In the last couple of months another 3 new letting agents have joined the fray in Norwich, so as we come to the close of 2014, there are now over 90 agents advertising lettings on Rightmove within a ten mile radius of the City. This is more than double the number of agents in mid-2007 when we first opened our doors for business in Norwich. What caused this phenomena? Why have so many jumped on this particular band wagon and what are their prospects? Well cast your mind back, Until mid- 2007 everything in the world seemed rosy, the global economy was sound, the UK was doing well and then ‘overnight’ the world fell off an economic cliff; as one of the many consequences, house prices plunged as no-one was moving house, not least because first time buyers couldn’t get mortgages. This led to estate agents, either, going out of business in their droves or, going against their natural predatory instincts and adding a lettings arm to attempt survival. The lettings market could sustain this influx of new agents because tenant demand continued to rise and rise, as erstwhile potential buyers found themselves having to rent and would be sellers became landlords in order to move house. As the lettings market continued to grow and appear on the face of it to become more and more stable, by 2012 onwards, the number of new letting agents joining the throng catapulted upwards.
Even though the sales market has now recovered to some extent, the number of tenants requiring property to rent isn’t going to go down any time soon; lots of reasons but bottom line, there’s just not enough new houses being built (and won’t be for the foreseeable future). Nonetheless, can a city like Norwich sustain 90 odd letting agents? The answer is a resounding NO for the simple reason that the overall stock of properties available to rent while growing, is not growing at a rate to keep pace with the number of new agents who have joined in since 2012. Inevitably, we’re going to see, therefore, a number of letting agents failing or selling up in 2015. The ongoing threat of Government intervention in the industry may well hasten the process. As a properly established, properly funded, ethical agent, Martin & Co in Norwich will most likely benefit from the demise of others but landlords should be vigilant as to which agent they are using and be particularly careful if using a non-regulated one.
In the meantime, it is interesting to see what those agents desperate to grow their lettings business are saying to would be clients. It has been a long held ‘tradition’ for estate agents to overplay their property descriptions, for example: ‘Bijou Residence’ (Small), ‘Stunning House’ (you’ll be stunned at how bad it is), ‘Convenient for the Motorway’ (It’s right on the junction), ‘Some Updating Required’ (Pull it down and start again) and so on. Now, we’re seeing letting agents using similar practices but in a much more sinister way. Many are so desperate for new business that they are touting landlords to the point of harassment with false promises to match. In the first part of our Mythbusters Guide, here are two of the things they say and what they really mean:-
We have tenants waiting Not in the true sense they don’t. Prospective tenants have no loyalty to any particular agent, why would they? Rightly, tenants will focus on the location of a property, its condition, its amenities and the monthly rent, thereby gravitating to whichever agent has the individual property they want. Its true tenants do register their requirements with an agent but this won’t be on an exclusive basis, they’ll register with all of the agents in the City. So the same tenants who have registered with Martin & Co will have registered with Haart, William H Brown and so on. The reason the agent is touting for your property is that it’s a good one and fits the profile of what they regularly see demand for.
We have someone ready to move in No they don’t. This is a mean spirited ploy which preys on the vulnerable landlord whose property is sitting empty and there are no incoming tenants on the horizon. Often the agent in question will telephone you out of the blue and tell you they have a tenant all ready to go, ready to move in within a week if only you would instruct them. Sounds great but let’s just hit the pause button for a moment – the agent and the supposed tenant haven’t seen the property so how do they know it is suitable? Also, has any tenant referencing been done? It’s implausible a prospective tenant would pay to be referenced if they haven’t actually seen a property. And, more importantly, why haven’t they seen the property via the current agent? No, this is just a ruse to get you to show them the property and take your instruction. The next step is to list it on the open market and hope they get an application from a tenant. You’ll then be told that the original tenant who was ready to move in, in a week has fallen through but they’ve got an even better one lined up. Is this really a good basis on which to establish a working relationship with your agent, the person responsible for interacting with one of your most valuable assets?
A variation on this one is where you’ve interviewed 2/3 agents before deciding which one to use and one of the unsuccessful ones phones you a week or two later with the same line. However, in this variation they’re a bit ahead of the game because they’ll have sneaked a few photographs of the property when evaluating it with you, then used these to put up an unauthorised listing with Rightmove. With this one, they’ll genuinely be able to say, they’ve got someone who wishes to view the property.
Martin & Co Norwich