Build to Rent and the Letting Agency Issue
I know of one good reason why some forays into large scale “build for private let” by institutional investors and housing associations are failing -and it has very much to do with letting agents.
Lots of big scale investors in big build to let promised much about longer term tenancies. They would revolutionise the market for assured shorthold tenancies, they said, by offering long term tenancies in spanky new, though usually tiny, apartments.
The trouble is that in too many cases these investors have failed with their online marketing efforts and the tenants are not coming to them directly.
So these investors are instead, having to recruit tenants from local letting agencies. This costs them a lot of up front money, of course. But it also costs them even more later, because 6 or 12 months in and the letting agents are mining their database to churn those tenants into new properties. Nothing wrong with this, of course – the agency depends on people moving to earn some of their fees.
But this results, all too often, in the tenants leaving after only a short time – with the result being higher void periods and more changeover costs coming the way of the investors.
The average tenant in the private rented sector actually stays in a property of a private landlord for well over 3 years but from the presentations I have seen by housing associations and institutions, the average for them looks to be much less than 2 years – far less than many had hoped and boasted they could achieve.
This high tenant turnover and its associated costs must be absolutely killing the big investors business models.
And a lot of the failure has to lie in the big investors inability to harness and optimise their marketing efforts so that the tenants come to them directly, rather than via letting agencies.
Too many of them do not really fully understand the intricacies of private renting and that is why their marketing efforts are failing. Private tenancy letting and management looks easy, but it is actually harder than the build to let investors think.
At LettingFocus we can help investors, whether large or small, get tenants who stay for long periods.
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