47% of UK landlords would ditch their agent if profits fell
New research from the UK Association of Letting Agents has revealed that roughly half of all UK landlords would 'forego the services of their letting agent' if they saw a fall in their profits.
The research was undertaken to assess what impact the forthcoming changes to landlord taxation from April next year could have on agents’ businesses.
The National Landlords Association (NLA) has already warned that more than 400,000 landlords will be pushed up a tax bracket as a result of the changes, potentially forcing them to revaluate the need to employ the services of an agent.
The news will come as another blow to agents, after the recently announced ban on tenant fees could force many to increase charges to their landlord clients in order to cover their costs.
The findings show that overall, 57% of landlords – approximately 1.1m – say they employ the services of a letting agent; with 36% regular users, and 21% occasional users.
Regionally, more landlords in Scotland would ditch their agent if their profits were compromised than anywhere else in the UK. However, just one in three landlords in the West Midlands would forego their agent – the lowest across the UK. A full regional breakdown can be found below.
The findings also show that a quarter of landlords who use letting agents to exclusively fully manage all of their properties would cut them loose in the face of diminishing profits. This drops to a fifth of landlords who use agents on a let-only basis for all their properties.
A third of landlords would retain the services of their agent even if their profits were compromised.
Richard Price, Executive Director of UKALA, said: “A significant number of landlords will be hit hard by the tax changes and agents’ fees will be one of the items underneath the magnifying glass if profits begin to decrease.
As landlords’ costs inevitably rise, agents will need to do more to position themselves as indispensable, and make it obvious that they provide solid value for money. Otherwise, as future tenancies come to an end, landlords will either shop around or start to consider self-managing their properties”.
Richard Lambert, Chief Executive at the NLA, said: “Landlords should already be looking ahead to the forthcoming tax changes and working out how they will be able to maintain profitability. That will intensify with the prospect of agents’ fees increasing as a result of the ban on charging tenants.
However, while it may seem an appealing proposition to minimise your outgoings, the majority of landlords simply won’t have the resources to deliver a service that meets the standards or professionalism that their agent currently provides”.