Professional Property Management Enhances Private Rented Sector (PRS) Investment Returns

In every third quarter of the year, Young Index gauges landlords’ views of the value of professional property management and its impact on residential investment returns.

76.6% of landlords believe that tenants pay higher rent for properties that are professionally managed and 82.9% think that average tenancies are longer for property that is professionally managed.  73.0% of landlords also believe that professional management of property enhances its capital value over and above any market uplift.

Minimising unnecessary repair and maintenance costs is a factor and 81.3% of landlords believe that tenants take better care of a property that is professionally managed.

77.6% of respondents would recommend professional property management and, interestingly, 50% of those who currently manage their own properties would also recommend that investors use professional property managers.

100% of landlords who manage their own properties cited cost saving as an influencing factor in their decision with 82% not enjoying doing so.  Yet, this eye to cost saving seems, by their own admission, short-sighted; 63% agree that professional management results in tenants paying higher rent and 55% believe that it enhances the capital value of their asset.

In summary, 85.7% of all landlords questioned thought that professional property management is money well spent.

Neil Young, CEO of Young Group and lettings agency, Young London, comments; “As the private rented sector continues to grow, it is particularly heartening to see that professional property management – and its impact on asset value and income returns - is so keenly recognised by the entire investment community.

“In a sector that is characterised by large numbers of ‘amateur’ landlords, it is encouraging to see that they wholeheartedly value professional property management and indicate that they believe it results in higher rents, enhanced capital values, longer tenancies and encourages tenants to take better care of their rental property.”

Here, Young Group summarises the full Q3 2011 headline statistics; the PRS in numbers.

The Impact of Professional Property Management

• 76.6% of landlords believe that      tenants pay higher rent for properties that are professionally managed by      an agency.
• 82.9% of landlords believe that      average tenancies are longer for property that is professionally managed.
• 81.3% of landlords believe that      tenants take better care of a property that is professionally managed.
• 73.0% of landlords believe that      professional management of property enhances its capital value.
• 85.7% of landlords think that      professional property management is money well spent.
• 77.6% of landlords would recommend using      a professional property management company.
• 81.0% of landlords questioned employ      an agent to manage their property.
• 17.2% manage the property themselves      and 1.7% of landlords’ properties are managed by a member of their family      or friend.
• Of those who do not use the services of      a managing agent, 100% cited cost saving as an influencing factor in their      decision, and only 18% enjoy doing so.
• 63% of landlords who manage their own      properties agree that using a professional property manager results in      tenants paying higher rent and 55% believe that it enhances the capital      value of their asset.
• Interestingly, 50% of those who do not      currently retain property management services would recommend to other      investors that they employ professional property managers.

Looking to the Long Term

• 95.2% of landlords intend to hold      their residential property investments for the next 12 months.
• 85.9% intend to hold their assets for      at least 10 years.
• 25.0% of landlords intend to retain      their property investments for the next 20 years or more.
• The average period that residential      property investors expect to hold their property investment assets is 13.5      years.

Appetite for Acquisition

• 33.4% of investors are considering      purchasing additional residential property assets within London over the      next 12 months.
• 12.5% of investors are looking at      opportunities in the UK outside of the capital.

Capital Growth & Income Return

• 78.6% of respondents believe that      London prices will be at current levels or higher by this time next year.
• For UK property outside of the      capital, 54.8% expect prices to be at current levels or higher by this      time next year.
• Landlords expect London property      prices to see a small average price increase of 0.9% by this time next      year with rents increasing by 2.47%.
• The predicted 12 month outlook for UK      property prices outside the capital is a fall of 1.6% with rents remaining      broadly flat, increasing by 0.3%.

Base Rate Expectation

• The average base rate expectation for   Q3 2012 stands at 0.73%.

The full report is available to download at: http://www.younggroup.co.uk/downloads/YIndexQ32011.pdf

A hi-res version of the accompanying infographic is available online at:
 http://prsupdate.co.uk/wp-content/uploads/2011/10/PropertyManageInfoGraph-compressed-21.jpg