If you provide a service, you expect to be paid for it. Sound fair? But with the forthcoming ban on tenant fees, letting agents will still be undertaking meticulous and time consuming pre-tenancy administration without being able to charge the person they are providing the service to.
Agents should be looking at new ways to cover costs and recoup losses. Of course, you could hike the fees charged to landlords but at the risk you’ll lose their business totally.
An opportunity is presenting itself, however, highlighted recently in a comment issued by Graham Davidson, managing director of Manchester-based Sequre Property Investment.
Research from Davidson’s company revealed that over 68% of Northern buy-to-let property purchasers are from London and the South, with Davidson alluding to ‘hands off’ investors.
It’s no surprise as purchasing costs in the North are much lower and yields of between 6% and 8% in big Northern cities are dwarfing those seen in many parts of the South.
‘Hands-off’ investors mean landlords who don’t want to be involved in the day-to-day running of their lets. And the distance from their investments means professional property management is the best – and perhaps only – option for protecting their asset and investment income.
Joined up thinking is what’s needed. If you’re a dual agency in the North and you’ve just sold a property to a Southern-based investor, converting that client into a fully managed subscriber should be your number one priority.
If you want to take the impetus a step further, agents in the North should be actively targeting Southern property investors looking to take advantage of the current opportunities and creating two income streams in the process – finding buyers for properties on their sales books and turning those purchasers into lettings clients.
There are short and long term gains when diversifying away from the once ‘cash cow’ South.
Current demand for rental properties is exceptionally high, and likely to rise as the North’s status improves. Davidson was quoting his figures in a wider article about the Government’s Northern Powerhouse project.
The Government is looking to attract £5 billion of foreign investment for its Northern Powerhouse initiative in order to fund 14 major projects that will unite to rival the force of London - areas christened ‘enterprise zones’.
The ambitious plans include retail, commercial, leisure and infrastructure developments that are counterbalanced by a bold house building programme and the creation of thousands of jobs.
So, if you’re looking for new opportunities in 2017, it might be the time to look North.
*Simon Duce is managing director of the ARPM Group, which provides national outsourced lettings support