LETTINGS agents with a sales arm could be doing more to help aspiring buyers onto the market given major steps forward in affordability, increased choice, improving rates on 95% loan-to-value (LTV) mortgages and the availability of 100% LTV loans, a lettings expert has claimed.
But she says too many lettings agents ‘gate-keep’ their tenants rather than alert them to the mortgage options that are now available, and that “myth-busting” mortgages is key to driving more sales.
A losing strategy
Patricia Ogunfeibo, founder and non-practising solicitor at London-based tenant2owner, a UK platform helping tenants understand their chances of homeownership, said: “Some lettings agents still gate-keep their tenants, but that’s a losing strategy in this day and age.
“With 100% mortgages returning and affordability improving, many tenants now have a genuine path to homeownership, and agents who ignore this risk becoming irrelevant.
“The opportunity is clear: agencies are sitting on databases of qualified, local and employed tenants who want to buy but assume they can’t. Most just need some mortgage myth-busting and there are various sites, including our own, that give them all the information they need.
“The payoff for lettings agents? Some commission when tenants buy, and stronger relationships when they don’t. Let’s also not forget the chance to make a demonstrable social impact by helping solve the housing crisis. There are no good excuses that I’m aware of for sitting this out.”
Short-sighted
Simon Bridgland, a mortgage broker at Canterbury-based Charwin Private Clients, said lettings agents need to focus on the bigger picture.
He continued: “Letting offices and estate agents are usually two separate entities and the relationship between them is often poorly managed, with too much competition between the offices.
“A well-run relationship would happily turn existing tenants into purchasers, and see actively farmed tenants lined up as potential buyers. In the main, however, you see short-sighted agents unwilling to let go of a good tenant.
“Using existing tenants of an agency as buyers would give vendors confidence of how good the buyer is, plus the added bonus of cheaper marketing cost, as purchasers are on tap.”
Great in theory
But some said it’s not quite as simple. Zaman Sheikh, Director at Northwood Chelmsford, a lettings agent, manages over 300 properties across both branches in the Essex city.
He said: “Our first port of call is to ask the tenants whether they would look to buy. A lot of them say no they wouldn’t want to, and they give a lot of reasons why they are renting or prefer to rent.
“We often present them with the fact that there are 100% mortgages available, and while this is great in theory, I’ve never seen it work in practice — or at least consistently.”
Mortgage-savvy tenants better tenants
Phil Shelley, chairman of Hello Neighbour, a platform helping landlords find tenants, said: “The idea that anyone can gate-keep tenants in the age of the internet and AI is unrealistic.
“While our business is focused on letting properties, we do see considerable benefit in tenants starting the journey of home ownership. Quite apart from the benefits for tenants there are also benefits for landlords.
“After all, tenants who understand the needs of a mortgage provider will be better tenants for as long as they remain tenants. Financial track record, credit history and other referencing criteria all become much more important if house ownership is the ultimate route.”
