With the tenant fees ban fast approaching, letting agents should be doing all they can to remind landlords of the buy-to-let market’s benefits for investors, and the downsides of leaving it.
This caveat comes as research shows rising number of landlords leaving the buy-to-let sector due to financial pressures and increased government legislation.
Buy-to-let is still attractive to landlords
ARLA Propertymark reports that the average letting agency branch had three landlord clients wanting to sell properties in January.
Neil Cobbold, chief operating officer of rental payment automation platform PayProp, says despite a turbulent few years, landlords have many reasons to remain in the private rental market.
Cobbold said, “Firstly, recent HomeLet figures show rents up in every region of the UK over the past year. This gives landlords the opportunity to secure solid rental returns, particularly in areas where property prices remain below the UK average.”
“What’s more, demand for rental property remains high and consistent, with the latest English Housing Survey showing that the private rental sector has doubled in size since 2002 and now represents the largest housing tenure in London.”
Cobbold adds that due to Brexit uncertainty, the sales market continues to underperform.
Cobbold added, “If landlords look to sell now, there is no guarantee that they’ll be able to secure a quick sale for the best possible price.”
“And in the event they sell up and then decide to revisit buy-to-let investment in the future, they’ll be required to pay an additional 3% in stamp duty when purchasing a property and could be faced with stricter mortgage lending criteria.”
How can agents communicate the positives to landlords?
Letting agencies need to be proactive when it comes to reassuring their clients about the positives of operating in the lettings market.
Cobbold said, “It could be beneficial to check in with landlords personally to discuss the current market and any concerns they may have.
“On top of this, you can communicate with your existing database, showcasing recent local market statistics and explaining some positive market viewpoints for landlords to consider.
“During challenging times, it’s important for landlords to know that they have a letting agent on hand who is a property expert with their best interests at heart.”
Client retention is crucial for letting agencies this year
With the ban on tenant fees set to come into force on 1 June, many letting agencies will experience a dent to their income. This means it’s more important than ever for agents to retain landlords’ business for the long-term, protecting their revenue in the process.
Cobbold said, “The post-fees ban landscape will see competition between letting agencies intensify as they look to replace lost revenue from tenants with increased revenue from landlords.
“With this in mind, it’s vital that agents do everything in their power to impress existing landlords while attempting to attract prospective clients at the same time.”
“This can be achieved by providing a combination of expert advice, a professional and personal service and efficient PropTech-enabled processes which ensure compliance with industry regulations,” he concludes.