Letting experts give their view - and break down how agents can win new landlords in an increasingly competitive market.
95% of letting agents saw at least one of their landlords selling one of their properties over the last 12 months, according to Goodlord’s State of the Lettings Industry report.
In a recent Goodlord webinar, William Reeve, Goodlord’s CEO interviewed Megan Eighteen, Director at Location, Location, and Darren Owen, Sales Manager at Infinite Property, to discuss why landlords might be selling up and reducing their portfolio.
- Why do you think landlords are selling up?
- Short term lets
- New technologies
- Fully managed letting agents
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Why, do you think, are landlords selling up?
Darren Owen: I think it is fair to say that more landlords are selling up over recent years, through a combination of factors from the Renters (Reform) Bill, taxation, and rising interest rates. What we are seeing though is that it's a trickle, rather than a surge. We're not seeing it in vast numbers, and the landlords that we are seeing leave the market tend to be single-property landlords rather than larger portfolios.
There has been an increase in short-term lets, with two out of five letting agents seeing an increase over the last 12 months. Why do you think there has been an increase in popularity? Why is this affecting landlords selling up?
Megan Eighteen: The positive of short-term lets is in terms of tax, it is considered more of a business. So, there's much more tax relief than doing a kind of traditional let. You can see the appeal with the rents as they are, and London being London, hotels at the moment are obscenely expensive.
But the flip side of that is, you have zero idea who's in your property. You hear lots of horror stories about drug dens and brothels and have zero control over that. If your property gets trashed, you are kind of limited with it. It's a high-risk, high-reward kind of setup.
DO: In Liverpool and Manchester, properties are only really rented out for the weekends, which indicates it's due to tourism. Letting agents are not finding any bookings Monday to Thursday and are struggling to fill properties during the week; they’re having to drop the rents at the weekends and getting far less than they're expecting.
The management charges are much higher, your turnover costs are increased because you haven't got those long-term bookings. You're constantly paying out for more cleaners, changing bedding etc., causing landlords to sell up and move out of the letting industry.
How can you use new technologies to reach new landlords?
ME: There are loads of technologies you can use. There's also nothing better than picking up the phone and talking to somebody. TikTok is the place where I found my voice. We use it as a business and we use it for our personal brands within the businesses.
I'm getting evaluation requests through TikTok, I had one landlord give me a set of keys for a whole portfolio without meeting me. People often say to me, oh well it's for kids, but it's not anymore. It's the new Google for millennials and landlords are getting younger and younger, so let's not forget that.
Do landlords understand the benefits of going fully managed? What factors are stopping them from using a fully managed service?
ME: Maybe we all need to take a look at how we're presenting our offerings to landlords because if they don't understand the value that we bring, then that's not their problem, that's our problem.
DO: I think now you've got to demonstrate your value more than ever. The reality is if we all charge a 1% management fee, every landlord would use an agent. So what are you doing for your fee?
I think the Renters (Reform) Bill brings some really good opportunities for agents because there is an opportunity now to position yourself as an expert; as somebody who understands the legal system far better than the landlord can.
So really the best thing I can advise agents to do is get as much knowledge as possible about upcoming changes and be ahead of the landlords. You need to be able to offer landlords more now than just finding a tenant and collecting rent because we've seen lots of low-cost competitors come into that market.
This article has been edited for clarity, and is based on the webinar "Are landlords really selling up? And how agents can win landlords when supply is low"
