This is especially true for landlords managing their own properties, with 63% being open to make the transition. Almost a third (29%) of private landlords say a switch to an agency would be due to their stronger knowledge of the market.
The most common reason landlords would pay an agent to manage their property is to no longer deal with repairs, with almost a third (31%) citing this as an advantage.
The top 5 most common reasons landlords are switching to agencies
|Reason||% of landlords|
|No longer dealing with repairs||32%|
|No longer dealing with legal requirements||30%|
|No longer having to find tenants||30%|
|More knowledge of the market||29%|
|To avoid scams/fraud||27%|
|Would not switch||16%|
On average, property maintenance is estimated to consume one-fifth of landlords’ income. The most common reason landlords consider selling their property is a lack of profit (35%) and a third (31%) of landlords say repairs are a reason they would sell their homes entirely, the second most common reason given.
Another major reason landlords consider switching is to avoid the hassle of finding tenants (30%) and to transfer legal responsibilities of a property (30%), both of which may mitigate a landlord’s anxieties around the unstable buy-to-let market. Agencies are also more likely to accept tenants: 99% of independent professionals had to reject a tenancy application at some point, while just 88% of estate agents have done so.
Over a quarter of landlords (27%) would switch to a letting agency to avoid scams and fraud. False information and fraud in applications is the leading reason potential tenants are rejected, with over a third (34%) of landlords doing so at some point. Poor credit from applicants is another large factor causing tenancy rejection, as 33% of landlords have turned down residents after checking their credit score.
Kellie Steed, buy-to-let expert at Uswitch, which carried out the research, said: “With both the renters reform bill and higher interest rates on mortgages having a huge knock-on effect on the residential property investment market, some landlords may find the coming months more challenging than usual. While it can feel like selling up is the only option, there are other ways landlords can keep profits afloat during the cost-of-living crisis.
“Switching to a letting management company offers some attractive advantages, and gives landlords the scope to hold onto their investment. Property managers have a strong knowledge of the market’s changing regulations and can also take on much of the responsibility of owning investment property: lettings, repairs, rental disputes and complaints can all be tackled by an agency. Many offer increasingly alluring packages for landlords in return for around 10-20% of profits.
“Remortgaging a property can also save landlords money, as any equity held in the property will give them access to cheaper rates. While a lower interest rate could offer less expensive loan repayments, releasing equity on a property can boost your finances and give you, and your property, more support in the form of a cash sum.”