Property Management Businesses For Sale

Axis Partnership are specialist business brokers with several types of property management businesses for sale throughout the UK. We are involved in the buying and selling of residential and commercial lettings agencies, estate agencies and block management companies in Suffolk, Essex, London, East Anglia, South East, Norfolk, Cambridgeshire, Home Counties, England, South West, North West, South East, Midlands and West Midlands.

Whether you are looking for a lettings company for sale, a block management business or an estate agency, Axis can help.

Click here to view our current selection of Property Management Businesses For Sale

There are several different types of property management business for sale at any one time, so it important to understand what each type of business offers and how they differ.

Estate agents
Estate agents are involved in selling property, rather than renting or managing. Their income is based on a percentage of sale price – typically 1-2% – payable by the vendor on completion of the sale. Success is therefore directly linked to the overall level of activity and prices in the property market. Some estate agents for sale will specialise in residential sales (private houses and apartments) while others will specialise in commercial property sales (office blocks, shop premises etc).

However it is not unusual for an estate agent to have a combination of residential and commercial property on their books, especially if they are an independent agent operating in a local area, basing their reputation on local knowledge and contacts. This type of local, independent agent is often a target for larger national chains. Similarly, it is also possible for an estate agent to become involved in lettings. In the current property climate vendors are often choosing to rent out their property if they cannot sell. So it is often the estate agent handling the sale who is in a position to pick up the letting business. This can be a useful way for estate agents to diversify and supplement income in a market where sales are flat but lettings are strong.

A prospective buyer of estate agents for sale will want to understand the current mix of residential/commercial and sales/lettings before purchase.

Lettings Companies
Lettings companies are involved in renting property on behalf of landlords of either residential or commercial properties. A lettings company will usually offer a choice of “tenant find” or “fully managed” service. A tenant find service involves the letting company finding a suitable tenant for the property: placing advertisements, conducting viewings, carrying out credit checks or checking references, and organising necessary paperwork. The landlord will typically pay a fixed fee for this service.

A fully managed letting service involves finding a tenant and then managing the letting for its duration. This includes collecting rent and arranging for it to be conveyed to the landlord, being the primary point of contact for all tenant issues (e.g. repairs) and conducting periodic property inspections. The landlord will usually pay an agreed percentage of the rent – typically around 10% – every month.

The lettings sector has remained strong despite, or perhaps because of, problems in the wider economy and property market in the last few years. In addition, the income stream for a lettings agency with a reasonably sized fully managed portfolio tends to be more stable than that of an estate agency which depends on “per sale” income. To give an example, one particular lettings company for sale at the time of writing has a portfolio of just 150 properties and derives a steady turnover of around £180k per annum – and that is without providing any additional value-add services such as financial services. Given the continuity of this type of income, a lettings company for sale can be a very attractive prospect to buyers.

Property Management Companies
A property management company is involved in the letting and upkeep of blocks of properties. These may be residential apartment blocks or commercial premises such as office blocks, or shopping centres containing multiple retail outlets. Sometimes a building will contain a mixture of residential and commercial units e.g. residential apartments at the top, rented offices on middle floors and retail units at ground level, in which case a property management company may become involved in the maintenance of both types.

The job of the property management company is to find tenants (or leasehold buyers) and manage the letting, as per lettings companies. But in addition they take on the physical maintenance of the buildings, particularly aspects which are not the responsibility of individual tenants. Upkeep will typically include cleaning and decoration of communal areas inside buildings such as entrance lobbies, stairways and corridors, maintenance of outside space such as gardens, pathways and car parks, and maintenance of shared infrastructure such as roofs, guttering or lifts. They will also take on responsibility for health and safety within the block, including issues such as fire prevention (provision of smoke alarms and fire extinguishers, installation of fire doors where appropriate and organising fire drills) and trip and slip hazards (e.g. loose paving, gritting in icy weather). In some properties there are additional special facilities provided such as cafes, gyms, laundry areas and so on – all of which will need ongoing maintenance by the property manager.

The income of a property management company derives predominantly from service charges paid by tenants or leasehold owners, usually annually. These service charges form part of the tenancy agreement or leasehold agreement, and so the property management company has a great deal of protection in terms of income.

Another major challenge is managing communications with tenants / leaseholders. A large apartment block of dissatisfied people can, if they are sufficiently disgruntled, create a significant headache for a property management company, potentially risking the overall business. It is therefore important to take the “point of contact” role seriously and cultivate good relationships with lessees.

Many property management companies, like lettings companies, are indirectly benefitting from the downturn in the residential sales market. Many developers of large “buy-to-let” blocks and complexes have found themselves unable to sell, and have turned to rental instead as a way of riding out the recession. They then find that they need a block management company to organise that for them.

In short, running a block management business has several attractions – not least a steady, protected income stream. But it is also a highly technical job requiring input from a variety of professionals (e.g. qualified surveyors to assess when repairs are needed) and, potentially, an ongoing stream of issues from tenants to deal with.

Buying a Property Management Company
The prospective buyer of a property management company will need to have existing experience of working in a similar business. At Axis we find that most buyers are already in the industry and are looking to expand their portfolio of properties and expand into new geographical areas. We deal with all the nationwide buyers as well as local companies looking to expand.

Buyers interested in buying property management companies in order to expand or fill a gap in their portfolio can take two routes to acquisition.

The first route is to wait for suitable businesses to come up in their required area. By registering with Axis you can be kept up to date with new property management businesses for sale.

The second route is to pro actively research and approach businesses which fit your requirements, to see if they are interested in selling. Doing this yourself is time consuming but, perhaps more significantly, many companies like to keep their acquisition plans and activities confidential. To solve this problem, you can retain Axis to perform this task on your behalf. We can approach companies, conduct initial valuations and hold preliminary discussions and then arrange introductions with businesses who express an interest in selling, without your identity being revealed until a business is ready to negotiate in detail.