New research indicates a considerable shift in the UK property landscape, with almost two thirds (63%) of private landlords contemplating transitioning to a letting agency or property manager. Foremost among the reasons for this potential change is the growing burden of dealing with property repairs.
The rising trend of landlords moving towards agency management has been linked to the current volatile buy-to-let environment. Uswitch’s team of buy-to-let mortgage experts carried out a comprehensive survey involving over 2,000 UK landlords. They aimed to uncover the main incentives for property owners to switch their portfolio management to a letting agency and to determine the likelihood of such transitions.
Uswitch’s study revealed the top five reasons why landlords might prefer an agency over managing properties independently. Not having to deal with repairs came out on top with 32%, followed by a desire to avoid the hassles of legal requirements (30%) and finding tenants (30%). Other reasons include a belief that agencies have superior market knowledge (29%) and a desire to avoid scams and fraud (27%).
Furthermore, only 16% of landlords stated they would not consider the switch, showcasing a strong inclination towards using agencies among UK property owners. This sentiment is especially common among landlords who currently manage their properties, with 63% expressing openness to transferring management to agencies.
Property maintenance costs, which on average eat into a fifth of landlords’ income, also plays a significant role in the shift. The top reason for landlords considering selling their property is insufficient profit, with 35% citing this issue. A third of landlords (31%) named repairs as a cause for potentially selling their homes entirely.
Additionally, letting agencies have a higher propensity to accept tenant applications, relieving landlords of the associated stress. Nearly all independent professionals (99%) had to reject a tenant application at some point, while only 88% of estate agents did so.
Uswitch.com’s buy-to-let mortgage expert, Kellie Steed, shed some light on this notable shift in landlord behavior. “The renters reform bill and elevated interest rates on mortgages are significantly impacting the residential property investment market,” she commented. “As a result, landlords may face challenges in the upcoming months. Although it may seem like selling is the only option, there are alternative solutions to maintain profits during the cost-of-living crisis.”
Steed went on to suggest that hiring a letting management company could be a viable solution, providing landlords the chance to maintain their investments. These agencies have the expertise to navigate changing regulations and can handle the responsibilities associated with property ownership, from lettings and repairs to rental disputes and complaints.
“Many are offering increasingly attractive packages in exchange for roughly 10-20% of profits,” she added. She also proposed remortgaging as a way to potentially save money, allowing landlords access to cheaper rates through equity in the property, and bolstering finances with a cash sum.