Managing agents are to face a dramatic reduction in their ranks over the next ten years, it has been claimed by the sector’s largest membership organisation.
The Association of Residential Managing Agents (ARMA) says that although the industry is dominated by hundreds of smaller companies managing between 500 and 2,000 residential properties, this is set to significantly reduce.
ARMA claims that a large proportion of the 870 companies within the property management sector are run by ageing principals, many of whom do not pay themselves a salary to keep their operations profitable and who are likely therefore to eventually sell up in increasing numbers to larger, corporate competitors.
“The fact that profitability is reliant on the owner effectively working for free, it is difficult to escape the conclusion that there will be a dramatic consolidation of the industry as owners sell up, retire or leave the sector,” says ARMA.
But it also claims that the government’s proposed abolition or severe restriction of ground rents, and the more widespread introduction of freehold, present opportunities for managing agents.
Also, ARMA claims that many block landlords will exit the sector when ground rents are reformed, leaving agents in a more prominent role, as will the increase in commonhold, a system that also relies heavily on agents.
ARMA says 25,000 people are employed within the sector, which contributes half a trillion pounds to the UK economy via VAT payments, National Insurance and also staff and corporate tax contributions.
It also says there are 1.7 million leasehold homes in the UK, 1.4 million of which are flats.