PROPERTY | SPECIAL
VANITY OR SANITY RUPERT SMITH OF COMPLETE RPI TALKS LETTING AGENTS, FURNISHING AND INSURANCE IN HIS LATEST COLUMN ON UK PROPERTY INVESTMENT.
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y name is Rupert Smith, the founding Director of Complete Residential Property Investments Ltd (hereinafter CRPI). We are a specialist property investment company offering a unique and results-orientated commercial approach to UK property investment.
HOW DO I APPOINT MY LETTING AGENT? Now there is the million dollar question! Whether appointing an agent for letting or sale typically this decision has been made purely based upon either location relative to the property itself or referral from the developer who sold the property. Word to the wise: neither option in my view is very strategic or standalone, nor does it offer the right amount of exposure from a marketing perspective. The estate agent closest to the property is handy for viewings and may well know his local market; however, it’s doubtful that they will be able to offer the property the exposure it rightly deserves from either a sales or letting perspective. I have attended many property exhibitions over the years and my mind continues to boggle when it comes to appointing an agent. Poor unsuspecting investors part with their hard earned cash and are herded in the direction of the “preferred” agent at the back of the room. I don’t care how good an agent thinks he is but if they are attempting to let, often in excess of 100 properties at a time in the same development, there will be trouble. Our approach at CRPI is fundamentally different. Why of course it is I hear you cry as I try to sell you you my wares but rest assured it really is and indeed it is proven more to the point. I took the view as an investor that when attempting to source a suitable tenant, exposure to the maximum audience is key. With the advent of the internet and many property portals there is no doubt that the marketing of property reaches a wider audience than it used too. However, good old fashioned completion really does work wonders. CRPI will firstly market the property to a global database of corporate employers whom we house already, then relocation agents and then we shall appoint multiple estate agents nationwide. The reality is in this day and age the tenant may well come from overseas and/or have relocated from another part of the UK. In essence we offer the property to the entire marketplace of which the net result is a better quality occupant paying an optimum rental. CRPI interface with all third parties therefore the client has a single point of contact at CRPI, rather than having to interface with multiple agents. Furthermore we consolidate our clients’ portfolio as we let and manage property anywhere in the UK. Most of our investors own more than one UK property (albeit we are happy to act for just the one) and the common statement of “dealing with estate agents is very taxing” continues to ring in my ears! The marketplace has changed dramatically as has indeed has the business of estate agency. My view from a letting’s perspective is to create as much marketing exposure as you can, especially in today’s market. By way of reference CRPI manage over 1,000 properties in the UK and we currently stand at 98% occupancy, not just because we are brilliant but market forces are unlike any I have experienced in nearly 30 years of being in the industry. When appointing an agent for sale you generally pay a reduced fee for exclusivity, circa 1.5 – 2% sole agency and 2.5 – 3% multiple agency; my point being this does
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It is highly recommended to obtain rental guarantee insurance, and here at CRPI this comes as standard and free to all clients in the first year of every new tenancy. not apply when appointing your agent to let, therefore why not maximise your exposure? By way of example, only this month we marketed a client’s fairly normal one-bedroom apartment in Surrey, which we had taken to the market and ended up having six estate agents bidding on. We made the decision to take the property to a “sealed bid” (we gave all interested parties a timeline to submit best and final offers) and the property was let for in excess of the asking price on very favourable terms – the full term rent was paid in advance, thank you very much! One final note on this topic. “The bigger the better ?” Not necessarily. It’s all well and good appointing an agent with national coverage, offices worldwide etc. But in my experience, in this industry the smaller agents are more hungry for the business. Always look out for accreditation; it is good practice like most professional organisations to have this. Look out to see if your agent is a member of ARLA (Association of Residential Letting Agents), OFT (Office of Fair Trading), TDS (Tenancy Deposit Scheme) DPS (Deposit Protection Service) and TPO (The Property Ombudsman).
I SHALL FURNISH YOU WITH SOME ADVICE It makes me weep every time I speak to a poor unsuspecting investor who has acquired a furnishing pack. Unlike the majority of Europe, the UK seems still intent of furnishing property to let; however, you really don’t receive a premium for the very expensive privilege! There is simply no need to provide a fork, spoon, ironing board and random wall art unless you, the person paying, is receiving a premium for doing so.
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The best advice I can give you is buyer beware and use this contentious topic as a form of negotiation at the time a tenant has been identified. Furnishing can be installed with a few days’ notice and the price can vary tremendously. I am firmly of that the view that less is certainly more and invariably future tenants will want some furnishing removed or added to at some point which proves complicated. I agree that in the event a prospective tenant has the option of either a fully furnished property with all the bells and whistles versus an unfurnished property, then the former is more attractive. That said it does not mean you have to acquire the furnishing prior to letting! If the property is offered to the market on an either or basis this is without doubt a more cost effective and logical approach. In my experience a tenant will always want more than they actually need. Case study: we recently let a central London apartment for a client who was about to pay in excess of £6,000 for a very basic package on the advice of his agent (who dare I say it had an interest to declare, as referral for furnishing packages can be very lucrative!). We advised not to carry the upfront cost and wait until a tenant expressed an interest. When a tenant was found by CRPI they did require a sofa, bed, mattress and dining table, at which point we negotiated very favourable tenancy terms and 12 months’ rent up front. Had the furniture package already been installed with many items not required this negotiation could not have taken place. I rest my case. Furnishing lecture over.
INSURANCE MATTERS The last topic of this month’s article relates to insurance, both contents and rental guarantee. Contents to begin: it is highly recommended to put in place a contents and accidental damage insurance policy, which generally speaking cost somewhere in the region of £200 per annum for £10,000 worth of cover. Bear in mind that even if a property is unfurnished it is wise to have the cover as the general fabric of the property could be costly to repair or replace, such as windows, bathroom suits etc. This cover is taken in addition to any tenants’ deposit which is generally equal to six weeks rental. Why? Well in the event the tenant decides not to pay his last month’s rental then there simply may not be enough protection in place. “Belt and braces” yes, but wise in my experience. Do not mistake this insurance with buildings insurance which is normally paid through your service charge and merely protects the actual building itself against flood, fire, movement etc. Furthermore, content’s insurance for rental HKGOLFER.COM
property is specific as many insurers will not offer this. CRPI are able to introduce a numbers of insurers who can facilitate this. Rental guarantee insurance: whilst we have a stringent referencing process sometimes tenants fall into difficulty and are unable to meet there financial obligations. As we all know, circumstances can change. Again, it is highly recommended to obtain rental guarantee insurance and here at CRPI this comes as standard and free to all clients in the first year of every new tenancy. This insurance will cover loss of rental income and will pay out immediately upon the occupant falling a total of 60 days in arrears. So by way of example, if your tenant had signed a 12 month contract and fallen into arrears in month three you will receive the balance on rental due for the term of the agreement, 9 months. The typical cost of this premium is circa £160 per annum with no excess. CRPI have a bespoke product and can facilitate this for any tenancy, even if not under management, subject to references. Next month I shall be addressing topical issues such as gearing, rent levels, corporate tenancy and inventory / property inspection. Should you wish to get in touch or have any questions please do visit us at completerpi.com.
YOUR PROPERTY, OUR PRIORITY Let Complete RPI overview your UK property free of charge and answer the following questions: - Is your property under-let? We increased our rental income for client's by 7% last year, did your agent? - Have you contracted with the most up to date tenancy agreement? Changes in legislation occur daily. - We only charge monthly fees, are you paying up front? We charge a monthly Letting & Management Fee and no up-front fees, does your agent do the same? - We offer free rental guarantee insurance, does your agent? - Is your property inspected every three months by an independent inventory clerk? If not it should be and we pay the cost. Does your agent? - Do you have 24 hr access to your very own bespoke online property platform which allows you to view all aspects of your property including management statements, invoices, interim inspection reports, values, gearing ratios, etc ... at Complete RPI this is standard. The answers to these questions and many more could both save you money and increase the return on your capital invested. Please call us on +852-9307-0337 or write to info@completerpi.com Why not visit us at www.completerpi.com ... “Your Property, Our Priority."
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