As landlords increasingly feel the squeeze, with their reduction in yields principally due to increased regulation and tax changes, they are questioning more than ever the point of paying letting agents.
An agent’s services can be crucial for landlords, especially those who have properties far away or a large portfolio to manage. But for those seeking less hassle and less cost there are other choices, with some preferring to go it alone, and that is why letting agents wishing to flourish in 2019 need to go above and beyond to add value to a landlord’s business, according to PayProp.
The leading PropTech supplier says that a combination of key new legislation, market consolidation, a challenging market for landlords and changing consumer habits will force letting agencies to adapt and evolve to remain successful this year.
According to research by Belvoir, the proportion of landlords selling up to three properties increased over the course of 2018.
Meanwhile another agency, Knight Frank, has reported that tax changes have directly prompted many London landlords to sell rental properties.
Neil Cobbold, chief operating officer of PayProp UK, commented: “In 2019, it will be important for letting agents to continue to approach the buy-to-let sector with a positive mindset, reminding landlords at every opportunity why the rental market continues to be a good place for investors with the right agency partners.
“Agencies will need to strive to retain their clients while securing new business. Providing an appealing landlord proposition that is transparent and tech-enabled will gradually become a minimum requirement as landlords increasingly look to save time and money.”
Cobbold points out that the imminent introduction of the Tenant Fees Bill, which will ban upfront fees and cap security and holding deposits, will cause the biggest shift in the letting agency business model in recent years, forcing many firms to “look for new revenue streams”, while becoming “more efficient and reducing administration costs at the same time”.
“This means that post-introduction of the fees ban, we will have a leaner sector made up of proactive businesses that provide a wider range of services for consumers,” he said.
The way letting agencies operate has been evolving steadily over the last few years, but 2019 could represent a more significant and widespread change.
Cobbold continued: “There are a number of important questions the owner of the typical agency will be asking themselves over the next 12 months, ranging from portal subscription costs to the value of a high street presence.
“And it's because of these key questions, combined with changing consumer behaviour and the move towards a more professional and regulated rental sector, that we believe 2019 will be crucial in shaping the evolution of the modern letting agency.
“This year, the most successful agencies will look to adopt a slicker business model which embraces useful technology such as automation. There will also be an emphasis on improving client retention rates through accurate administration and processes.”