Is it possible for letting agents to recover from the tenants fees ban?
According to the latest report from Fixflo, half of agents believe they will lose between 10% and 30% of their revenue and cited this loss as their biggest challenge in 2019, while 32% said it would be winning new landlords.
Most worryingly, almost half of agents (48%) said they are wondering whether to carry on because of developments in the lettings industry. This is supported by findings from the National Landlords Association (NLA) that show around 380,000 buy-to-let property owners are looking to sell within the next twelve months. The data from the NLA also reveals that nearly a fifth of all UK landlords are looking to sell their buy-to-let properties, with almost 50% of them selling a flat or apartment.
Simon Tillyer, Director of Shefflets and Vouch, belives that the current market conditions are tougher than we have ever seen before.
He comments: “You could be forgiven for thinking that the letting agent market is in serious trouble, with all the doom and gloom in the media and talk of large and small agents going to the wall, thanks to the fees ban.
For agencies like mine, the fee ban threatens our very existence, unless we can find ways to supplement the lost fee income. As it represents 20% of our turnover, it’s a significant chunk of income to find. Many landlords can’t afford to incur any further costs, so an obvious option is to pass on the costs to the tenant, via increased rents.
It’s inevitable that weak agents will not survive, especially if they are heavily dependent on tenant fee income. We are likely to see continued consolidation, with the corporates hoovering up smaller agents, if the price is right.
However, I believe that agents have a great opportunity to survive and prosper in 2019 if they make some positive changes in their business. Building strong property portfolios and providing an excellent customer service to landlords and tenants will attract new landlord and boost loyalty.
Many agents that are managing property portfolios will be able to compensate for the fees ban. It’s a good time for agents to review their business processes and see what is working and what isn’t. Ask yourself, how good is your customer service - what is the level of satisfaction amongst your landlords and tenants? Are there areas that can be improved?
It’s a good time to restructure your business – step back and evaluate your landlord portfolio to see if it is cost effective. Decide which landlords you should keep and which ones should go eg unprofitable. Look at ways to improve efficiencies in the business and make savings. Streamline your business.
Agents going out of the market will leave opportunities to pick up new properties and landlords. The more bad companies that go out of business means more business for the good agents. It’s also a great time to sell them the benefits of your superb service, especially if they have been left high and dry, or had issues with the old agent. They may be ready to pay for a proper service.
Also, there are many proptech solutions on the market offering letting agents ways to save costs, improve efficiencies and increase income. We have developed a referencing app to offer other agents a fully automated, web-based system delivering significant cost savings, via a comprehensive, time-saving solution. Technology and applicants perform the tasks, meaning that agents simply monitor progress. Vouch creates efficiency in the tenant application process and improves business-wide productivity and profitability.
Vouch can also help agents supplement their revenue by providing them with commission on a range of media and utility packages, offered to all tenants signing new leases. We designed Vouch to simplify the tenant application process and help agents and landlords save money and benefit from a passive income stream.”