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Starting a property management company is the next step in developing a business for many landlords.
The company handles repairs and maintenance for the homes rented out by the landlord. Although anyone can start a property management company, some legal requirements exist.
If you are involved in renting homes and have the right skills but don’t know where to start setting up a property management company, this guide will help you set off along your new career path.
Many builders think they make good property managers because they have the skills to fix a home.
Although some make excellent property managers, skills like communication and running projects are just as important. Property managers sit in the middle of letting agents and tradespeople.
The agent's source and manage tenants, while property managers look after the fabric and environs of the buildings tenants rent. Managing property covers keeping grounds trim, cleaning windows, decorating and dealing with repairs and other issues. Management may also include rent collection, with a percentage as the manager's fee.
The landlord client might also ask a property manager to serve notice on the tenant where there's been a breach, or perhaps the landlord wishes to sell the property. An agent can do a notice on behalf of their landlord client but is not permitted to complete court forms if a possession order is required.
Anything to do with court procedure must be done by either the landlord directly or a qualified and insured solicitor. Some letting agents act as property managers, but portfolio landlords are more likely to split the responsibility between a letting company and a property management company.
If you want a career as a property manager, then the barriers to entry are few and far between. Communication and good organisation are the two primary skills a property manager needs. Regularly, tact and negotiating abilities come to the fore when dealing with tenants, while coolly managing a project by organising quotes, materials, and tradespeople is a talent, too.
You do not need formal qualifications, although you can gain a university degree or on-the-job recognition. Several universities offer real estate or property management degrees.
Professional body Training for Professionals runs regular courses for property managers.
For England, although qualifications are not necessary to start a property management company, failing to join a redress scheme approved by the government is punishable with a fine of up to £5,000 and closure of the business. To apply for registration of a redress scheme, the property manager must take out professional indemnity insurance and agree to abide by a code of conduct.
For Wales, property managers must be licensed with Rent Smart Wales, which includes the completion of online or in-person training. If the property manager also receives rent, they must have client money protection insurance.
This is a legal requirement for England, and for Wales, it will be a license condition. Property managers do not have to align with a trade body, but it’s helpful to join one to keep up-to-date with news, new legislation and refresher courses they offer. Private Rented Sector Professionals is such a body, and the Guild of Residential Landlords also welcomes agents.
The magazine Property Week is also a source of news and information for property professionals.
Most property management businesses start as a limited company or limited partnership (LLP). Whichever framework you pick for your business, you need to register with HM Revenue & Customs (HMRC).
You should also discuss your expected finances with an accountant who can advise you about topics like VAT, PAYE and keeping records for tax accounting. An accountant can also help fine-tune a business plan.
By now, you should have a good idea about what kind of property manager you fancy being. You can pitch your business as a general property manager or consider niches like commercial or agricultural premises, holiday lets at home or abroad, looking after blocks of flats or offices or houses in multiple occupation (HMOs).
The decision depends on where you live and the property type within a reasonable driving distance of your office.
The coronavirus pandemic has proved that service businesses like property management can run from home and an office - remote working saves money and is a better use of time. Renting an office and everything that goes inside is not cheap.
Working from home offers a better work/life balance and savings on rent and phone bills and puts a brake on commuting. However, home working is not for everyone, especially young families in small homes where quiet and space are at a premium.
To start as a property manager, you need the basics: a car, internet connection, smartphone, computer and printer.
According to recruitment site Indeed, the average salary is £28,620 a year, rising to nearly £45,000 with some companies.
A new-start property manager working for their company should do better than the £15 an hour the average salaried worker earns. Most companies charge a retainer for month-to-month work and charge more for any extra time. Premium services, like 24-hour call-outs, are more expensive.
Your business plan should put a figure on the hourly rate you require to charge first to break even, then in annual profit - the difference between the two is your salary.