Almost four in ten agents are expecting a drop in lettings revenue next year, Zoopla claims.
The figures come as agents face the prospect of the tenant fee ban being introduced during 2019.
Zoopla found that 38% of the 600 agents polled are anticipating a drop in lettings revenue, in part because of the fee ban but also over concerns about the number of rental properties coming to market.
Despite the concerns among agents, demand from tenants appears to be strong.
Zoopla’s State of the Property Nation report found that the number of tenants saying they are using letting agents to find a place to live has increased by 12 percentage points in the past year.
Almost half, 48% of tenants, used a letting agent to source accommodation this year, up from the 36% recorded in the 2017 edition of the report.
Of the 6,000 people surveyed for the report, 62% said they expect to rent for at least the next three years. Of these, 23% said they are likely to rent indefinitely.
Meanwhile, the proportion of home owners letting out properties rose from 2.4% in 2016 to 4.2% this year.
Charlie Bryant, managing director of Zoopla’s property division, said: “It’s certainly a challenging time for lettings agents with the ban on lettings fees looming. However, our research shows that demand for agents’ services and rented accommodation are strong, and that should come as a welcome boost.
“As the market becomes more regulated and complex, the lettings agents that adopt a more consultative approach with both their landlord and their tenant clients to help navigate them through will gain an advantage.”
https://advantage.zpg.co.uk/insights/reports/state-of-the-property-nation-report-2018
Comments (8)
If every rent is increased 15%, the average £600 PCM will become £690 PCM. The agent can then charge the landlord £90 for tenant checks and he/she is still £990 better off (less commission) per annum.
The tenant is now paying 12 x £90 and is £1080 worse off, but the agent will benefit from 8% (on average) of this – (£86.40)
£90 + £86.40 = fees recovered!
Of course some tenants won’t be able to afford this and may find themselves soon in arrears, facing eviction, but what do MP’s care as long as they got more Twitter followers?
Business is all about balance, it can’t be allowed to become unbalanced to the point of where it fails.
There is an increasing demand for rental properties which will only escalate if landlords exit the market, the rental value must reflect this.
Every Christmas parents pay over the odds for that must-have toy in short supply, not forgetting year round concert tickets that sell for multiple times face value. (Supply & Demand).
MP’s are creating a monster with their meddling, ultimately tenants will pay for their error, and their self-promoting ways.
You want to fix the rental market?
Make it mandatory that private landlords (especially those far away) use legitimate agents, their properties will then have certain standards, regular checks and both they and their tenants will have some redress.
The amount of times we’ve had tenant’s coming to us with complete horror stories about their time in landlord managed properties is ridiculous!
Only yesterday we had a viewer (single mother) who claimed that she had not had a working boiler for 4-months, while her landlord was living it up in Thailand!
Surely if he is out the country for so long, she should have an agent or representative that she can go to?
On a separate note I’m still waiting for someone to tell me when the TV license will be banned, given that it is a forced tax payable by people who might not even watch the BBC, which is then distributed among the already wealthy?
Talk about double-standards!
Four in ten?
They must have forgotten to ask Romans/Leaders
The 4 stages of TT fees ban:
1. Its not going to happen. They’ll never do this.
2. Ah, its going to happen – HELP. How dare the Govt do this?
3. Oh, we’re fine, we don’t charge that much anyway, in fact we think its a good thing.
4. [Quietly, in the board meetings] Er, guys, how do we replace 15% of our income which is almost 100% of our profit?
As much as I love ZPG and RM you have to take their ‘research’ with very large pinches of salt.
I would anticipate it being the straw that broke the camel’s back in many cases.
Not shit Sherlock!
Expect it will be 10/10…
“Zoopla found that 38% of the 600 agents polled are anticipating a drop in lettings revenue” – Really? You don’t see many lettings agents who don’t charge a tenant any fees so a very optimistic outlook.
The majority of agents generate over 15% of their income from tenants so they must have a very robust plan ‘B’ which they haven’t implemented yet. It’s certainly not our impression when we look at the increasing number of acquisition opportunities which we are actively pursuing. We see business owners extremely concerned at the financial outlook considering the reduced revenue, increased regulatory burden and already tight margins. Nevertheless, if correct, then it’s refreshing to read some positive news.
So on the upside, 62% of agents see no impact on revenue from either the fee ban or lack of instructions. Were they not charging fees? Or have they found successful strategies to replace the loss and who is now paying for that? It is a confusing stat, as we are being told something entirely different and putting in maximum effort to create alternatives, especially with the coming demands of CMP and staff shortages.
I’m somewhat suprised that according to the poll the majority of tenants (52%) find accomodation from somewhere other than a letting agent. Word of mouth perhaps?