Recently, we have noticed a big change in that our local letting agents now cater for HMO ( house of multiple occupation) and multi-let properties.
When the market was more buoyant, letting agents would not touch multi-let or HMO properties with a ten foot barge pole. The main reason for this I think was because to rent out a whole property as rooms takes a lot more effort. It involves more viewings for the agent, which of course is time consuming, more credit checks which involves more expense, and generally a lot more work, and as we all know, time equals money.
HMO’s can also mean a greater turn around of tenants if not done properly, which again means more work. Letting agents have had it very easy and can be pretty lazy. Landlords were left to find their own means of getting HMO room only tenants. This trend is now changing due to the amount of increased competition in the lettings sector. Many estate agents are now breaking into lettings because sales are so slow they need to increase their bottom line sales margin. Indeed the latest news from RightMove is that 70% of property on the market in 2011 has not sold. The quickest increase in profits and cash flow is within the lettings sector.
What we have found over the last year is a general creeping into the market of letting agents who suddenly feel HMO’s and multi-lets are an untapped source of funds. As letting agents, they are allowed to advertise on RightMove etc which gives them a big audience advantage, whilst landlords who do it themselves are not. Hence many landlords are finding it tougher to get tenants in.
Agents Do It For The Money
An interesting comment came from a conversation with our latest tenant. He said “our property was the best he had seen by far and that all the others were run like bedsits where none of the other tenants spoke with each other.”
This tells me that in the multi-let and HMO sector landlords have an advantage. That being, to create happy places for people to live, not just ‘room rents.’ A disadvantage of allowing agents to run your multi-let is that you will probably have to provide more services like weekly cleaning or gardening etc, because tenants who do not speak to each other are unlikely to give a damn about communal areas being kept clean etc.
In the long run this will eat into profits and you will probably find that this type of room rental will generate a higher turnover of tenants, and, the property will get more wear and tear. Remember too that agents, like to charge fees for repeat tenant finding. (Although some fees are tax deductible.) Tenants on a tight budget will probably find it cheaper renting direct from a landlord rather than be charged a fee via an agent.
Landlords Can Get Properties On To RightMove too!
Lets tackle the advertising factor then. There are now many purely online agents who will place your advert on RightMove for a nominal fee. And many will do it on an “until let’ basis, unlike other advertising which tends to be over a set period.Fees range from around £30 to £100. Online agents also have add-on services such as credit checking if you require them, with some including it in the price.
Recently, many of the other room let services have joined with bigger companies which gives them ability to cast the tenant finding net a lot wider than previously, so it really should be just as easy for a private landlord to beat letting agents at HMO or multi-let, and you might just have an advantage or two in the current market.