A great many estate agents have opened lettings departments during the last 5 years but most are finding that it’s much harder than they expected to make money from lettings.
The problem is one of critical mass. The big lettings agents can afford to recruit specialist staff to handle each of the key functions. They have negotiators, tenancy administrators, accounts staff, property managers, inventory clerks and valuers. In the smaller firms, one person has to do everything and this is not an efficient way of working.
As a consequence a great many small lettings firms are now selling their businesses and increasing legislation means that this trend seems likely to continue.
Commenting on the situation, Adam Walker, a broker who specialises in the sale of lettings businesses said, “The biggest and best run lettings agents are making a profit of 20, 30 or even 40% of turnover. The smaller firms cannot possibly compete with this and many are deciding to sell now so that they can reinvest the proceeds into other more profitable areas of their business. I expect this trend to continue.”
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