A respected transfer agent who has been selling lettings businesses for 25 years has issued a warning that tenant-find let-only portfolios sell for lower prices than full service agencies conducting property management and rent collection.
Adam Walker says: "Following the tenant fees ban, many agents have decided that let-only landlords are unprofitable so they will not buy let-only portfolios.”
He adds that prospective business buyers tend to view let-only landlords as less loyal and future income from them as not guaranteed.
Moreover, outside London, most agents do not get renewal fees from landlords, so if the tenant stays for another year the let-only agent will not receive a further fee.
Walker also advises that let-only can also cause agents problems with landlords and tenants.
"Let-only landlords often want to be given all the services that they are not paying for and can harm your reputation with negative online reviews if you don't give them what they want.
"They are also often ignorant of the law and, as a consequence, agencies could get blamed or even fined for [landlords’] mistakes.
"Some tenants will not understand that the letting agency does not deal with repairs, and this could cause problems if the landlord refuses to carry out a repair" says Walker.
His comments come alongside comparable advice from the chief of automated lettings payment service PayProp UK.
Neil Cobbold, the PropTech firm’s chief operating officer, says a recent survey by outsourced supplier ARPM shows that agencies providing let-only could be earning 80 per cent less than full-service agencies, missing out on income from referring and cross-selling additional products.
The study also found that a full property management service could boost an agency's average income per tenancy by up to 63 per cent and its capital business valuation by 600 per cent.
"Utilising the best PropTech products to become more efficient and streamlined is an important next step for agencies to take. The extra time this creates can be used to focus on the needs of clients and put into providing a personal service” insists Cobbold.
"If your staff are fully trained as lettings experts, they can provide crucial guidance and ensure that all clients are up to date with the latest industry legislation. This can inspire confidence in landlords and position your agency as a trusted business partner for years to come" he adds.
Cobbold adds that agencies with a clear service offer can also benefit.
"By explaining to landlords all the services they’re offering in their full-service package, an agency can demonstrate the increasingly complex nature of letting a property legally and remind them of the excellent value for money they will be receiving for their management fee" he says.
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Any tenant will know that repairs are responsibility of the landlord, not letting agents. its common sense
Absolute rubbish. Professional LLs always but Always respond quicker and more effectivly to tenants needs.
eg. Tenant had problem with shower yesterday, we turned up yesterday we took the defective part left and returned within 2 hours and refitted result happy tenants happy landlord. Agents would not and can not respond to a tenants issues quickly. They are either not available, dont have a maintenance man to attend or and charge a rip off fee to resolve. Yestetday Again had another tenant with dodgy front door lock, resolved within 3 hours!!! A Professional LL will have his phone on 24 7 even when on holiday and will always have good trustworthy back up and support. All he askes for in teturn is his rent paid on time and property and neighbours respected. Simple.
Absolutely, and speaking of 247, 365 are the last 6 digits of my mobile number to illustrate my commitment towards all tenants. I'm a member of NLA &RLA. It's better for Landlords to use a landlords insurance service, landlords home repair breakdown cover service and an appliance repair breakdown service than to give 10% in management fees to an estate agent and get nothing in return but unnecessary stress!
It seems like estate agents are out of touch!
I've been a landlord for 23 years. I've always used the "let only service".
In all my years of being a landlord, I've never known an estate agent who offers a fully managed service, to collect rent from a tenant who hasn't paid, conduct repairs without adding their extortionate/hidden commission on top.
As for the renewal fees, if I were to use the service and three months in to a 12 month contract, the tenant vacated for whatever reason, I wouldn't be entitled to any form of compensation.
The agent will say, are you managed or let only?
When you confirm the latter, they'll reply as usual, sorry we can't help you.
However, if the same tenant stays on to renew their agreement for the second term, they say send us our check in the post!
In June 2019, we had the introduction of the landlords tenants fee ban.
We should be having an introduction on the estate agent's tenancy agreement renewal ban.
Furthermore, the landlord's tenants fee isn't set by the landlords, it's set by the estate agents, so again, this banned fee should refer to the estate agent's and not the landlord's!
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