Two-pronged strategy can increase profit margins to 50%, lettings agents told

Expanding services and cutting unprofitable admin can increase profit margins to as much as 50%, lettings agents were told at the PayProp Connect conference.

Speaking at the event held at London’s One Moorgate Place, Sally Lawson, a former president of the Association of Residential Lettings Agents (ARLA) and founder of coaching firm Agent Rainmaker, expressed the belief that too many letting agents concentrate on lettings and management instead of adopting the mindset of business owners.

“The top 1,000 letting agents in the UK have an average profit margin of 11.9%,” she said. “When you think of the liability and the hassle and the risk that we take, I believe we have to make more profit.”

Lawson believes agencies should aim for a 50% profit margin – and that means automating or outsourcing unprofitable activities to free up time for selling more services to landlords.

She explained: “It’s not just about lettings and management, it’s about all the other things that we can offer – things that landlords are already paying somebody for.

“What about refurbishment? We can charge 10% or 20% for managing that. Supplying furniture packs is another one.

What about when landlords are wanting to sell? What we need to do is to help other landlords to buy their property.

“It’s about changing the way that we work,” Lawson added. “If we can replace landlords leaving the market by getting other landlords to buy, we’ve got ourselves an acquisition fee of between 2% and 5%.

“And maybe they want a refurbishment as well. We’ve made thousands of pounds before we’ve even put a tenant in the property.”

Another speaker at the PayProp Conference emphasised the importance for lettings agents to support landlords with the process of negotiating the incoming digital tax regime.

Robert Bolwell, senior partner at law firm Dutton Gregory, explained: “From April 2024, landlords who have a projected rental income of £10,000 a year gross will have to enter the new digital tax system whether they like it or not.

“Every quarter, a landlord is going to have to file what their income is and what their expenditure has been. This has to be done digitally using HMRC-compatible software.

“The issue for our industry is that 47% of landlords have got just one property. If you tell them they are going to have to file four times a year and then do a fifth one at year end, they are going to panic.”

This situation, Bolwell explained, offers an opportunity for letting agents backed by rental payment technology. “Because who has all the information about rental income? You do,” he said. “Who has all the information about expenditure to go on the return? You do.”

Neil Cobbold (pictured), PayProp UK managing director, welcomed the opportunity to meet lettings agents face to face at the conference for the first time since the pandemic. “Events like PayProp Connect are a vital opportunity to discuss the issues affecting us as an industry and share best practices for the future,” he said.


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  1. MrManyUnits

    So “ outsourcing unprofitable activities”  so who’s going to pay for that  ?  From 11% to 50% is that every property every year or are you going to refurbish every year ? Your Landlord leaving rate could jump from 11% to 50% ! Utter click bait tosh! 

  2. Mrlondon52

    What rubbish. Having looked at the P&L of quite a few agencies I can assure you the best in class get up to 30% but not much more. I mean in a sustainable way, eg service levels are good year in year out rather than just cutting staff to flatter margins. 50% is BS for gullible fools and I imagine that is before the owners drawings.


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