Letting agents urged to update processes ahead of tenant fees ban
When the Tenant Fees Bill comes into play, potentially from April next year, letting agents might need to be prepared to take business-changing measures to stay afloat.
Earlier this month, the Tenant Fees Bill which is expected to see tenancy fees banned across England passed a third reading in the House of Commons, and is expected to be signed into law next spring. However, a webinar with ARLA Propertymark’s David Cox this week highlighted the fact that many letting agents will need to make some major changes in order to keep up with the movements in the industry.
The Bill is described by Cox as a “seismic shift” for the private rented sector, with tenant fees representing around 20% of the letting industry’s turnover according to research commissioned by ARLA. In the case of an outright ban – the most likely outcome of the Bill – letting agents across the country could lose around £200m a year in income according to the figures, while landlord costs could go up by an accumulative £300m, and tenant rents could rise by an estimated £103 per tenant per year.
Improving technology to aid the industry
Proptech is one thing that could help agents cut their costs in preparation for the changes, which was discussed at the webinar hosted by property technology company Goodlord. By improving technology, agents can increase efficiency, reduce costs and ultimately increase profits in order to stem the effects of any losses felt after tenant fees can no longer be charged.
Cox commented: “There’s no silver bullet, because every agency runs their business differently, but I think everyone needs be looking first at how they can reduce their costs and how they can maximise their income.”
With some agents looking at upping their fees to landlords as one measure to recoup their costs – which could ultimately see tenants as the final victims of the Bill, the opposite of the intended effect – it is important that they offer an improved service to remain competitive.
Property consultant Graham Lock said: “Now is the time to review all your processes and what you’re doing with technology. If you do nothing you risk not innovating as an agency.
“Agents are looking at increasing their fees, but if you’re not improving your business and your service at the same time, you’ll miss out.”
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