last few years some things are not always clear cut. Yes their credit score might be okay, but when you actually look at their bank statements, certain things might stand out, like a gambling habit or always being overdrawn. Obviously they might get lucky one day and win a large amount from their gambling habit, but as a Landlord you don't want to take the risk that your rent might not be paid.
At this point you might decide no or you might decide to ask for a guarantor. The choice is yours. I have recently seen some discussion around the role of guarantors and that perhaps one day everyone taking out a tenancy will be required to have one. Again the criteria varies slightly for some people. Some insist on a home owner while others look at affordability and providing they meet the criteria are happy with this. However, for student accommodation this will depend. Some landlords and agents are happy with the parent signing the guarantor documents and nothing else, while others are more rigorous.
The general criteria that the clients I work with opt for ensures that they can get rent guarantee insurance are:-
Not everyone has a guarantor available to them and for some people this limits their access to the private rental sector. There are guarantor companies available and while some agents and landlords don't accept them, others are willing to. They work by the tenant paying them a set amount at the start of the tenancy and at the time of each renewal. This covers the landlord for rent arrears and other things like damage. However, you do need to look at the terms and conditions carefully before deciding to go ahead. Some policies insist that if you are taking tenants who claim benefits their rent must be paid directly to the landlord. In the current situation a lot of tenants who are in work receive a top up of benefits and are very capable of managing their budgets and this does feel like they are being penalised for needing a top up. As anyone who has ever tried to get rent payments directly to the landlord they are often refused, so this is not quite as straightforward as it might seem. Also as soon as the tenant is a few days late (typically less than a week) you need to notify the rent guarantee company. I think the advice here is do your homework and work out what is best for you.
I am a specialist property virtual assistant, looking after HMOs, single lets and multi lets.