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Manage your rental yourself or use an agent?
Managing your rental yourself saves you the agent’s fee, but it takes your time and puts the legal risks on you. Using an agent costs money, and the right one takes a lot of work off your hands. The better choice depends on how much time you have, how close you live to the property, and how comfortable you are with the rules.
What managing it yourself involves
You become responsible for everything an agent would otherwise do:
- Advertising the home and showing it to applicants.
- Screening tenants, which means checking identity, income and credit history.
- Drawing up the lease and explaining it.
- Collecting the deposit and keeping it in an interest-bearing account, with the interest going to the tenant.
- Doing the joint inspection before move-in and again within the three days before the lease expires.
- Collecting rent and chasing late payments.
- Arranging repairs, often at short notice.
- Giving notice and following the proper steps if something goes wrong.
If you live nearby and have time, this can work well. You also keep the full rent, and you know your tenant. The risk is mistakes. A missed inspection, for example, means the law treats you as accepting the home was in good repair, and you may have to refund the whole deposit. And you may never use a lockout or cut services to put pressure on a tenant. You need a court order to repossess or to seize goods.
What an agent does
A letting agent usually finds the tenant, checks applicants, prepares the lease, handles the deposit, collects rent, arranges inspections and deals with repairs. Some agents only find a tenant. Others offer full management. Ask exactly what each fee covers.
A property practitioner needs a valid Fidelity Fund Certificate and has no right to payment for work done without one. Ask to see it, and check with the Property Practitioners Regulatory Authority (the PPRA) if you are unsure. Before an agent takes a letting mandate, you must give the agent your signed mandatory disclosure form listing any defects you know about.
When an agent holds the deposit, it goes into the agent’s trust account. Who earns the interest on trust money depends on the lease. A PPRA directive splits trust interest between the agent and the PPRA unless the lease says in writing who gets it. Make sure the lease deals with this.
What an agent costs
Agents’ fees vary and are not fixed by law. Typical charges include a fee for finding a tenant and a monthly percentage of rent for ongoing management. Get quotes in writing from more than one agent, and ask what is included, what costs extra and how to end the arrangement. Agent fees are a deductible cost of earning rent. See tax on rental income.
Questions to ask an agent
- May I see your Fidelity Fund Certificate?
- What do you charge, and what is included?
- How do you screen tenants?
- Where is the deposit held, and who earns the interest?
- How quickly do you pay over the rent after receiving it?
- Who authorises repairs, and up to what amount?
- How do I end the agreement if I am unhappy?
How to decide
Choose self-management if you live close, have time, and are happy to read the Rental Housing Act and learn the steps. Choose an agent if you live far away, own several units, or do not want to deal with late payments and repairs. A middle option is to pay an agent to find and screen the tenant and then manage the rest yourself.
Work out what the fee does to your return before you decide. The rental yield calculator shows how costs change your yield. If you are weighing up a purchase, read buy-to-let: how to work out whether a property pays.
What to do next
- Get at least two written quotes from agents.
- Find agents near the property in the agents directory, or look up an agency in the agencies directory.
- Check each agent’s credentials.
- If you decide to go it alone, learn the deposit and inspection rules in rental deposits: the rules.
This article is general information for South African readers, not legal, financial or tax advice. Rules and rates change, so check your own situation with an attorney, your bank or a tax practitioner. Our property calculators can help you work out the numbers.