Do letting agents face problems or a wake-up call for creativity?

Just one month into the New Year and already the tsunami of changes facing the lettings industry appears to be gathering momentum.  Putting Brexit and the possible impact of that aside, The Tenant Fees Bill is due to receive Royal Assent and will become law on 1st June 2019, arguably changing the landscape of the private rented sector forever.

 

The government has also outlined plans to introduce a single one-stop shop for housing complaints (bringing landlords and developers into the provision of redress) and set out plans to regulate property agents. Finally, the much-anticipated implementation of mandatory client money protection insurance for all property agents in the private rented sector is likely to be in place from 1st April, and the industry awaits the response to the consultation into the proposed housing court, the use of Section 21 and longer tenancies.

 

With the market facing so many changes to government policy in such a short space of time, letting agents could be forgiven for feeling a little apprehensive about their 2019 prospects in an already volatile market.

 

However, over the coming months we are going to:

• Guide you through the changes as they happen
• Provide case studies and commentary from letting agents sharing their concerns on the changes and what they are doing to prepare their own businesses
• Offer advice from leading industry experts on how to mitigate the risks to your business and answer any questions you may have

 

This month, we spoke to one independent estate agent and member of the PRS, Steve Wayne, Managing Director of Benjamin Stevens, about the upcoming changes and what they mean for his business:

 

“Yes, the Tenant Fees Ban is going to be game-changing for our industry but in all honesty, I believe some agents have relied on it for far too long. If you have a good relationship with your landlords and are charging them a fair price for the service levels you provide, they will recognise your value.

 

I have never made fees to tenants a primary part of my income, so fortunately the impact to our businesses will be minimal. However, it will certainly affect those agents who have taken a different approach, charging landlords next to nothing to win instructions but charging £400-£500 to tenants every time they moved in. This is one of the issues with the lettings industry, there are too many instances where agents have sacrificed service to the people who are paying their wages.  With that said, this is an opportunity for the industry as a whole to take a new approach and still be successful whilst offering real value for money.

 

Unfortunately, the irony of the whole ban is that it is tenants that are ultimately going to lose out. One of the greatest challenges will be that landlords won’t pay for inventories and in fact, these protect tenants as much as landlords. In addition, it’s likely that rents will go up as landlords re-coup any costs which are then pushed their way or, more landlords may decide to self-manage which could also be detrimental to tenants.  

 

In the future, I would like to see a supplier bring out a lettings passport. This would enable tenants to walk into a letting agent or go to a landlord and say: “Here are my references, I’m in a position to rent.”

 

Finally, I welcome the move to make client money protection mandatory for all property agents, and am shocked at the number of agents who, up until now, have held hundreds of thousands of pounds of clients’ money in their account without any protection.”

 

Despite the many changes the industry faces over the coming months, it is clear they all present the same underlying challenge or goal for letting agents – stock! Granted, the buy-to-let and investments market has been hit hard by the implementation of the higher levy on Stamp Duty for second homes and tax relief reduction.  However, with one in five people now living in rented accommodation and 52 per cent of landlords not using a lettings agent or management company to handle their portfolios*, the opportunity to attract landlords based on quality service offering remains high.  It simply requires agents to take a step back, reevaluate and evolve.

 

The question is, do you want to face obstacles or stepping stones in 2019?  Read our next blog in March to find out more.

 

*According to The Private Landlord Survey, released by the Ministry of Housing, Communities and Local Government,