There are number of reasons why outsourcing is so important even more so now due to section 24 it will effect profits and taxes.
A business can increase its profits in 2 ways
- Increasing revenues – in this case is increase rents, but this is dependent upon the market conditions.
- Reducing costs – this is to mitigate the effects of section 24
- One of these major costs is the expense of managing a portfolio with a letting agent charging anything between 7-14%+vat
- Self managing – Self-management might save you some money this will make mean your money is no longer passive due to the amount of time & energy that is needed. You would be on call 24/7 and this is not why anyone invests in property specifically to be a hands-on landlord.
- Letting agents – Using a lettings agent is the more attractive option but it comes at a high monthly cost and they can be quite unreliable and they may not manage your property the way in which you want.
- Outsource under your control – this means that you can outsource the management on a PAYG basis which will lead to a significant reduction of costs. You can retain total control and have your properties managed the way that you want them to be. A PAYG basis would mean that you would pay nothing on a god month, more of a pay as you need basis. Meaning that you would be rewarded for having a well-maintained, low turnover portfolio via reduced costs rather than paying a letting agent a fixed fee every month.
This is not for everyone but for those looking to reduce costs and still remain in control without the headache of self-management this is the ideal way forward