At one time having a lettings division was a safe bet for almost any estate agency.

It was a no-brainer with the private rental sector large and growing, packed with amateur landlords keen to employ professionals to handle their buy to let investments. It was seen as a ‘banker’ producing regular income to balance the rollercoaster of sales revenue.

After some decades of that being the norm, it’s now the reverse – landlords are selling up and quitting buy to let, as has happened to a worrying degree of late – and as you will know better than I do, that’s hitting agents where it hurts right now.

The pages of Letting Agent Today frequently carry stories of independents, in particular, selling out to larger corporate rivals. And now one of the very biggest names in the sector is suggesting that agencies of all sizes are increasingly scrabbling for business. 

Spicerhaart is warning that more regulations could trigger further sales which could be “devastating” for some firms, especially those which have not diversified. 

This isn’t an idle claim. The government itself, in its impact assessment for the Renters Rights Bill, forecasts that the reduced number of landlord clients will cost lettings agents an estimated £391.7m over the next decade, as their customer base contracts.

So, what to do?

Here’s an idea which some agents may regard as radical – get stuck in to Build to Rent.

BTR has been seen by some as a threat to buy to let, and because of its institutional reputation it’s been seen as almost an enemy of the traditional lettings’ agencies. But in reality, the two have existed side-by-side for around a decade now. Although BTR has been slower to take off in the UK than many other countries, it’s clearly here to stay and expanding.

Latest data from the British Property Federation, which monitors the sector closely, shows there are over 123,000 completed BTR flats and houses UK-wide, reflecting 17% growth in 2024. The region with the most is, unsurprisingly, London with 54,350.

Meanwhile, there’s a substantial pipeline – flats and houses either under construction or at some stage of planning now stands at 285,000 across the country.

Out of a total UK private rental sector of around 4.6m homes, Build to Rent is clearly still a pretty small proportion, but it’s growing and getting more important for three reasons.

Firstly, it’s attracting substantial investment from the private sector (often from organisations with little involvement in housing until now). There’s recognition amongst areas like private equity firms, investment trusts and even retailers that Britain has an overall housing shortage, so an investment is likely to produce long-term returns.

Secondly – as agents know only too well – traditional private landlords remain the backbone of the rental sector but are selling up in substantial numbers and may continue to do so if buy to let becomes increasingly complex and more expensive to be a part of. 

Thirdly, there’s now a growing number of mid-sized agencies employing their own BTR experts, especially as the sector is expanding faster out of London and sometimes in towns where big corporate agencies are not as prominent. In other words, these agencies have already recognised that BTR is not an enemy, but an opportunity.

Pitch your agency’s strengths

Pitching to developers involved in BTR is a sensible move now that Buy to Let is less attractive and showing signs of contraction.

Agents have big advantages that many BTR developers are hungry to have:

• they have a list of existing and potential tenants who may want to move up to a BTR-standard home;
• they come with expertise in tenant-recruitment and vetting (which can be quite a task when a whole empty BTR block of, say, 60 to 150 units comes on stream at one time);
• They now have considerable PropTech to help handle large volumes of routine work (referencing, Right to Rent formalities, contract writing);
• Local expertise, which is likely to be lacking with a national developer who chooses a location based on demographics but no personal knowledge.

BTR has been waiting in the wings for some time, but I sense that now it’s time has come. 

It will undoubtedly be stronger with the experience and expertise of agents managing the blocks and tenancies – and agents, in turn, may just find Build to Rent helps them adapt to a new future.

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Phil Spencer is the founder of Move iQ. Move iQ now creates bespoke video content for estate and letting agents sharing local insight and personally introduced by Phil – to secure your exclusive post-code speak to Alex Wilson [email protected]