The Rise of the 'DIY Landlord'
The 'squeeze' on private landlords over recent years has left many wondering if property investment is worth the aggravation. Increased estate agency charges, maintenance costs, electrical safety certificates, energy performance upgrade requirements, and reduced tax relief for landlords, are a few of the costs undermining 'buy to let' as a profitable venture.
Whilst I realise that no body’s ‘heart will bleed’ for those who own multiple properties without making a sensible return; there are single property landlords and ‘accidental’ landlords out there who will find the outgoings can outpace the income and will genuinely struggle to make ends meet. Let us also not forget that the private rented sector provides a huge amount of housing stock in the UK, so you would think private landlords would be supported rather than penalised.
The ‘Tenant Fee Ban’ in 2019 rightly or wrongly put an end to tenancy set up costs being shared by both landlord and tenant, and pushed letting agency charges northward for landlords. Some have said (myself included) that this was a ‘sledgehammer to crack a walnut’, and a cap on tenant charges would have been a more sensible approach to combatting the few ‘rogue agents’ who were over charging. Anyway we are where we are.
So what is the answer to the squeeze on ‘buy to let’ returns? Sell up and put the cash into stocks or crypto currency instead? This is certainly a more ‘hassle free’, low maintenance option. OR, go DIY. Ditch the estate agent. Or better still, become the estate agent.
In years gone by using an estate agent was pretty much unavoidable. It was only agents who had the tools to get proper marketing exposure for a property and to do proper referencing and proper contracts.
As is often the case technology changes the field of play. Online tools now enable ‘the savvy landlord’ to list their own property using online agency services (such as Quicklister.co.uk), use online referencing companies, download binding tenancy agreements and check their compliance using online resources.
This empowerment for landlords is seismic (and often necessary) in the quest to maintain profitability, and to ensure the funds are available to invest back into the property(s) when needed over time.
The obvious cost savings aside, many landlords prefer it. Instead of handing the house keys to an expensive estate agent who may not have the landlords best interests at heart, the DIY landlord gets to meet prospective tenants first-hand, choosing the most suitable candidates themselves and building a rapport with their tenant from day one. In my experience a tenant is far less likely to disrespect the landlord or their property if they have looked them in the eye or shaken their hand on check in day. Anonymity as a landlord often creates a ‘disconnect’ between them and their tenant, which can sometimes lead to negligence or hostility on the part of the tenant.
If like many landlords you prefer an agent to manage your tenancies for you (but resent how much they charge to do it), here’s a tip. If you source the tenant yourself and save the agent the leg work, you can often negotiate a far better management fee. Part of the full management fee they charge will include the marketing and tenant placement, so if you have done this part for them, it can dramatically reduce the cost of managing the tenancy.
So you have the tools, the documents and the support as a UK landlord to market a property, select a tenant, and set up a tenancy. All without needing a High Street estate agent. These days you don’t even need to be local to the property, as there are online viewing services who can host viewings for you (for a fraction of the cost of an estate agent). The rest can then be done remotely using electronic signatures etc.
With more costly regulation likely on the horizon, is it any wonder that more and more UK landlords are opting to go DIY. Whether it’s through necessity or preference, hang in there, as the long term capital appreciation guaranteed with property will always make it a good investment if you can go the distance!
