The first ‘state of the industry’ report on the lettings agency sector since the introduction of the fees ban suggests individual agents are gearing up to suffer 30 per cent drops in income.
The assessment, by PropTech firm Goodlord, reveals that over 90 per cent of agencies are predicting a loss in annual revenue following the Tenant Fees Act, which came into effect on June 1.
Most of the agencies surveyed estimated losses of up to 30 per cent.
The vast majority of agencies told Goodlord they would concentrate on increasing their managed portfolio or increasing their management fees when looking to attract additional revenue.
Despite the negative impact on their revenues, the vast majority of letting agents said they had felt prepared for the new legislation, with just two per cent saying they had not felt at all prepared for the Act.
Another legislative change investigated in the survey was the proposed plan to repeal Section 21 of the Housing Act 1988 and put an end to ‘no-fault evictions’.
Some 85 per cent of lettings agencies surveyed had served a Section 21 notice in the past 12 months.
However, industry criticism of the government’s pledge to bring in new Section 8 grounds for eviction is reflected in the fact that only 51 per cent of agents surveyed had served a Section 8 notice in the past 12 months.
Goodlord also surveyed letting agencies on the hot topic of deposit replacement schemes.
Only 24 per cent of agencies said they already offered an alternative deposit scheme, but over 60 per cent said they would consider offering one in the future.
Despite the flurry of regulation and tax changes aimed at the lettings sector, the majority of agencies remained upbeat.
Only 23 per cent of agents surveyed said they weren’t optimistic about the future of the lettings industry as a whole and 60 per cent said they were either ‘very optimistic’ or ‘extremely optimistic’ about the future of the agency they worked for.
You can see the report here - although you will have to register.
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I work with lots of letting agents to generate extra income from insurance for their clients, not only on the letting side but sales as well, this is just another avenue to help bridge the gap in respect of the lost income from the tenant fee ban. Agents must be pro-active in this area as there is a way to reduce the loss of income but also benefit from giving your clients an extra service/advise.
Well we have lost an important stream of income due to the ban and we have had to compensate this by passing the fee to the Landlord and we all know what the knock on effect (higher rents). It was either that or lay of a member of staff which I was not prepared to do.
What frustrates the hell out of me in 11 years I have never had a single complaint from any potential tenant re paying the £200 pound fee we charged.
A fee cap was so obvious a solution.
A LA I have known for many years stated that he would be losing about £30000 in tenant fee income per year.
Plus he has many of his L L clients selling up due to S24 and S21.
He can't increase his management fees as the remaining LL will leave.
Everyone is under the cosh.
Somebody had to pay.
It will be the tenant.
LL will simply increase rents which will mean tenants end up paying far more than a fee.
I did suggest to this LA that I might charge a higher rent for the first 6 months to cover all costs and then reduce until a S13 increase 6 months later.
The LA said Nah! just keep the rent the same!!
So there you have direct evidence of how tenants will be paying more in rent.
This will also affect tenants of self-managing LL as market rents increase as a consequence of the TFA.
So everyone gets clobbered.
HMRC does nicely out of it as well due to increased rents!!
No rent increase as when i do use a LA they charge me max £250 or dont use.
No problems no arrears no bad tenants. Everyones a winner.
I put up rents if service charges maintenance or BOE increases so only had to do once in past 5 years. Voids no more than a week, most are relet whilst current tenant still in contract.
We just doubled the finders fees and lost the idiot Landlords so 12% down on Landlords but mitigated-the loss of fees.
Think Mr Sykes is talking hogwash £250 incl vat and inventory, maybe in the old days old fellow but not now.
I think you'll find it is the LL that have got rid of LA like you!!
You will find that more LL will be terminating their contracts with you in the coming months.
You can try increasing your fees but eventually you will run out of LL prepared to pay.
You are exactly the sort of LA that will go out of business due to your belief that you can just raise charges to cover your list Tenant Fee income.
You will be in for a reality check very soon.
If you consider what other LA are doing they are managing things far more cleverly than you.
They are devising strategies that are actually increasing their income in excess of tenant fees they used to receive and they retain LL at the original price.
Arrogant LA like you won't be around for long.
The game has changed and us idiot LL are increasingly dispensing with the services of idiot LA!!!
??
Please go back on my messages. Show me where i said a LA charges me £250 which includes an Inventory?
I cover Inventories, gas cert, epc, electric report and any other requirement.
A LA acting for me will find me a tenant(s) Reference them, produce the TA take the Deposit and First months rent deduct their £250 or less.
Arrange for signatures on All Docs including each page of Inventory, set up SO, Also give to tenant Right To Rent, Mould and Damp fact file, legionnaires fact fine, keys, codes and All that is required to secure my tenant and present me with All paper work. Ok PS!!
Or i simple find tenant myself which i have been doing along side LA for over 35 years. Adapt or lose out Twit LAs
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