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Robert Irving Burns

Why Private Landlords are Now Looking to Use Letting Agents More Than Ever

December 21, 2020    |   Robert Irving Burns

The effects of the pandemic on the housing market has been nothing short of seismic. The government’s stamp duty tax break has offered a lifeline for estate agents – but no such rescue package exists for private landlords; especially those specialising in short term lettings and renting their properties via sites like Airbnb.

Unsurprisingly, these landlords are having to adapt in order to survive. The answer? Changing the nature of their properties – from a holiday let, to a longer-term rental. The key to making this work lies largely with letting agents.

If COVID has crippled your Airbnb business, or you’re simply unable to get tenants as a private landlord, here’s more information on how a letting agent can help you.

What’s the problem with Airbnb?

As a business model, Airbnb has proven itself to be highly effective in the past. It’s a useful way for private landlords to connect with prospective customers and generate a good income.

However, no one could have foreseen COVID-19, nor the impact that it would have. In April 2020, Airbnb hosts reacted with anger when the platform offered full refunds to guests, leaving them out of pocket. Although a relief fund was introduced shortly afterwards, it still wasn’t enough to cover the landlords’ losses.

Hosts remain anxious for the future, especially as the disruption caused by the pandemic shows no sign of abating. For many, who rely on a steady stream of paying guests for their income, it spells financial disaster.

What about other private landlords?

Those choosing to rent privately (without working with a letting agency) are also finding it hard-going at present. This has been an issue for a few years now, though the pandemic has exacerbated the problem. The following have been particularly problematic for private landlords:

  • Increased workload
  • More legal complexity / requirements
  • More competition
  • Smaller profit margins

The impact of COVID has resulted in:

  • Tenants moving out (unable to pay the rent)
  • Tenants failing to pay the rent, but legally being able to stay in the property
  • More tenants ‘playing it safe’ and renting via letting agencies, rather than private landlords

The drawback of short-term lets during a pandemic

Under normal circumstances, short-term rentals (e.g. to holidaymakers, people seeking temporary accommodation for work etc.) can be extremely lucrative. Although these short-term lets usually don’t last longer than two weeks, the high rental rates mean that there’s great profit to be made, particularly when there’s a steady stream of people wanting to stay at the property.

However, even at the best of times, short-term lets can cause problems. These are some of the more common issues:

  • Increased likelihood of damage to the property
  • Increased wear and tear
  • Higher maintenance and cleaning costs
  • Higher standard of accommodation often expected
  • Complaints from neighbours
  • Dealing with complaints from holidaymakers

COVID has added the following problems to that list:

  • Increased vacancy
  • Reduced profit
  • Higher cleaning costs (to ensure properties are safe to stay in)
  • Reduced trust in the market
  • Fewer people renting properties for work (e.g. for a week-long conference)

Adapting to a new market

If all the above sounds worryingly familiar, then it’s worthwhile considering renting to longer-term tenants. You certainly wouldn’t be alone – according to Rightmove, numbers of new rental properties coming to the market in the first week of the first lockdown increased by 45% in London, 62% in Edinburgh, and a staggering 78% in Bath.

There are plenty of advantages to long-term renting, such as:

  • A more predictable monthly income
  • No need to frequently market the property to attract new tenants
  • Bills and basic maintenance handled by the tenant
  • Reduced wear and tear over time
  • No need to provide a cleaning service

If you’re not sure you want to commit to a long-term rental arrangement (which is often six to 12 months), there’s also the medium-term option. The length of the contract is usually limited to a few months, and is particularly appealing to students, contractors working on a business project, or people who have sold their house and require a temporary home until they find a property to purchase.

How a letting agent can help

Working with a letting agent is especially beneficial at the moment. They can help with:

  • Proactive marketing. They’ll place your rental property on major portals like Rightmove, which will attract larger numbers of prospective tenants.
  • Tenant vetting. A good letting agent will also carefully source and vet tenants. They’ll be looking for people that have a proven track record of paying the rent on time and treating properties with respect.
  • Handling legal matters. They’ll ensure that your property meets all legal safety regulations and assist with drafting all the necessary documentation. In the unlikely event that a dispute arises between you and the tenant, they’ll act as third-party mediators, with a view to arriving at a resolution as quickly and efficiently as possible.
  • Carrying out regular checks. Your letting agent will also carry out regular inspections of the property, with a view to identifying any minor defects before they become major problems. If any repairs are required, they’ll often be the point of contact for contractors.

Letting agents charge a rental fee, which varies depending on the level of service required. However, this fee is often covered by the income generated by reduced vacancy, and higher rental rates.

Finding the right letting agent

When selecting an agent, consider the following:

  • How established / experienced are they?
  • Have they got a good reputation in the area?
  • Are they renting out several properties in the area?
  • Are long-term clients happy with them?
  • Are they members of recognised bodies such as ARLA, Propertymark, NALS, NRLA or UKALA?

As well as focusing on your plans during the pandemic, a good letting agent will encourage you to consider the long-term future, and the best plan of action once the COVID situation is resolved.

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