Letting agents’ survival depends on their ability to attract and retain customers, just like any other business, although in this case those customers happen to be landlords.
The way that landlords use letting agency services exists along a spectrum. At one end about 45 per cent of landlords don’t use a letting agent at all. At the other, about 14 per cent are completely hands-off electing to use agents to let and manage their entire portfolio all of the time.
This is according to private landlord surveys conducted by the National Landlords Association (NLA), who have been conducting similar research concerning landlords’ behaviour and habits for more than a decade.
The interesting point about this variation in practice is that there appear to be certain trends emerging.
For instance, over the course of the last seven years or so the proportion of landlords telling the NLA that they do not use letting agents at all has increased from around 39 per cent at the end of 2011 to 45 per cent in the last quarter of 2016.
*Yes, that should read 2013
Using current estimates of the number of landlords active in the UK market, this equates to about 141,000 more landlords choosing to do without the assistance of a letting agent today – compared with a few years ago.
That sounds bad…..
It could be; extending this trend in a purely linear sense would forecast the end of letting agencies within 46 years or by the end of 2063!
Obviously that’s nonsense, but so is most forecasting based on indicative surveys. In reality the increase in those landlords going it alone is only one part of the picture.
The proportion of landlords handing over their entire portfolio to an agent, either for tenant find or full management purposes, has actually increased from 14 to 17 per cent and 9 to 14 per cent respectively.
At the same time the proportion of ‘casual users’ of letting agents has shown the most substantial change. Occasional use of an agent for let only services has declined from 18 per cent of landlords to only one in ten, while the proportion of those who use a combination of let only and full management for some but not all properties has dropped from 11 to 9 per cent.
What does all this mean?
It suggests that landlords, and the way that they are approaching the management of their portfolios, are changing. One possible interpretation is that letting and portfolio management is becoming less causal and more structured.
In this sense landlords seem to be opting either to bite the DIY bullet, or hand over responsibility to the professionals.
What about the future?
Here’s where it gets a little contradictory. The NLA’s long term trend statistics compare like for like quarters, in this case Q4 each year, which works out just fine most of the time. The problem is that Q1 2017 showed a considerable spike of landlords using agents – an increase of around 6 per cent compared to the end of 2016 – bucking the trend.
This could be an anomaly, or it could be an extension of the polarisation the trends seem to be suggesting, since the increase appears to be coming from the single property landlord segment. Of this group of landlords, those with only one property to let, Q1 illustrated an increase in agent use from 31 per cent to 46 per cent, suggesting that agents are becoming more important to those with the smallest portfolios, who occupy the largest tranche of the market.
Perhaps in this case, less really is more.