Sarah Beeny’s Tepilo looks at a study which suggests letting agents are saving the average landlord nearly £2,000 a year.
How letting agents can save landlords money
Letting agents have been in the news quite a bit of late, with the recent controversial announcement by Chancellor Philip Hammond in his first Autumn Statement that letting agents’ fees to tenants will be banned.
However, new research conducted by insurance firm Endsleigh has highlighted the valuable role that letting agents play in helping landlords make the most from their rental properties. The survey, which spoke to 500 landlords, revealed that UK landlords who use a letting agent estimate that they save £1910 a year more than if they decided to take on the responsibility of marketing and managing the properties themselves.
The research also found that misconceptions among landlords about the value for money offered by letting agents are rife. Many of those landlords who choose to bypass an agent do so because of cost. Over half of the landlords surveyed (53%) currently opt to let at least one of their properties privately without the assistance of an agent, with more than two in five stating that price is the main reason for this. This is despite a reported average monthly saving of £159 per month among those landlords using letting agents.
There has been lots of speculation that the letting agents’ fees ban will force agents to pass on the extra costs to landlords, who in turn will pass these onto tenants in the form of higher rents. If, as the study suggests, landlords perceive letting agents as poor value for money, there could be an increase in the number looking to let directly to tenants. Again, this is despite the financial savings that could come from working closely with an agent.
Most of these savings come as a result of the guards against costly void periods, with letting agents offering a number of services to make these periods much less likely. What’s more, 76% of the landlords surveyed said that their agent tends to help them find tenants in a proactive manner, as well as offering expert assistance on key financial and legal matters.
As you would expect, though, the relationship between a landlord and letting agent is not built on financial benefits alone. Of those landlords that use an agent, 50% said local knowledge was the most attractive attribute of an agent, closely followed by excellent service (44%). For 41% of landlords, meanwhile, the main benefit of working with an agent is peace of mind, with 25% of landlords communicating with their agent each and every week.
Generally, the research showed that landlords who use letting agents find that stress is reduced, time freed up and, most important of all, money saved. That said, the perceived cost of letting agents is one of the biggest turn-offs to landlords even though those that use an agent are witnessing significant savings. Clearly, mixed messages are being put across and more needs to be done to convince landlords of the cost-effectiveness of using an agent rather than going it alone.
With an online agent, such savings could be even higher – given we have none of the overheads associated with traditional letting agents as well as lower overall operational costs.