Are you looking for an easier way to find a tenant, or has the previous one proved problematic? There are many difficult decisions, responsibilities and risks involved in starting a tenancy, and especially in choosing a tenant, which is why you might consider using a rental agency. A letting agency can offer an easy, time-saving and safer solution than renting on your own. However, it is important to remember that the responsibility for the success of the tenancy passes to the landlord from the moment the tenancy agreement comes into force.
We will go through the key steps and benefits of renting a property as opposed to the traditional, self-help methods of renting a home on a long or short-term basis. We will address challenges such as the varying reliability and conditions of brokers, and the ultimate responsibility of the landlord. We compare rental brokerage, in particular for renting to businesses through a dedicated service that, in addition to rental brokerage, takes care of managing the tenancy, respecting the tenant's rights and paying the rent on time.
What is a rental agency?
Landlord and tenant brokerage refers to a landlord acting as an intermediary between the landlord and the tenant. You can even hire a specialist company or a private person to act as a letting agent. The agent will take care of marketing the property, selecting the tenant, drawing up the tenancy agreement and possibly other services.
The main tasks of a rental agency
- Site evaluation
- Pricing of the destination
- Destination marketing
- Processing of applications
- Managing screens
- Drawing up a rental contract
- Starting a tenancy
Benefits of a letting agency for the landlord
If the rental agency service knows what it's doing, it's a win-win situation:
- Time saving: the rental agent takes care of the key steps in the rental process.
- Expert help: the agent has experience of the local rental market and legislation.
- Faster rental process: agents reach a wider range of potential tenants through their marketing channels.
- Risk management in tenant selection: professional background checks help reduce the risk of choosing an unsuitable tenant.
- Tailored service: a rental agency can offer flexibility if the landlord can choose which parts of the process to outsource.
The risks of letting for the landlord
- High costs: the landlord often pays a commission regardless of the length of the lease.
- Tenant selection failure: if the broker does not carry out sufficiently thorough background checks.
- Quality variation between providers: an unreliable or inexperienced intermediary can make mistakes that affect the success of the process.
- Lack of responsibility during the tenancy: most rental agencies do not offer support in managing the tenancy after the contract is signed.
- Exclusive contracts:
Some agencies may have exclusive rights to a property for a certain period of time, which may limit the landlord's ability to find a tenant, increasing the number of empty months.
How is rental agency different from other ways of renting?
There are several different ways for landlords to rent out their investment property. Below are the different ways of renting, their characteristics and who they are best suited to.
Rental agency
In a rental agency, the landlord outsources the rental process to a professional. The agent handles the marketing of the property, the selection of the tenant and the drafting of the rental contract, depending on the conditions.
- Hassle: Minimal - generally speaking, the whole process is handled by the letting agent up to the signing of the lease, but usually the landlord manages the lease himself after the contract is signed.
- Risk management: the broker assesses the background of the tenants and draws up the contracts with professional accuracy.
- Costs: one-off fee for the acquisition of one tenant.
Suitable for: the landlord who wants to save time and reduce risk during the rental process, but is also prepared to put in the effort to manage the rental relationship.
Traditional long-term rental
In a self-catering rental, the landlord is responsible for the entire rental process from start to finish. This option requires the most activity, but offers full control.
- The hassle: the landlord does everything himself, such as marketing, organising exhibitions, choosing the tenant and drawing up contracts.
- Risk management: depends on the landlord's own ability to carry out background checks and manage contracts.
- Cost: the cheapest option, as no external services are used.
Suitable for: landlords who want to save costs and manage their rental independently.
Airbnb and Booking-type short-term rentals
For short-term rentals, accommodation is offered to tourists or short-term visitors through online services. The landlord is responsible for booking and maintenance.
- Hassle: Big - the landlord handles marketing, reservations, cleaning and customer service.
- Risk management: online services provide security mechanisms such as reviews and insurance, but the landlord is responsible for any damage and wear and tear.
- Cost: Services typically charge 10-20% of the reservation. Furnishing and maintenance costs are additional.
Suitable for: landlords who want to take advantage of the higher profit potential of short-term rentals and are willing to work actively.
Rental for businesses
Renting accommodation to businesses is usually related to project accommodation or the need for employees, on a long-term or temporary basis. A fully furnished and equipped apartment is the most attractive option for businesses.
- Difficulty: varies - The landlord can do the tenant selection, tenancy management and furnishing himself, but outsourcing through the service reduces the workload significantly.
- Risk management: companies are often reliable payers, but careful background checks are still important. The brokerage service can provide additional security, for example by paying the rent themselves rather than waiting for the company to pay.
- Costs: business customers pay higher rent, which improves returns. However, it is usually difficult to find corporate tenants without a dedicated service.
Suitable for: landlords who want more reliable tenants and higher returns.
The steps of a letting agency
A letting agency consists of several steps to ensure that the rental process is efficient and that a reliable tenant is found.
1. Valuation of the property and determination of the rent
- The location and condition of the property, the rent levels of similar properties, the competitive situation in the area.
2. Marketing your rental property
- Professional quality images and introductory text will increase the attractiveness of the ad, which will be published on rental platforms such as Front Door or Oikotie, and possibly on social media and targeted channels.
3. Agreeing on property showings
- The landlord will organise showings and arrange introductions with interested tenants to highlight the benefits of the property and answer questions from potential tenants.
4. Tenant background checks
- Credit history, ability to pay, references and rental history are checked.
5. Drawing up a rental contract
- The contract is drawn up in accordance with the law, including the main terms and conditions, such as the amount of rent, payment schedule, security and the responsibilities of both parties.
6. Securing a guarantee and home insurance
- These protect the landlord in the event of damage.
7. Inspection and documentation of the condition of the dwelling
- Before the tenancy starts, it is important to check the condition of the property and document any defects. This will prevent disputes at the end of the tenancy.
8. Handing over the keys
- The keys are handed over to the tenant, which in most cases means that the landlord takes over the management of the tenancy.
Next, let's go through a couple of essential steps for a successful rental.
The role of the rental agency in the drafting of the rental contract
Although the letting agency does most of the preparation of the contract, the landlord's involvement ensures that the contract serves his needs and prevents potential problems during the tenancy. It is therefore advisable for the landlord to think about the terms of the contract in advance.
Type of contract: fixed-term or indefinite?
The letting agent can recommend the type of contract, but the decision depends on the landlord's objectives:
- Fixed-term contract: Binding on the parties for a certain period of time and cannot be terminated before the end of that period without a specific reason. This is suitable for situations where the duration of the lease is known.
- Contract of indefinite duration: a more flexible option that can be terminated within the statutory notice period. Particularly suitable for long-term tenancies.
Rental conditions and payment arrangements
The terms of the contract should be clear and unambiguous. These include, for example:
- Rent payment date and method: Specify whether the rent will be paid by traditional bank transfer or by an automatic payment system.
- Rent increases: if the rent is to be increased annually, the contract should include a clear condition for the increase (e.g. indexation or a fixed percentage).
Guarantee and home insurance
The terms of the security deposit and home insurance are important to protect the landlord.
- Amount of security deposit: according to Finnish law, the security deposit may not exceed three months' rent. Decide whether you want to use this maximum amount or attract applicants with a lower deposit.
- Home insurance: make sure the tenant has comprehensive home insurance, including liability insurance.
Responsibilities and costs
The lease must clearly define the responsibilities of the landlord and the tenant:
- Landlord's responsibilities: maintenance of the apartment and the common areas of the property.
- Tenant's responsibilities: taking good care of the property, reporting any faults and following the instructions for use.
The distribution of operating costs is also important:
- Are water and electricity included in the rent, or are they billed separately?
- If it is a furnished apartment, what maintenance or servicing costs will the tenant pay?
Documentation and annexes
The annexes to the rental contract ensure that the terms of the rental are transparent and disputes can be avoided:
- Condition of the dwelling: attach photographs and a list of fixtures and fittings documenting the condition of the dwelling at the start of the tenancy.
- Special conditions: for example, allowing pets, no smoking or subletting conditions should be included in the contract.
Signing the contract
The rental contract can be signed either electronically or on paper. Both are accepted and legally binding in Finland. Before signing, please check the agreement to make sure it contains all the relevant terms and requirements.
Entry into force of the agreement
- Handing over the keys: handing over the keys is the moment when the lease takes effect and the tenant gets the right to manage the property.
- Recording: the number of keys should be recorded and the parties should confirm the handover in writing, by filling in a key handover form. This will prevent disputes at the end of the tenancy.
The role of a letting agent in choosing a good tenant
The role of the letting agent is to facilitate the tenant selection process and to carry out key steps in the process, such as receiving applications and conducting background checks. However, success depends on the diligence of the agent, the methods used and the criteria set by the landlord.
What can a letting agency offer when choosing a tenant?
The services of a letting agent may include the following steps:
- Background checks: the broker checks applicants' credit history and any payment defaults to ensure financial stability.
- Rental history check: in some cases, the agent will ask for references from previous landlords or assess the applicant's previous rental history.
- Screening of applications: The agent may screen out applicants who do not meet the criteria set by the landlord (e.g. sufficient income or long-term commitment).
- Interviews: the intermediary can interview applicants and gather more information about their needs and life situation.
Such a systematic process helps to reduce risk and find tenants that are suitable for both the landlord's needs and the rental property.
What is usually the responsibility of the landlord?
Most rental agency services focus on the initial stages of the tenancy, such as drafting the contract and selecting the tenant, but the ongoing management of the tenancy is often left to the landlord. Although a letting agent will try to find a reliable tenant, there is no absolute guarantee of a successful tenancy.
- Uncertainty about the quality of the tenant: although the agent can make careful checks, the tenant may not meet expectations of the tenancy or remain a long-term resident.
- Responsibility for success lies with the landlord: most rental agencies are not involved in the ongoing management of the tenancy, such as monitoring rents, dealing with repair requests or resolving conflicts.
- Payment problems: the tenant may face financial difficulties that affect the payment of the rent. Even if the broker checks the credit history, the situation may change during the contract.
- Maintenance of the dwelling: the tenant may not respect the terms of the contract for the maintenance of the dwelling, which may cause damage or extra costs for the landlord.
How can a landlord prepare for challenges?
While a letting agent can help you get the tenancy off the ground, the landlord should be prepared to play an active role in solving any problems that may arise:
- A clear contract: A rental contract that clearly defines the tenant's responsibilities and possible penalties for breach of contract.
- Communication: open communication with the tenant can prevent problems and help solve them quickly.
- Support and advice: If the landlord needs extra help, consider a separate tenancy management service, where a professional handles rent control and problem situations.
Renting an apartment for businesses
Renting an apartment for business is a popular option, especially for long-term project accommodation or to house employees. Businesses are generally low-risk tenants, as they typically have a more stable payment record than individuals and are more compliant with their contracts. Even when renting to businesses, it is still important to ensure clarity in the rental contract, for example in the areas of use and subletting.
Companies value ready-to-move-in furnished apartments, especially in big cities such as Helsinki, Tampere and Oulu. Furnished rental apartments with all the necessary amenities are in high demand as they facilitate the logistics of the business. Companies' needs for the length of tenancy vary between short and long term tenancies, usually between a couple of months and a year.
Immodan as a hirer for companies
Immodan offers tailor-made accommodation solutions for corporate clients. Landlords can be offered different types of contracts for occupancy, such as open-ended contracts with only one month's notice. If an advance tenant is found, a fixed-term tenancy can also be agreed.
Immodan offers a safe and easy solution to enjoy the benefits of renting to businesses without the hassle, so rent your property through Immodan.
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