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Landlords would consider forgoing a letting agent if profits were hit

Wednesday 14th December 2016

New research from the UK Association of Letting Agents (UKALA) has revealed that nearly half of landlords (47%) would dispense with the services of their letting agent if their profits began to suffer.
 
The research, conducted to assess the impact on letting agents' businesses of the upcoming changes to landlord taxation from April 2017, found that 57% of landlords – roughly 1.1m – currently employ the services of a letting agent, with 36% regular users and 21% occasional users. 
 
On a regional basis, more landlords in Scotland said they would do away with their agent if their profits were being compromised than anywhere else in the UK (56%). By contrast, just 29% of landlords based in the West Midlands would forgo an agent – the lowest number in the country. 
 
UKALA's findings also revealed that some 26% of landlords who use letting agents to exclusively fully manage all of their properties would cut these ties if faced with falling profits. Meanwhile, 21% of landlords who use agents on a let-only basis for all their rental homes would forgo an agent if their income took a dip. 
 
More promisingly for agents, though, was the fact that 36% of landlords said they would keep the services of their agent even if profits were affected. 
 
“A significant number of landlords will be hit hard by the tax changes and agents’ fees will be one of the items underneath the magnifying glass if profits begin to decrease,” said Richard Price, Executive Director of UKALA.  
 
“As landlords’ costs inevitably rise, agents will need to do more to position themselves as indispensable, and make it obvious that they provide solid value for money.  Otherwise, as future tenancies come to an end, landlords will either shop around or start to consider self-managing their properties”.
 
Previously, the National Landlords Association (NLA) has warned that more than 400,000 landlords could be pushed into a higher tax bracket when the changes to mortgage interest tax relief come into play in April next year. This, in turn, could see them re-evaluating their need for the services of an agent.
 
This comes on top of the recent announcement about the ban on letting agents' fees to tenants, which could force many agents to increase their management charges to landlords to help cover costs. 
 
“Landlords should already be looking ahead to the forthcoming tax changes and working out how they will be able to maintain profitability,” Richard Lambert, Chief Executive at the NLA, said. “That will intensify with the prospect of agents’ fees increasing as a result of the ban on charging tenants.”  
 
He added: “However, while it may seem an appealing proposition to minimise your outgoings, the majority of landlords simply won’t have the resources to deliver a service that meets the standards or professionalism that their agent currently provides.”
 
              

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