There is an interesting thread on Property Tribes as to whether now is a good or bad time to start a lettings agency.
It begins with someone asking for advice with building a business plan.
A senior member responds, saying: “Now is hardly the time to be starting a LA. It is time to shut down. Do you really believe that landlords will wish to use letting agents when they have increased taxes to pay courtesy of Osborne?
“I certainly won’t be.”
He goes on: “Consolidation in the letting agency sector is needed, not more letting agents starting up.
“The first unnecessary expense a landlord will get rid of is the letting agent and his fees.”
The original inquirer replies, disagreeing with a number of the points made.
In particular, the would-be agent does not think landlords will exit the market in any great numbers, believes that the 3% surcharge on Stamp Duty is a red herring and says that more legislation will mean that using a letting agent will become more important to landlords.
The would-be letting agent also makes clear that their putative business would not charge any tenant fees other than referencing costs, and says there would be no high street presence, and concludes that the time is right to start up: “I think the high street estate agents will suffer.
“Some will go bust; others may retrench back to their sales-only business model (since lettings won’t be profitable with lower volumes) – no one is going to grow their letting business.
“More properties could be up for grabs and if landlords are having to move agencies, it’s easier to grab them than have to convince them to move from an existing agent.
“This will start playing out in the next couple of years – perfect timing for me.”
http://www.propertytribes.com/letting-agency-costs-t-127622997.html
Comments (2)
Start a lettings agency in today’s market is a tough call for anyone.
If you are going to, its all about finding out what landlords arent getting from their existing agency.
The relationship most landlords have with their agent is the same tye of relationship you have with your bank. You dont love them, in fact you can hardly stand them … its just all banks are perceived to be the same and people cant be bothered to sap becuase of the hassle of switching dtanding orders and DD’s over.
… but many people say lettings is a people business… and people do business with people they like. Every agent will tell you that if you can meet a landlord before the tenant hands in their notice, then build a relationship with that landlord so they likeyou and trust you, more times than not, that landlord will give that property the next time the tenant hands in their notice.
Question is … how do you get landlords to come and talk to you before the tenant hands in their notice?
No office, no admin fees…… sounds like a bedroom agent. Would like to see how they will make money. Initial start up costs, ongoing portal costs. No doubt will also do a low fully managed fee. So let’s say circa £50 per property per month. Will need a letting portfolio in excess of 20 properties just to stay open!