The best lettings agents will survive and shine through the ban of fees levied on tenants, which comes into effect this weekend.
The prediction comes from utility management service Tenant Shop which says that only the best-equipped will succeed in the second half of this year and in 2020 as the effects of the ban manifest themselves in reduced income.
The service says that with tenants no longer paying upfront fees, it will be key that agents help landlords to vet prospective renters and ensure all aspects of check-in and check out are satisfactory, including notifying local councils and utility companies about tenancy changeovers and dealing with stray bills.
"The introduction of the Tenant Fees Act is the most significant change to the private rental sector in recent years and landlords will need full service traditional letting agents they can rely on" says Glenn Seddington, managing director of Tenant Shop, an Inchora company.
"Having the right tenant referencing, contractual and deposit systems in place will become even more important, as will remaining compliant with the new legislation.
"Letting agents can also prove their worth to consumers by providing a comprehensive, knowledgeable and personal service at a time of huge industry change when people will need reassurance and expert advice," he says.
Seddington believes that as landlords consider their options following possible increases in management charges prompted by the ban, agencies offering a range of expert services can best justify their fees.
"It's this kind of approach with an emphasis on full service and demonstrating the value for money available to landlords which will see the very best traditional agents take centre stage once the fees ban becomes law" he continues.
He says that while in some cases management fee increases may be justified, agents don't necessarily need to hike fees to remain profitable.
"It's about finding a balance between charging a fair fee for what you offer while remaining transparent and cost-effective. Many agents have also been looking to build additional revenuestreams to replace lost fee income," he explains.
"Meanwhile, providing access to leading utilities services … can also help to keep tenants happy, encourage them to stay for longer and therefore reduce void periods for landlords," concludes Seddington.
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You can only charge so much for utilities and this is optional by the tenants.
google resale of electricity by landlords and remember the fine is £5k for starters.
At the dawn of the modern PRS agents charged landlords 15% for full management and tenants nothing or virtually nothing. The costs were then gradually heaped on tenants as a way of attracting landlords in an increasingly competitive market. However, 15% is still the right price to do the job and make a fair profit without diversifying into non core activities. Landlords have had it really good for a long time and yes, for a while some will be able to blackmail desperate agents into holding or reducing their fees. Only about 35% of landlords use a Lettings Agent for anything, there is also the rise of the corporate build to let landlord to consider. All of this amounts to a lot of turbulence and it’s nowhere near over. Landlords are exiting the sector because of tax changes and those who remain (sorry) are faced with mounting regulations and costs. If Labour gain power it’s game over for the PRS, there will be some survivors but it will be a different market and being last man standing sounds heroic but sometimes the juice just ain’t worth the squeeze...(aka Dr Nick’s juice loosener) Am I concerned? Actually I’m more excited than concerned because with great change there is nearly always opportunity and anyway, worrying won’t help. It’s an ill wind that blows nobody any good
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