Why now might be a good time to sell your lettings business

WHY NOW MIGHT BE A GOOD TIME TO SELL YOUR LETTING BUSINESS

The Brexit vote and the tenant fee ban have both had a very negative impact on the business transfer market but we are beginning to see light at the end of the tunnel again. The tenant fee ban has not had nearly as much impact on the income of letting agents as was predicted and well-run firms have managed to pass all of the fees that they used to charge their tenants onto their landlords. As a consequence, buyers have started to pay a multiple of the whole turnover again rather than the turnover excluding tenant fees and this has raised the prices that we are able to achieve for businesses by typically 10-15%.

A second factor is that landlords have increased rents in order to recover the fees that the tenants used to pay and these rent increases mean an automatic pro rata increase in management income for letting agents.

A third factor is that many tenants delayed their move until after the tenant fee ban came in so many agents have seen a significant increase in the number of new tenancies and a corresponding increase in income from tenancy administration and set-up fees. As a result of these positive changes in the lettings market, our buyers are very keen to make further acquisitions and as a result, we have been achieving some extremely good prices recently.

As far as Brexit is concerned, the chaos is still having an impact on the value that we can achieve for residential sales businesses but as far as letting businesses are concerned, our buyers are taking the view that the rental market will not be affected by Brexit and most have decided that they cannot postpone their acquisition strategy any longer.

So all in all, if you are thinking of selling your letting business, then now could be an excellent time to do so. If you would like an up to date valuation of your business without obligation, call me, Adam Walker, now on 07785 277262 or email me at jd@adamjwalker.co.uk.

Adam Walker is a business transfer agent and management consultant who has specialised in the property sector for more than twenty-five years.

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