The next finding is that the proportion of landlords looking to sell properties has almost trebled over the last six months – rising from 7% to 20%.
In fact, for the first time since the birth of modern buy-to-let, more landlords now intend to sell properties than buy them.
Well, first of all that’s less business to go around. But that is probably a medium-to-long-term concern which we can worry about later. The more immediate challenge is how to make sure that you stand out from the crowd and are able to hold on to your part of the market.
Step one: Join UKALA. We’re bright orange for heaven’s sake you can’t get any more visible than that!
Step two: Consider your market, and what they will need as conditions emerge. Who are they and what can you give them to ensure your services are both indispensable and distinct from your rivals down the road?
Landlords are often regarded as some kind of homogenous group, when in reality we know that this is far from the truth.
I think we’re starting to see the beginnings of a more clearly segmented client market for agents because landlords are being forced to focus on how they define themselves and their place in the market.
What segments are appearing?
Landlord confidence is currently at rock bottom as many come to terms with how – or even if – they will be able to remain in the market in the coming years.
For those looking to incorporate we’d likely see a more hands-on approach to their lettings activity overall, and a more clearly-defined professional landlord market (I’m talking about defining landlords by their needs and requirements, not their characteristics – professional landlords already exist in their droves).
Crucially for letting agents this means that many may not think they need a full service offering any more, and perhaps they’re right, but however professional these landlords become they cannot be experts in every field, which is where you come in. Look for the gaps and show them how you alone can fill them.
Those landlords looking to sell, or maybe just maintain the status quo, are likely to be smaller and more focused on investment, the kind wanting to provide an income in retirement rather than as a means of primary income.
Meeting these needs may be simpler, or at least more familiar, but the question is, do you know how the needs of these two groups differ and how to reach the right audiences?
Will landlords stand by their convictions?
It’s too early to know whether or not landlords will follow through will their intentions, but there tends to be a big difference between what people say they will do, and what they actually end up doing in any given situation.
For example, incorporating is not a straightforward task. Transferring personally held properties into a company would incur a capital gains bill at one end and, depending on property value, a significant stamp duty charge at the other.
This would surely price the process out of most landlords’ financial capabilities.
Talk to your clients about the next few years and their intentions, or use the upcoming new financial year as an opportunity to review their accounts.
Perhaps remind them about the new SDLT levy or the changes to wear and tear for 2016/17. You might be surprised how useful you suddenly become.
The road ahead is uncertain
What’s clear is that the buy-to-let market is already in flux. The jury is out on whether future change will be for better or worse, but interestingly it looks like landlords are being forced into re-evaluating how they actually see themselves.
The Budget is little over a month away, so who knows what might be next for landlords.
Either way, your customer’s hands have been forced, and their needs look to already be changing.
Are you prepared to react? You should be.
*Richard Price is the Executive Director of the UK Association of Letting Agents (UKALA)