Going It Alone

We own a small studio flat which we bought for my son to live in during a gap year in his studies. We have been renting it out via an agent for the past 4 years or so and have now paid off the mortgage so are finally fully benefiting from the income. (An extra expense we had a couple of years ago was having to buy a lease extension which cost over £10,000 - but that's one for another post).

For the most part we've had good tenants, one of whom stayed 2 years which was great (no void periods and none of the expenses attached to finding a new tenant), but we have had a couple of less than perfect ones, one of whom continually complained about tiny maintenance issues (loose screw in window catch etc.) and one who got himself deported to South Africa on New Year's Eve owing 2 months rent.

However, because we pay 12% for a fully managed service, the agents sorted out any issues and we just paid the bills (which, to be honest, have seemed ridiculously high at times for things like minor repairs and cleaning). In other words, up until now we have been taking the "our time is more important than our money" stance as far as the flat goes.

But the current tenant has just given 2 months' notice and this has prompted me to have another think about this strategy, mainly because I came across the OpenRent website. The difference in cost between what we pay and how much they charge is quite substantial.

What we're paying: - 

• Initial charges: (ie advertising, contract, deposit registration, references, rent collection) - £395.
• Ongoing Charges: (Conducting viewings, Organising any repairs, ongoing rent collection, meter readings etc) - 12% + VAT

What our current agent offered when I told them we were thinking of using OpenRent:

• Initial Charges:- £295 +VAT
• Ongoing Charges - 10%

What we would pay with OpenRent :-

• Initial Charges: £49
• Ongoing Charges: Nil

In cash terms this means that by using OpenRent and DIYing we would be saving at least £1000 per year. (All other things being equal of course - there is the danger that the property won't go as quickly with OpenRent due to them being an online only service, but I think that's a smallish risk - surely a fair number of people use Zoopla and RightMove? and the flat is in a great area. On top of that we have had empty weeks with our current agent anyway so I think it's worth a try).

Is this saving worth the work? I think so. It means £1000 a year (less any extra tax that's due) that could be going straight into our ISAs and even if we don't strictly speaking "need" the money now, we certainly will once I leave work. I think it's worth giving it a go and learning to deal with what's involved sooner rather than later.

I'll be spending the weekend reading up on landlord's responsibilities and making sure we know how to cover all bases before I take the plunge and give our agent the required 3 months' notice to quit. It's still a little scary though :-)