Over half of UK landlords have decided to bypass letting and managing agents, preferring to deal directly with tenants.
The claim, from insurance firm Direct Line for Business, is based on a survey of just 293 landlords.We asked for further information about the sample, but have not received answers to questions for example about geographic location and type of portfolio.
The study claims that 63% have not used an agent in the last year, saving an average of £734 in fees across the average portfolio of 5.3 properties.
More than half (53%) of landlords not hiring property managers are saving an average of £1,040 per year, says the survey, which also found that 18% of landlords do not have the appropriate insurance.
Jazz Gakhal, head of Direct Line for Business, said: “Buy-to-let is growing in popularity as a result of rising rental prices and cheap mortgage lending, and many new landlords appear to be taking a much more hands-on approach.
“Estate agent fees can run into thousands of pounds a year, so landlords that can deal with the tenant directly stand to make big financial gains.
“Landlords may be able to make significant savings by taking their properties into their own hands, but it’s vital to have appropriate insurance should the worst happen.”
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Comments
I'd rather take on a lease from a private landlord.
It's my opinion that agency deposits are too high. I think the process has become convoluted and unbalanced, in the favour of landlords.
Can someone tell me why an agency has to get in touch with an employer and have them use their time to fill in forms on their employee every time they apply for a new Let? I'm sure most employers are happy to do this, but why should they? It's over the top and invasive.
I went through this process with an agency recently and passed all of the checks. I was sent an electronic copy of the lease after all of these checks had been completed. However, I didn't agree with some of the terms in the lease; Having to pay for professional cleaning and the chimney to be swept were just a few of my concerns. I recinded my offer, but I'm now looking to a private landlord as I don't want to go through this overly invasive process of contacting my employer etc everytime I apply for a new Letting.
What a one sided report this is. Basically saying its good for landlords to self manage so long as they have a Direct Line insurance policy in place. What a load of nonsense. Landlords who use professional agents almost always achieve a better ‘net’ yield. Direct Line landlords buildings and contents insurance is basic at best.
Quote from Jazz Gakhal 'estate agents fees can run into thousands of pounds per year'
Rent £450 per month, management fee 10% plus VAT - annual charge £648 - hardly 'thousands'. In fact we make a loss on properties with rents below £500 per month if we divide our overheads by the number of properties managed.
Took a property on a couple of weeks ago for a landlord who had previously let to a work colleague. No gas safety certificate (he said the boiler had been last serviced about 18 months ago!), deposit not protected (had never heard of the legislation he claimed) and no EPC.
How many more landlords are in the same position and how can they be insured when they are breaking the law?
I never said it was the best decision landlords make when choosing to go it alone but we can only adjudicate this because of our position, its a business decision none the less.
A landlord, like agents look to turn a profit and just because their decisions lack acumen doesn't diminish this, its business just not at its best but we definately agree on the way forward.
I agree that its arrogant for us agents to believe we should get the business simply because "we know best".
However, I disagee with the suggestion that landlords are "making a business decision" to let and manage properties themselves.
A business decision is a considered and informed choice which often involves a calculated risk. Certainly some private landlords do exactly that, but a large number know naff all about lettings and have no idea what agents do or where they add value.
And there is the crux of it. As an industry we should be on a charm offensive to both landlords and tenants to explain WHY we know best, and, most importantly, what benefit our knowledge and experience provides to both the landlord and his tenant.
Expel any thoughts of entitlement based on our qualification, compliance and affiliation; landlords are free to find their own tenants. We can trump our knowledge and skills against the landlords whom lack them but to what end?
As agents we deal with many clients, properties and in particular client money, landlords don’t and so naturally we’re held to a higher standard. I don’t dismiss their obligations but lets be honest, for every landlord misstep or horror story ours is greater and most landlords actually get it right.
It’s a utopian wet dream to think that just because agency is best equipped then it should handle all lettings. This is a business so public awareness will diminish in contrast to supply & demand because just as tenants shop around for properties (not agents or landlords) so it is that the property dictates the transaction.
Landlords make a business decision when opting not to use an agent and we need to firstly understand that in order to reverse the trend so rather than drawing their ire with negative advertising and further driving them away we should make landlords a positive focus of any campaign. This is an opportunity to make an impression with the person most relevant and to win their business.
If ‘half of the UK’s landlords’ reject us then our dilemma is why…
Instead of Shelter stiring up tenants over letting agent fees why don't they spend some of the money they get from the public purse (£10 million) on helping the homeless rather than paying themselves fat cat salaries.
Shelter was originally set up as a charity to fund housing associations and actually provide shelter. It is now a fake charity funded by the tax payer to pay ex labour party members to attack landlords and letting agents.
Rant over
Instead of Shelter stiring up tenants over letting agent fees (some of which, I agree, are totally outrageous) why don't they start a campaign to encourage tenants only to rent through properly qualified letting agents (preferably Licenced ones who are members of a professional body such as ARLA - however pathetic ARLA is at encouraging public awareness!). At least then the tenants will be protected from dodgy, penny-pinching landlords who are either ignorant of the laws regarding H&S, deposit protection, etc or, when challenged, claim to be! This is 2013 and bad landlords ripping off tenants ought to be a thing of the long distant past. Has the PRS not moved on since 1988 when The Housing Act was supposed to make the whole process of renting safer and fairer?
“Landlords may be able to make significant savings by taking their properties into their own hands, but it’s vital to have appropriate insurance should the worst happen.”
Oh, of course...you RBS parasite.
What a complete pillock.
Niiiice.
A prime example only just yesterday when I met a Landlord who had been managing the property on his own for the last three years. He had never heard of deposit protection or an EPC. He wasn't even sure if the property had a gas safety certificate.
Here's a precis of the article:
"Insurance company suggests that landlords should save money by cutting back on their use of letting and management services and buy more insurance instead".
Suggestion for next weeks' article:
"Chip shop owner suggests people should save money by cutting back on their visits to restaurants and buy more fish and chips instead"
As for the statistics, "Insurance company finds half of the 293 landlords it asked don't use letting agents" is right up there with "chip-shop owner asks 293 hungry people and finds that half of them don't eat in a restaurant"
Problem is anyone can set up as a Letting Agent and there is a great deal of the blind leading the blind out there. A good friend of mine has just joined an Agent who deals with sales & Lettings and she tells me they are in chaos and their knowledge of legislation, good practice and procedures is extremely poor. They have CFP software, but are not getting the best from it by using its all its many and various functions. On top of this Shelter want to ban letting fees making Letting Agency unviable. Letting is a complex process and has numerous onerous responsibilities which are being ignored by some Landlords and Agents.
I agree with Denise 100%. The general public on the whole still have little idea who ARLA, RICS, NALS etc are.
As a tenant of a property which is let directly through a landlord with no agent and someone who is currently studying to do their ARLA qualification, all I'm learning about it how much my landlords are doing wrong! They are in a very weak position legally because they are following so little, even things like not protecting the deposit. Corners are being cut everywhere!
Well said, Denise.
Deep joy!! So all the hours that properly qualified, licensed letting agents have to spend complying with the ever-increasing mountain of legislation that is in place supposedly to protect landlords and tenants and in ensuring that decent standards in the PRS are maintained is all for nothing because amateur landlords are hell-bent on saving a few quid.and doing it for themselves in ever increasing numbers!! Does that say anything about how totally unsuccessful the professional bodies - ARLA, etc - have been in raising public awareness of the benefits of using self-regulated agents? And how pathetic the Government has been in failing to impose regulation of landlords and letting agents? So, rogue agents flourish, tenants continue to be ripped off, legislation is ignored and properties are mis-managed by armies of new amateur landlords muddling through to save a few quid in professional fees that are tax deductible against profit anyway. Letting agents can be sent to prison for failing to protect the health and safety of their tenants - who is checking on these penny-pinching DIY landlords?
Estate Agents don't let properties Mr/Ms Gakhal. Let's hope your advert attracts as many landlords as possible that all share your deep understanding of property rentals.