If predictions are to be believed, the buy-to-let market is set to enjoy another buoyant year.
The latest landlord sentiment survey from LSL Property Services reported that over half of UK landlords expect tenant demand to increase while nearly a fifth anticipates expanding their portfolios this year.
While the Help to Buy scheme is undoubtedly encouraging would-be home owners on to the ladder and lenders are gradually easing their criteria, rising house prices means that home ownership will remain a dream for many.
National average rents in the UK continued their upward trajectory last year and new agreed tenancies hit a three year high across the country. Buy-to-let landlords generated an average total return of just over £12,000 in the year to September 2013, equivalent to an annual return of 7.4%. If both rents and property prices continue to rise at the same pace then landlords could see their return almost double in the coming 12 months, equivalent to a return of 13.6% a year.
As interest rates likely to remain at rock bottom for some time, the buy-to-let market will continue to attract more investors in 2014 – and this represents a significant business opportunity for mortgage intermediaries.
Many of you have already tapped into the market through your landlord clients – however in my experience, few have explored how to generate new leads and new business from the letting sector.
The UK private rental sector comprises of some 4.8 million homes currently and 1.6 million households move annually. The sector is forecast to grow around 25% until 2016, leading to 6 million privately rented homes, the vast majority of which will be managed by the 25,000 letting agent currently operating in the UK.
These agents have to carry out some form of tenant referencing and most will encourage or at least make their landlords aware of the benefits of legal protection and rent guarantee insurance – both of which require an approved tenant reference.
To date, letting agents been poorly serviced by a handful of providers who have sat back and got fat on the profits of the recent boom. Agents have used these providers in spite of rather than because of their service and typically pay between £30 and £50 for the ‘privilege’.
I see tenant referencing as the door opener for mortgage intermediaries and the team at the Source has the key. We’ve developed our SourceLet tenant referencing service to check prospective tenants quickly but thoroughly, taking just 30 seconds to produce a detailed and accurate tenant reference – and we only charge between £6 and £14 depending on the level of referencing required.
Once you have pushed the door open with our cost effective and efficient referencing tool, you then have the opportunity to provide the full range of regulated services with access to the full life-cycle opportunities of the tenants – not forgetting the buy-to-let requirements of the landlords themselves.
You’ve no doubt got relationships with local estate agencies and I bet nearly all of them have a lettings arm. Why not get an introduction and show them that they don’t have to put up with the poor service and average products that their current providers deliver – you have a service oriented and competitive proposition to offer instead, and we’ll be behind you every step of the way.