Landlords and letting agents – what did our poll reveal?

Only a quarter of landlords currently use a letting agent to fully manage their property, and just another 15 per cent use them on an occasional basis. What’s more, nearly 60 per cent say they are less likely to use one at all during the next 12 months, as a result of the pandemic. These are some of the findings of Hamilton Fraser Total Landlord Insurance’s recent industry poll of some 2,500 landlords, conducted on Twitter for Landlord Today and Letting Agent Today.

We talked to experts from across the Hamilton Fraser family about the results of our poll. Here, we share their insights into the ins and outs of using a letting agent.

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Why are landlords not using letting agents?

Eddie Hooker, CEO of Hamilton Fraser, cites increased costs as a result of the tenant fee ban and reduction in tax relief for landlords, as the key drivers for landlords’ reluctance to use letting agents. He explains:

“I’m not entirely surprised about these results.  Over the past few years the changes to legislation have placed more and more financial burden onto landlords and away from tenants.  For example, the tenant fee ban has meant that where letting agents traditionally and legitimately charged tenants for certain services such as creating tenancies, the new law has prevented them from doing so.

This unfortunately means that the landlord has to foot the bill.  Add to this that changes in taxation for landlords mean earnings from rental properties for many landlords are being squeezed.  To save money landlords are increasingly trying to self manage, thus reducing their use of agents.”

Technology and access to information is also affecting landlords’ use of agents, as Eddie explains,

“Letting platforms with fixed fees and self-selecting services are more commonplace now than say, five years ago.  They have matured and are far more transparent now. There is also more choice when it comes to listings and the internet provides more information than ever. Traditional high street lettings unfortunately are suffering from increasing costs which have to be passed onto someone, which in most cases is the landlord.”

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Is not using a letting agent a false economy?

Despite the costs, could not using an agent be a false economy? Paul Shamplina, Head of Property for Hamilton Fraser and Founder of Landlord Action, argues that landlords should factor in the cost of their time, when considering whether to use an agent. He says:

“Put a price on your time. Landlords who don’t have the time to manage their rental properties properly, or don’t live near their rental properties, should outsource the management to a good letting agent.”

Our poll revealed that 15 per cent of landlords use an agent just to ‘find a tenant’ before then managing the property themselves. But Paul advises landlords against this approach, arguing that “The difference between a let only service and a fully managed one is actually much smaller than many landlords think. It’s important to put a price on the time you will spend managing a property yourself.”

“What’s really important is for landlords to weigh up their own circumstances and think long term. No landlord wants to receive a direct call from the tenant at 2am to say that they have lost the keys or the boiler has broken down.”

– Paul Shamplina

Not surprisingly, ‘lack of time’ was cited by over one third of respondents as the most common reason for using a letting agent, or for being most likely to do so in the next 12 months. Perhaps more surprisingly, however, distance from the property and increased legislation were not seen to be as significant as COVID measures in influencing whether landlords currently use, or are likely to use, a letting agent.

Despite over one quarter of respondents citing COVID measures as being the most important factor in deciding whether they would use an agent, only 16 per cent said they are more likely to use an agent as a result of the pandemic. This is compared with almost 60 per cent who said they are less likely to use an agent as a result of the pandemic.

While the pandemic has thrown a curve ball into what was already an increasingly complex environment, our poll suggests that the perceived costs of using a letting agent are still too high for the majority of landlords.

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Choosing the right agent

For those agents who feel that using an agent is the right thing for them, it’s important to be aware that not all agents are equal, so choosing the right agent for your needs is crucial.

“There are some very good agents and these are worth their weight in gold. But unfortunately there are also some very poor agents who hit the headlines, tarnishing the reputation of the entire industry.  The skill is in selecting the good agent!” Says Eddie, who advises landlords to interview agents as they would any other service.

It is vital, when choosing a letting agent, to carry out due diligence to make sure they are compliant with the law. In September 2019, London Trading Standards claimed that almost half of letting agents were breaking the law, putting landlords and tenants at risk of being ripped off.

Sean Hooker, Head of Redress at the Property Redress Scheme, part of the Hamilton Fraser family, emphasises the importance of making sure that you and your tenants are protected in the event that anything should go wrong.

“I urge landlords to make sure that their agent is a member of a property redress scheme and a client money protection scheme (such as Client Money Protect) and to ask to see proof. Although most agents do a great job and comply with the law, sadly we have seen numerous cases of agents not passing rent onto landlords, illegal subletting and multiple tenants being forced to live in unsafe and crowded properties, ultimately stealing the rents and deposits of their landlords.”

– Sean Hooker, Head of Redress, Property Redress Scheme

Find out more in our Ultimate landlord guide to choosing a letting agent.

As our poll highlights, using a letting agent is not going to be for everyone. For landlords who choose to self-manage, we would advise joining a landlord association, such as the National Residential Landlords Association (NRLA) and subscribing to reputable websites such as LandlordZONE, to keep abreast of the latest developments within the private rented sector.

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