Should the let-only landlord be put on the endangered species list? - Eurolink

Should the let-only landlord be put on the endangered species list?

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The days of the let only landlord may be numbered, if industry pundits are to be believed. Citing an increase in cases of compliance clamp downs and vicarious liability claims being brought against lettings agents there is a push towards making the let only service a thing of the past.

Despite the value of let-only instructions to letting agency businesses over the years, they are currently valued at next to nothing when it comes to selling your lettings business – if anything they are designated a nominal good will value according to business transfer expert Adam Walker in a recent interview with Kerfuffle.

The reason for this is not only the fact that this isn’t seen as bankable recurring revenue that can be relied on, it is also the rise in reported cases of actions brought against the letting agent even in a case where they were not holding the deposit nor managing the property.

As a result of this, there are reported cases of agents pricing their let-only services so expensively that it is cheaper for the landlord to opt for one the fully managed services. Additionally, there is a push to encourage landlords to sign lengthy disclaimers that detail the staggering number of legislative issues that they need to be aware of and compliant with. Although the jury is still out on whether those disclaimers have the legal power to absolve the agent of all long term liability, many are opting not to take the risk and these highly detailed disclaimers intend to discourage the landlord from even attempting to self manage in the first place.

It is a well established fact that the value of an estate agency business is closely linked to its ability to produce recurring revenue from various sources, managed property services being the principle instrument of generating this recurring revenue.

Whether or not the days of the let-only instruction has been and and gone, is still yet to be decided, but it is largely become an accepted truth that if your are going to suffer the possibility of incurring liability, you might as well do it in a scenario where you have a degree of control over the management of the property and where you are benefitting from generating recurring revenue.

Richard Murray, CEO of Veco by Eurolink sees similarities between managed properties and subscription based businesses:

“This has long been the way with any subscription business and where value is placed on recurring revenue. Agents are therefore now choosing to look at other metrics to assess the value of an Estate Agent’s business linked to recurring revenue and I’ve even heard of EBITDA being used. Whatever metric you wish to use, customers of Veco by Eurolink can use our reporting functions to produce insight reports and allow you to forecast ahead and better prepare for the future, in the eventuality that income from Let Only instructions will be lost. Good agents will start to plan ahead and look at ways to replace this income by improving other parts of their service offering or charging structures.”


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