A rise in the number of professional landlords means letting agents need to ensure their service meets the expectations of experienced investors, according to PayProp.
The automated payment provider says challenging market conditions - including tax changes, regulation and political uncertainty - have caused a dip in the number of accidental landlords, paving the way for professional investors with larger portfolios to thrive.
It cites recent research from Paragon which shows that the lender's new mortgage lending has consisted mostly of complex and professional landlord business so far this year.
The lender reported that the proportion of 'complex' BTL completions - customers operating through corporate structures or running large portfolios - increased from 72% to 88% in the first half of 2019 compared to the same period in 2018.
It added that lending to experienced, professional landlords represented 92% of the company’s future business at the end of March.
Neil Cobbold, Chief Operating Officer of PayProp UK, says that the jump in ‘complex’ buy-to-let mortgages is likely down to a combination of new landlords entering the market and those moving their properties into corporate structures, to take advantage of favourable tax rates.
Meanwhile, the English Private Landlord Survey 2018 revealed that 48% of rental properties are let by landlords who own five or more properties, and that this segment comprises 17% of the survey base.
The report found that the proportion of landlords with just one property has declined from 78% to 45% since 2010 and that the proportion of landlords with five or more properties increased from 5% to 17%.
"Following huge changes in the lettings market over the last few years, it's no surprise to see research suggesting that the number of accidental or part-time landlords may be dwindling while professional portfolio landlords appear to be thriving," says Cobbold.
"Despite a boom in the number of tenants, letting a property has become more complex and carries an increased risk, something that may well have discouraged one-property landlords who were previously self-managing."
He says it is also easier for those with a more structured business in place to absorb the market changes and tricky conditions.
Cobbold says that with this in mind, letting agencies need to make sure they are meeting the needs of professional and experienced landlords, providing a full service which allows investors to remain profitable.
"As the market becomes more complex, one of the key strengths letting agents need is the ability to provide valuable knowledge and guidance to landlords with large portfolios," explains Cobbold.
"Not only this, they need to demonstrate why their service represents value for money and how they can keep void periods to a minimum."
"Furthermore, agents who use technology to provide a streamlined and efficient service can impress large-scale landlords who manage a huge number of processes each month," he says.