Agents must streamline their processes in wake of fee ban

Agents must streamline their processes in wake of fee ban
It’s clear that we could soon reach a point when upfront letting agent fees charged to tenants are banned in all corners of the UK

According to automated rental payment provider PayProp, letting agents must prepare now for the incoming ban on upfront fees charged to tenants, and the way to do so is by streamlining their processes.

A ban on letting agent fees charged to tenants is expected to be implemented in England sometime during 2018.

There is currently a consultation on a fees ban taking place in Wales. Meanwhile, a similar consultation was carried out in Northern Ireland earlier this year and fees have been banned in Scotland since 2012. It's clear that the vast majority of letting agents will lose a significant proportion of revenue when a ban is introduced.

In fact, as part of its consultation, the Welsh Government reports that fees charged to tenants account for around 19% of an agent's income.

Meanwhile, a separate study undertaken by software provider Eurolink calculated that the fee ban could cost a single office agency £85,000 and over £850,000 for a multi-branch network.   

Agents must start planning for change now

Neil Cobbold, Chief Operating Officer of PayProp in the UK, says: “It’s clear that we could soon reach a point when upfront letting agent fees charged to tenants are banned in all corners of the UK.

That’s why it’s important that agents begin to plan now for how they are going to replace lost revenue – whether through alternative revenue streams, optimisation of business processes for better efficiencies, or through low-overhead growth.”

Concerning the first point, Cobbold points to the common tactic of increasing landlords’ management fees and partnering with preferred suppliers to generate additional commission.

Why streamlining could be the answer

But while these may seem like no-brainers, PayProp suggests that streamlining financial processes is an indispensable way of utilising PropTech to an agent’s advantage.

Cobbold adds: “PropTech automation can help agents to generate new revenue streams, manage cashflow and become more efficient. Automating the rental payments process, for example, could free up more time for agents to explore alternative revenue streams and generate more business.

It can also help to improve day-to-day cashflow and ultimately improve client retention thanks to reduced rental arrears and increased landlord satisfaction.”


It’s not all doom and gloom – just look at Scotland

According to PayProp, it’s not necessarily all bad news for letting agents in England, Wales and Northern Ireland.

“Fees have been banned in Scotland since 2012 and the lettings market north of the border remains in good shape,” Cobbold points out.

He suggests that agents in other parts of the UK seek out their Scottish counterparts and gain advice on how they have replaced lost revenue over the last five years.

Cobbold concludes: “The ban on letting agent fees is all about a changing market and effective adaptation. The agents who plan their strategy now are likely to be most successful when a ban is finally introduced.”

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Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

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maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

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maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

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zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

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Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

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Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

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RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

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sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

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Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

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Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

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Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

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Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

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