Dust off your black tie and grab a tissue as we’re entering a period of mourning. It’s a bold claim, but I think the ‘let only’ service offered by agents has been given the last rites.
The lettings industry is under attack and the ban on tenant fees the final nail in the ‘let only’ coffin.
A ‘let only’ service – where the agent finds the landlord a tenant, draws up an agreement and performs a number of administrative tasks – is very time consuming and requires desk time, diligence and specialist knowledge.
Sadly and probably within the next 18 months, agents will not be allowed to charge tenants for these services, although they’ll still need to be carried out.
I can’t quite possibly see how agents will continue to offer a ‘let only’ service as it will be a loss leader. This poses a massive problem for letting agents who do not offer a full property management service, as they’ll find themselves quickly slipping into the red – in terms of money and manpower.
The sensible way of recouping costs and balancing the books moving forwards is to offer a comprehensive lettings package that allows you to parcel up all pre-tenancy administration and tenant-find tasks with a bigger full property management offering. This enables agents to charge fees that surpass what they billed for let only.
The fortunes of letting agents will go on of two ways. Agents that solely offer a ‘let only’ service may choose to leave lettings altogether to avoid making a loss - perhaps reverting back to a sales only operation or selling up to another agent.
Forward thinking letting agents will see the ban of tenant fees as a brilliant opportunity to actually increase revenues. Abolishing ‘let only’ in favour of a full property management service in an ‘all or nothing’ move will give agents the ability to charge higher fees.
Landlords generally have an Achilles' heel and that’s compliance. The thought of breaking the law and keeping up with the ever-increasing number of lettings legislations can frighten new and existing landlords. Looking after this aspect for them as part of a full management service will be a big asset.
Combine this with the promise of a round-the-clock maintenance service, rent collection, professional inventories, check-in and out, property inspections and tenancy administration, and you can create an irresistible package for landlords that fully justifies an inflated fee.
The let only King may be dead…… but long live the full property management King.
*Simon Duce is managing director of the ARPM Group, which provides national outsourced lettings support