Official government figures published in November reveal that letting agents could lose more money under the Renters’ Rights Bill than the failed Renters (Reform) Bill, Reapit commercial director Neil Cobbold has highlighted.
However, Cobbold insists that the bill will offer opportunities for “forward-thinking agents” to adapt.
The Impact Assessment published by the Ministry of Housing, Communities & Local Government, reports that the Renters’ Rights Bill will cost letting agencies £391.7m over the next decade as it will lead fewer landlords to use agency services.
The loss in fees is almost 41% higher than a projected £278.7m in agency losses if the Renters (Reform) Bill had been implemented under the previous Conservative government.
The Labour-led Renters’ Rights Bill introduces extensive changes to the private rental sector, replacing assured shorthold tenancies with periodic tenancies, abolishing Section 21 evictions, and mandating stricter compliance standards for letting agents and landlords.
For agents, the increase in losses – an additional £113m over 10 years compared to the Renters (Reform) Bill – will likely heighten concerns from the lettings industry, Cobbold said. The new bill is set to become law in 2025, when agencies will also be contending with higher business costs from the recent budget increases in National Insurance.
Commenting on the figures released by the government, Cobbold said: “Letting agents will understandably be alarmed by the forecasted £391.7m in losses they’re expected to incur from the Renters’ Rights Bill. However, as with the Renters (Reform) Bill, there are opportunities for forward-thinking agents to adapt.
“Key strategies include converting let-only landlords into fully managed clients, as the government puts the figure down to fewer tenants moving – which will shift earnings from one-off placements to monthly recurring service fees.”
Cobbold added: “Providing value-added services such as compliance management, rent collection, and tenant communication can help mitigate the potential revenue loss associated with reduced tenant turnover and increased operational demands.
“Demonstrating the value of an agent’s expertise in delivering a better rental experience for landlords and tenants will therefore be critical.
“Nevertheless, letting agents, landlords, and tenants need further clarity from the government on various issues. For example, details on the scope and functioning of the private rented sector database and ombudsman are critical to help the industry plan and adapt to the Renters’ Rights Bill, which we expect will become law in 2025.”
Upselling additional services has in my experience been in situ for many years.
However Agents are going to have to walk a careful path if they are looking to covert Let Only Landlord to Rent Collection or Fully Managed as some are looking at managed Landlords as cash cows and therefore the service costs become challenging. I speak from personal experience here as I have a portfolio of properties with a ‘Leading’ letting agent in the south.
They have just advised my fees will be going up by .75% in view of the additional costs levied by the increase in national insurance.
I already pay for a fully managed service (one of the most expensive on the market) however I pay an additional 10% on every contractors invoice, a compliance fee, rental insurance and yet my tenants complain they cannot reach the management team to speak with anyone when an issue arises. Whilst we all know costs have risen I have now resorted to having my own contractors deal with as much as possible to save money and have repairs completed faster.
Everything has gone remote – reporting in particular so the human touch has definitely left the building!!
So if Agents are looking for anything else to charge for can I suggest they invest in proper ongoing training for their property management staff- answer the phone – increase their contactor base and frankly draw the line at being greedy.
Rents have escalated significantly in the south and therefore so have fees. However I as a Landlord have seen the service level drop & as an experienced Landlord (and previous Director in the industry) the knowledge in lower scale staff is severely lacking due to under investment in training. It is always dangerous when the client is better informed that the Agent.
I have stayed loyal to my Agent for over 15 years and cannot escape due to the contracts in place without severe financial penalties but when my current Tenants leave I am afraid I will be looking at an alternative.
So in conclusion don’t milk the cow dry!!
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
The Letting sector has been regulated in Wales for 7 years and all staff have to do training and pass tests to renew their licence every 5 years, under the control of Rent Smart Wales (RSW). Some companies undoubtedly flout this and have some untrained members of staff, but in general standards have risen. The Renting Homes (Wales) Act came into force on 1/12/2022 and replaced the Housing Acts and Assured Shorthold Tenancies. We have taken on many more fully managed landlords, because the new law is so complex, e.g. the Occupational Contract (i.e. tenancy) is 38 pages and they are worried about getting it wrong. Each property requires more management time, so we have had to increase our commission fee, but only marginally. Looking long term we should see a better overall standard in properties and management, but as yet RSW has only audited 55% of professional letting agency offices.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register
An advert for Reapit aka cobblers from Cobbold.
You must be logged in to like or dislike this comments.
Click to login
Don't have an account? Click here to register