Price unsurprisingly remains an important factor for many buy-to-let landlords when it comes to choosing a letting agent.
Letting agent fees, of which 44% of landlords stated is their biggest expense, is the biggest factor when choosing an agent, according to new research by Rentround.
The agent comparison site, which surveyed 20,000 landlords, also found that a number of landlords also look to instruct an agent based on ability to quickly find tenants and fill void periods and to give a hands off, headache free experience.
Most landlords – 28% – rely on the high street to find an agent, while a close 27% claimed Google was their main way to find an agent.
Some 39% of landlords state tenant find only services is what they want from an agent.
Meanwhile, 30% stated guaranteed rent was the service they opt for or will be opting for next. This coincides with Rentround search volumes which have seen increases in guaranteed rent searches of 29% since the first lockdown in March 2020.
Overall, less than half – 47% – of landlords confirmed they want to stay in the rental game in the near term, with property prices post Covid proving to be the biggest current landlord concern.
Raj Dosanjh, founder of Rentround, commented: “Letting agents with a high street presence will be pleased with the amount of landlords choosing the high street as the go to place for picking an agent. It will be interesting to see how that fluctuates in the coming years with the high street being challenged and more agents adopting online/hybrid approaches.
“Guaranteed rent continues in popularity. The uncertainty brought about by eviction bans, the future ending of furlough and changes in tenant behaviour is pushing landlords for safer approaches when their rental income is concerned.”
Comments (21)
For me it always came down to ‘will the letting agent provide a couple of chocolate biscuits if I pop in to see them?’ Then again that was being a landlord in 1989, probably now a digitally alligned enterprise would be best, and I could afford to buy my own biscuits. How the world has changed, I can not remember how much red tape existed when I was first a landlord, but I am thinking in the last 30 years it is quite a lot less back then, so the depth of knowledge that an agent had would be a factor too, just is case ‘things got naughty.’
Most LA are doing a good job. It is NOT their fault that LL can’t afford to use them. LL are under the cosh and need to reduce costs as much as possible. A LL an hours drive from his property doesn’t need a LA. LA fees are very much a deciding factor if a LL determined a LA is required. If a service at a cheap price isn’t offered and if after taken up doesn’t work most LL WON’T go to a more expensive but possibly better LA; they will just stop using LA. The trick is to try and stop LL self-managing. Not the fault of LA but LL are being forced to pare back costs and LA fees are a big chunk. LL are being forced by economic imperatives to get rid of their LA. A LA is increasingly a luxury that LL can no longer afford. I can’t see this situation changing anytime soon. Indeed it will get worse as even more costs are imposed on LL. AST and S21 abolition will cause even more LL to take control. LA will need to reduce fees to retain LL. If they refuse to then they will lose LL. Their choice of course and it is completely understandable why LA would refuse to do business for reduced fees. But without reduced fees they may have reduced business. If LA cannot afford or choose not to afford to reduce fees then they face being out of business. LL are selling up and LA unfortunately face a decline in the PRS. Plainly put there are too many LA chasing too little business which is declining further. Achieving business during these awkward times is certainly a CHALLENGE for most LA. The PRS is in terminal decline albeit slowly. That business reality has to be recognised.
You speak like all landlords have the same motivations and issues. Not the case. There are a whole range of motivations; those that happily tick along with the long term view not requiring anything other than their costs and outgoings covered. There are those that want stress free income from a non mortgaged portfolio. There are those that obsess over every penny and expect to have the house earn them income as well as cover all their costs and mortgage. These are the landlords you seemingly refer to. They are welcome to continue to self manage. Those that have busy lives and understand that managing a property is not a very easy or pleasant job at times can be left to pay the right price to a letting agent.
They would have done better to see what is happening in Wales and Scotland under licensing. More than a few landlords and agents in England will soon get a wake-up call going by the antics they get up to.
Far too many letting agents are working for nothing? Far too many agents over charge!
Whilst I agree that costs have been squeezed for landlords, and some of the portfolio holders who have built on high gearing are really feeling the pinch For them the fee may well be an issue…….. But we still continue to grow organically at about 15% per annum on our managed portfolio. We have consistently reduced the number of units each Property Manager “looks after” and brought more services back in house (against the trend of outsourcing) average managed fee is 11.3% (above the local norm) so there are still plenty of “professional” landlords who seek out a high level of service. Each office has negs and property managers who work together without any commission and are charged with letting each property “as if it were their own” We do not loose clients but occasionally “let go” of clients who are resource inefficient. To me, the key is the culture of the organisation; that is what will retain good staff and attract good clients.
I know its a very over quoted Warren Buffet saying but “price is what you pay, value is what you get”. Low fee does not always mean bad service and high fee does not always result in great service BUT 25 years of experience of sweeping up properties from the bucket shops and over exuberant corporates in my area tells me that low fees (or comparison sites that exist purely on this fee driven basis) don’t last. I disagree with comments that services are broadly uniform so points of difference are indiscernible, this overlooks the crucial factor of our business – PEOPLE. I have never come across a more dominant component in this industry. You can have great tech, brilliant systems, great advertising……the list goes on…..but human relationships (even in this current world of Zoom/Microsoft team meets) have enormous value that remains the intangible commodity that will result in a landlord (or any consumer for that matter) paying more for one provider than another even though they offer, as one commenter has asserted, “very similar (if not identical) services” . Landlords (by their nature) are thinking longer term and if they are looking to leave a perfectly functioning agent to save £10/20pcm then I would be astonished. Landlords only swop if things are going badly wrong OR (and this is the big one) they have lost faith in the PEOPLE working for them.
The thing is with cheap fees is that you only find out that you have made a mistake in opting for the cheapest when something goes wrong.
I have to agree that price is more relevant than ever. I’ve lost more managed properties this year then any other. To be fair though most were the highest maintenance landlords with the lowest fees. With a limited number of newcomers to the market, it’s either the can’t sell one property landlords or those with portfolios who no one wants to deal with.
If I was a landlord I would want an online account for my property portfolio with my chosen agent, allowing me to see maintenance reports, view my invoices, my receipts, direct chat, signing of documents etc etc. That’s why I built it for our agents!
Charge the right price for the service you provide
No agent has ever lost a property on fee, they have lost it as they have not sold the value of their company.
4 years ago, I would have agreed with you Smile…however I think that now, Agency fees are a significant part of the Landlord decision making process, irrespective of the value you may seek to attach to your individual services. Ultimately, the vast majority of Agents offer very similar (if not identical) services, service levels and the structure of these and how they are administered, is well known and well understood by the vast majority of Landlords.
Landlords are under huge cost pressure, many of which have been discussed at length over many articles, and many years.
Each new piece of legislation, each additional measure introduced to protect Tenants, tax changes and so on…are all serving to pile on the cost. Ultimately, legislation and law are not negotiable. So naturally, you will seek negotiate where you are able…and currently that comes down to two key points of negotiation…rental and Agency fees.
It would be fantastic to believe that promoting the virtues of an individual firm, will result in a notably higher fee being agreed, but the reality is, there is little differentiate firms these days.
Yes, this is a simplified assessment, and there are other factors that play into the decision making process, but we’re seeing an increasing number of Landlords, across our network, being primarily driven by the desire for lower fees.
It is also worth noting, that there are quite a number of large/ “big-name” national firms, very regularly offering fees levels to Landlords which i would suggest, are unsustainably low in the long run.
“The vast majority of Agents offer very similar (if not identical) services,”
There is the problem. Agents need to differentiate themselves to obtain a better fee.
Why pay more for the same service.
Offer a better services, explain your process in more depth it will win you more instructions at a higher fee.
On sales we are averaging just over 1.4% compared to the areas average of below 1%
The average UK estate agent achieves 96% we average 101% at present. That’s why we are worth more.
On lettings we average 11% where our local average is 8%
It’s starts from the process of first contact to show why we are the better agent.
I appreciate your POV, however I believe (in part agreement with the article), that where Landlords used be driven primarily by perceived “quality”, it would appear that pricing in some (“some” possibly downplays the numbers) cases, is now the primary driver.
Achieving a larger sum in terms of a sale price is indeed a good differentiator, however (as well know), a key part of some firms marketing approach, is to overvalue. Whether this figure is achieved or not, is another matter entirely. Thus, this particular differentiator (and where the majority utilises this strategy)…ceases to become much of a differentiator at all!
At the end of the day, “better services” is all well and good, but it is something of an abstract vaguery, at the point of negotiation, as services will unlikely to have been provided yet.
An interesting discussion point nonetheless.
A rose tinted point of view there. Plenty of agents lose business over fees. My agency offers a great service, we are market leaders in our area and have the highest volume of stock and managed properties. Yet I will still lose instructions to an agent down the road under cutting on fee. It does usually mean that said landlord comes back to us a year or two later when wanting to find a new tenant due to receiving a bad service. Sometimes it is the long game. Not all landlords can be educated on the value of a good service over fee. As an agent you need to be realistic, not everyone will pay your fee.
Hate to break it to you Tcos you are not losing it on fee you are losing it because the LL or Vendors do not see the value you bring.
My staff lose property, i know we are better but its down to my listers not selling us properly.
PB have tapped into “All agents are the same, why pay more?” you and i both know thats B.S.
Its about setting yourself apart from the rest. Rather than im a green board they are a red or yellow board. By the way look at my really exciting PIE chart (99% of agents doing this) that’s not a reason to use you.
When was the last time you sat down with your staff, looked at how you conduct a pre val, val, and post val. Most agents NEVER do this, they do what they were taught a decade plus ago.
Thats why the public measure you and me against the 1% brigade.
Easy to blame the penny pinching public, harder to look at ourselves and be critical.
I am plenty critical of myself and my team, constantly re-evaluating how we do things and how we present ourselves. It’s called realism, you can’t win them all as hard as you try. After twenty years in the business and never dropping below the number one spot locally I am pretty confident we are hitting the right marks and the right clients.
Great to be a perfectionist but in my opinion better to know you can’t win everything you go out too, otherwise you are just going to drive yourself mad fighting an unwinnable battle. Any agent who believes that fee never comes into it is kidding themselves.
You can also argue that not every client will see the value you offer if it just isn’t what they want. Absolutely agree that not every agent is the same but the same can be said for clients. Again I agree if you rely on using pie charts and portal stats then you do have to take a look at yourself.
it would be interesting to know where Rentround found 20,000 landlords to survey as that would add a context to the report.
There is good reason why lettings portfolios are bought more than they’re built, unless an agent is particularly bad there is not much movement between agents and even where there is the fees are fairly much the same across the board in a particular area.
What also ought to be clear is whether this is just about tenant find services, let and rent collection or lettings and management. I am not disputing any of the conclusions but these findings might be representing a fringe activity within the industry in a small geographical location where all the respondents think like each other.
See below
https://v3.propertyindustryeye.com/nottingham-estate-agent-snaps-up-local-rival/
As if the world needs another cheap-cheap comparison site.
As with utilities, listing your business on a comparison site is fine if you are the cheapest agent in town. Otherwise, it’s a waste of time and money. I prefer running a business that charges fees that include a profit margin.
I walk away when they ask me to be a charity, not interested. They are often the ones that don’t want to maintain their property and argue over the smallest charge for work needed.