The impending tenant fees ban could entirely wipe out some agents’ profits, turning them into loss-makers – and half of letting agents are considering giving up.
Half of agents believe they will lose between 10% and 30% of their revenue when the tenant fees ban comes in.
The finding is carried in the latest annual Fixflo report published today.
The report says: “This is a major threat for any business, especially small businesses who will often yield a net profit of 10% to 20%”.
A total of 49.63% of agents asked about the impact of the ban said they would lose between 10% and 30% of revenue, but almost 10% of those asked said they would lose 30% or more of their income.
Agents cited loss of revenue as the biggest challenge to face them over the next year, at 41%. A further 32% said their biggest challenge would be winning new landlords.
Just 8.87% of agents cited online competition as a major concern.
Most worryingly, almost half (48%) said they are wondering whether to carry on because of developments in the lettings industry.
The Fixflo report says that changes such as the Tenant Fees Bill are putting the traditional letting agent business model under increasing strain.
It says: “It is evident that the Government’s measures are not being welcomed by the industry.
“We expect to see further industry consolidation over the next 12 months as the increased costs of compliance need to be spread over larger portfolios to keep compliance costs per property at economical levels.”
Today’s survey is based on responses from 401 agents around the country.
In addition, 100 landlords responded to a separate landlords survey.
Of these, 72% said that things had become more difficult for landlords over the past year.
Despite this, 70% of those polled said they plan to keep their portfolios or to expand.
Of the total, 37.21% do not use a letting agent.
Of those that do, rent collection was cited as the most important service provided by an agency, followed by legislative compliance handling, with repairs and maintenance in third place.