Landlords turn to letting agents
The research showed an 18 per cent decrease in the number of property investors who choose to stop using letting agents and manage their own buy-to-let properties.
In 2005, 22 per cent of landlords who used letting agents intended to manage their own property at the end of their current tenants lease, but this dropped to 4 per cent in 2006. Over half (52 per cent) of those who now plan to use a letting agent cite the upcoming introduction of the Tenancy Deposit Scheme as a reason.
From October 2006, all landlords will be legally required to join either a custodial or insurance based version of the scheme. This legislation is aimed at safeguarding consumers against rogue landlords who illegally retain all or part of a tenants deposit when they vacate a property.
While these new rules hold obvious benefits, many property investors fear that they will substantially increase the level and complexity of administration required, necessitating the use of a letting agent.
Landlords also blamed time constraints (34 per cent), fears about additional future legislation (9 per cent), an increasingly competitive rental market (3 per cent) and the desire for professional advice (2 per cent) for their increased reliance on letting agents.
Lee Grandin, managing director of Landlord Mortgages, said: “While we welcome any move which benefits consumers and improves the image of the buy-to-let market, this research reveals the hidden impact of regulation especially the Tenancy Deposit Scheme.
“As the market becomes increasingly complex such legislative changes may even lead to some landlords abandoning the sector altogether – a move which would adversely affect consumers over the long term. Therefore, we hope that the government takes into account the potential implications of increased regulation and chooses not to stifle this vibrant sector.
“This increased use of letting agents will also impact the potential ‘real’ rental yields available on residential property and may even dissuade investors from entering the market. Therefore, it will be interesting to see if this trend has an impact on average rents and the availability of property over the long term.”