The Biggest problem with lettings agents in 2022.
Updated: Mar 10
Estate Agents are typically not the most popular bunch. (I do have some friends who are letting agents) Honest.
Especially at the moment. They have reached new highs of loathing.
They have been living it up in the covid era. Getting the bubbly out at the shareholder's meeting. Out there just making it rain. Like this guy.
There were 20 viewings lined up by 9 am on a Monday morning for the below-average flat in speedwell.
Hearing the words were not taking any more viewings is something that offends me. Coming from a corporate sales background the idea that there is just too much demand that you can turn away happy punters seriously erks...
In Bristol, they had no more properties to let. I started to feel bad for them. Hang on a minute.(Slap me) I will just get my tiny little Violin out...That's better.
Agents were actually contacting me on Air BNB to ask if I would like them to manage these as single lets...
I think the market is changing. Natural selection is upon us and Landlords should be getting ready to go full caveman on it.
So I firmly believe that managing properties in the interest of landlords is an essential service that will be around as long as we have still have landlords. And if they have all survived the recent government bashing, rent caps, and death by licence.
However online services have ripped the bottom service levels out of the market. Why would you use a tenant finder only service when you can put it online for free and get the current level of response.
Ok, so agents manage a level of vetting and contracts. But this is again easily done online these days with services like Canopy and Open rent.
So It looks like we all need to compete on quality of service.
And by the way, I don't think the problem here is the individuals but the business model.
Agents have no skin in the game!
You pay between 8-15% for the privilege. And this doesn't take into account voids, maintenance etc . Margins for BTL investments are tight these days. Can you really make any money once you have paid an agent? You are lucky to make £200 after all costs. Is it worth taking the risks for that?
Quality of tenants
There is literally no incentive to pick the best tenant. They get paid to replace them, so in a way the more turnover the better. Agents get paid for bums on seats. Not the nicest bum.
As a result of the above. Agents don't have to deal with the fallout. And whilst it's empty or waiting to go to court. Your agent is still getting paid.
I was always left with a feeling that agents didn't really care how much it cost to fix the light switch, and don't shop around. However, you are welcome to find your own supplier of course. Hang on a minute. Is this me doing the work again??? I like a level of certainty in uncertain times.
Shoot the messenger
There really isn't an option to be shielded from the tenant. I don't want to hear about the tenant's girlfriend, the bins, internet or fridge disputes. Fundamentally it's still your job to make the decisions. Your approval will always be requested. And is....Very frequently.
I expect to get my property back in the same condition. And for this to be properly monitored during the tenancy. This just doesn't happen. I regularly used to find that It gets to the end of the contract and it's a mess. Now I know that is why you have a deposit. But 5 weeks doesn't go far these days. It certainly doesn't pay for a new kitchen or full refurb. There is not much accountability once the horse has bolted. Where is the duty of care...
So what are the alternatives to using a traditional managing agent?
Well, you have a couple of options. You could obviously do it yourself. To be honest, if you have a single unit and you are open to learning and putting in place some new processes and systems then I would look to go down that route.
But for the average small portfolio landlord with a full-time job, that is a lot of work! Another full-time job. So add that to the side hustle we all need to survive and the 2 kids and you should just about cover it.
Definitely Not Passive. No stars! Do not recommend!
The other approach is working with an agent that will guarantee your rent and take some accountability and the risk out of the management process. We love serviced accommodation for a number of reasons. We don't have the same issues. We have to keep the property in top condition otherwise it won't sell online. If we have a bad guest we just ask them to leave. We actually put around £5000 into improving your property. And if it's empty you still get paid! You don't need to speak to a tenant, Because there aren't any tenants. Just us.
Your best tenant ever...