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Should you employ a letting agent?

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This week the Property Poser expert assists a reader who does not have a problem at present but is proactively trying to prevent one.

The reader explains that she would like to rent out her townhouse, which is in a sectional title complex, and is considering using the services of an estate agent to make the process easier.

The agent has found a seemingly suitable tenant and is pressing the reader to sign the contracts he has provided, namely a mandate and lease agreement.

The reader is concerned that the agreements are not properly drafted and would like to know what she should look out for to prevent any problems at a later stage.

Sean Radue of Radue Attorneys in Port Elizabeth says the agent’s remuneration will be a percentage based on the monthly rental.

“The agent will carry out certain aspects relating to the process such as conducting the inspection of the premises.”

Contractually, the agent appears to do very little beyond this and one should ask whether there is commensurate value in the services provided, says Radue.

“Of course, the agent is better placed to source a tenant and carry out the useful background checks on a prospective tenant.”

This is not to say that the reader could not do the same thing, he says.

“Given sufficient time, she too could carry out these checks. Likewise, advertising the townhouse online or in a local newspaper isn’t that difficult but it requires time and effort.”

Radue says the reader must ultimately consider whether there is value in having an agent take care of the details rather than organising the letting process herself.

“The townhouse should be inspected, the rental collected and paid over and any breach should be resolved as quickly as possible.”

He says it is debatable as to how far the agent’s role should go regarding a major breach such as non-payment.

“Some agents will issue a summons to recover rental on behalf of the landlord and this can be quite useful, removing this responsibility from the owner.”

The reader would have to ensure that this arrangement is specified and that the mandate to the agent permits this, says Radue.

“At the very least, where a breach in payment occurs and as long as the breach persists, the agent should not be entitled to his commission.”

He says this would be particularly relevant in the instance where the agent has vetted and recommended the tenant.

“This also provides the agent with an incentive to ensure prompt payment each month.”

As far as commission is concerned, the reader could consider a reducing commission structure over time, says Radue.

“The process should become somewhat mechanical and problem-free and the agent’s involvement could well reduce over time.”

He says the appointment of an agent should simplify the leasing process for the reader and not raise additional problems.

“Clear boundaries and duties should be set out to avoid any misunderstandings at a later stage.”

If aspects are unclear, these should be resolved at the start of the relationship, says Radue.

“If no agreement can be reached, it may be better for the reader to seek assistance elsewhere.”

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Fullstop

Full Stop Communications is a public relations consultancy in Port Elizabeth in the Eastern Cape of South Africa focusing on media relations and copywriting. We drive regional and national media campaigns in a number of fields, most notably in the property, legal and sports arenas. We also specialise in media monitoring, ghostwriting, editing, translation and advertising. See more articles by Full Stop.