Almost half of buy-to-let landlords say they would dump their letting agent if their profits started to drop, fresh research from the UK Association of Letting Agents (UKALA) has revealed.
A significant number of buy-to-let landlords currently do not use letting agents to find or manage properties, and now this new study, undertaken to assess what impact the phasing out of mortgage tax relief from April 2017 could have on agents’ businesses, has found that 47% of landlords which do currently use agents would consider doing the same if the numbers did not add up.
“We’re firm believers that as landlords’ purse strings are tightened by tax changes and the expected increases from traditional letting agents that landlords will look for alternatives,” said Gillian Kent, chairman at No Agent.
Aside from the forthcoming changes to landlord taxation, another major issue that private landlords in England may soon have to contend with is that of addition letting agency fees.
The announcement during the chancellor’s Autumn Statement of an outright ban on letting agents’ fees to tenants was clearly designed to shift the costs to landlords, and although details are still very unclear, with the DCLG planning a consultation ahead of bringing forward legislation, Philip Hammond has already stated that the government believes the ban should be brought in “as soon as possible”.
Richard Price, executive director of UKALA, said: “A significant number of landlords will be hit hard by the tax changes and agents’ fees will be one of the items underneath the magnifying glass if profits begin to decrease.
“As landlords’ costs inevitably rise, agents will need to do more to position themselves as indispensable, and make it obvious that they provide solid value for money. Otherwise, as future tenancies come to an end, landlords will either shop around or start to consider self-managing their properties.”
While UKALA’s latest research will come as a blow to letting agents, Richard Lambert, chief executive at the National Landlords Association (NLA), was quick to point out that landlords do not profit from these tenant fees – they go to the agent. Consequently, while agents will be keen to maintain their revenues, landlords will also be looking ahead to the forthcoming tax changes and working out “how they will be able to maintain profitability”.
But while it may seem an appealing proposition to minimise your outgoings, Lambert insists that the majority of landlords “simply won’t have the resources to deliver a service that meets the standards or professionalism that their agent currently provides”.
The question is, do you agree?
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Given that many letting agents charge around 15% + VAT just for being the 'middle-man' in passing on rent and charging landlords excessive amounts for occasional repair and maintenance items - plus their additional 'fees' (I've heard of agents charging £100 per hour waiting time while a tradesman visits to repair something!) - , I'm not sure why any landlord would employ an agent. Internet means that landlords even can manage their properties from abroad. I used to have to sort out problems with agents I was engaging, rather than problems with tenants. Now happy to manage my properties myself.
Looks like you got well and truly ripped off David. Just hope you're up to speed with all the legislative changes and don't get caught in the many "elephant traps" being laid by the Govt..... with many more to come, no doubt.
This article, and the comment from David, all point to the lowest common denominator. The agent that charges as much as possible yet does as little. These agents, whilst seemingly reputable, continue to do untold damage to the industry in the prsuit of lazy profits but do damage the perception of the industry and endanger its future.
That said, any Landlord that has ever used a good agent will know just how much value they add in terms of rents acheived (in most cases agents acheive higher rents covering most, if not all, of their fees), reduced voids and the professional handling of all issues from compliance to trick issues.
Much like the 'threat' of online agents, if you give a great service and constantly look to improve and innovate then you really have nothing to worry about.
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