The Renters Reform Bill will cost letting agents more than £275m in the next decade as fewer landlords use their services as a result of longer tenancies, new analysis suggests.
The recently revealed estimate in the Renters Reform Bill Impact Assessment, published by the Department for Levelling Up, Housing & Communities, represents “costs to letting agents of reduced use by landlords” due to changes from assured shorthold tenancies to periodic tenancies and the removal of Section 21 resulting in fewer tenants moving.
The costs, estimated over 10 years, do not take into account the time agents will have to spend familiarising themselves with the new measures contained within the Bill. However, according to the document, the government states agents will benefit from the property portal, as they will be able to register on behalf of landlords and charge for this service.
The Impact Assessment goes on to conclude that the main costs of the Renters Reform Bill will be borne by landlords and that “the estimated net cost to landlords is £10 per rented property annually”.
However, at a recent Levelling Up, Housing and Communities Committee oral evidence session, Rachel Maclean MP, Minister of State for Housing and Planning, admitted that it is the department’s intention to introduce measures currently missing from the Bill, including the Decent Homes Standard, as an amendment in the House of Commons.
While MPs will have time to scrutinise any amendments, it is unclear if the government will publish a revised Impact Assessment to reflect the costs of any measures added in this way.
When introducing a Bill to parliament, the government has to publish an impact assessment outlining the measures in the Bill, their estimated effects and any associated costs. This report is then scrutinised by the independent regulatory scrutiny body for the UK government, the Regulatory Policy Committee.
While this committee has rated the Renter’s (Reform) Bill Impact Assessment “Fit for purpose”, it judged the reasoning behind the measures as “Weak” and the cost-benefit analysis “Very weak”. The committee also questioned whether “the reforms will introduce additional barriers to entry for new landlords and whether they will restrict investment into the PRS (and if this will impact on future supply)”.
“Let-only agencies will rightly be concerned about potentially losing £278.7m because of the Renter’s (Reform) Bill,” said Neil Cobbold, MD, PayProp UK. “But savvy agents will have already spotted the opportunity in the proposed regulatory changes.”
He continued: “It will be key to convert your existing let-only landlords into fully-managed clients. Charging landlords a fee for services including rent collection, maintenance and compliance with the Renters (Reform) Bill and the hundreds of other rules that govern the private rented sector, will boost your agency’s bottom line.
“However, for agents and landlords to properly assess the impact of the Renter’s (Reform) Bill on their businesses, we need more information from the government on how some of the measures will work and when they will take effect. Details on court reforms to speed up evictions, the Property Portal and the new ombudsman will be essential.
“We also want to see the Department for Levelling Up, Housing & Communities publish a revised Impact Assessment if new measures are introduced as amendments. This will allow all involved in the industry to judge the potential costs and benefits of any changes to the proposed Bill.”
No kidding. Many a let only business is on the brink and will disappear never to return. The only ones to survive will be the large agency’s and they will become smaller numbers too. It was official (as if we didn’t already know) yesterday that 38% of PRS stock has now been lost and climbing and that amount has been a crisis (not will be) for over a year and is getting worse this year with landlords leaving.
Shelter and the like with their constant lobbying anti-landlord rhetoric has a big hand in this. Civil Servants have been advising extremely draconian short sighted policy that has demonised landlords for decades hitting them tax never seem before in any sector, regulation that was poorly implemented or communicated, while some councils saw regulation as a gravy train of unspeakable profiteering. You lot made this mess and only you have to blame for the misery you ARE causing tenants and homeless people with children. Not even your own temporary housing meets the minimum standards of the worst private landlord!!!!!
38% is a crisis, should never have gone above 10% to 15% which is often replaced by new people coming into the market. What do we have? No-one is coming into the market and that is why the numbers is growing month on month AND IS GETTING worse. and you think that is bad ……… wait till they hit PRS with their eco policy on EPC requirements.
Listen up government ………………… the majority of PRS is private DIY landlords, often inherit a property they do not need to sell but can use as a source of income. You are giving them the death of a thousand cuts, they don’t like it and they are leaving. They don’t need to be in PRS.
At a time when housing has been in crisis for many years, in all devolved powers of the UK, controlled by all the political parties, you would have thought someone would have seen they are not only biting the hand that needs, they cannot cope without our help. Its just ludicrous, incompetence and arrogance.
As one landlord said to me yesterday, who is thinking of selling off their large portfolio ……… since when does government have the right to tell me who I can have living in my properties after I, not them have invested £m’s and dictate if I make no return. I didn’t enter PRS to provide social housing for government shortages. Now you are telling me I will have no control of MY PROPERTY if Sec 21 is banned.
38% is a crisis, a disaster but it heading towards 50% very quickly and probably cannot now be stopped. But one thing is certain, PRS is now broken, would take many years to start to recover, if ever. They are making changes that will make PRS so inviting …… why would a private landlord want to bother?
PRS is nuked. More landlords will leave, more agencies will disappear, next to impossible for a letting agency start-up, including the connected local business/tradesman losing income. More tenants are going to face MISERY.
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Can you share where the 38% data is coming from? Shocking if true, but I’ve not seen that evidenced anywhere as yet- nor seen that in the market- generally seeing around a 5% exit in our market and others I’m talking to.
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You missed the news headlines on prime TV yesterday.
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Like with all the legislation passed in the last 20 years, this will present challenges and opportunities for agents. If you are heavily let only then maybe there is a commercial angle to be speaking to your find only clients now to negotiate a halfway house between management and let only. The reason for this is the let only fee they have been used to covering them for 6/12/24 months will be gone. They will have just two months of security come 2025. Statistically the data shows that tenants seldom move in first 12 months but this was in a world where the option did not exist to up sticks and give two months notice at the drop of a hat. The property portal will add (not factoring administration costs) £10K PA to any business with 1000 managed properties. If you have not been charging yearly renewal or heath check fees – you will need to be. To include rent level (section 13 negotiation or similar statutory instrument for rent increase), legislation check, property portal registration etc etc.
I woke this morning and the most interesting news article that caught my eye is the financial times piece that the government are finally seeing that the EPC “C” rating would be the final death knoll for the PRS as we know it. Also its unachievable and in many cases, totally contradictory. As the commenter states so well above, Landlords do not need to continue to supply homes to tenants or bail out successive governments in their lack of provision for flexible housing. The corporate investor will replace a few but will that appetite for build to rent sustain with interest rates now back up? Private landlords, are, in most cases (despite the general mischaracterisation) fair, balanced, financially savvy people. They have accumulated a level of wealth that affords choice in their lives after many years (in most cases) of careful decision making and sacrifice. They will not be dictated to by ill-informed pollical parties, clandestine stakeholders with a buck to make when the PRS falters or charities that confuse homeless issues with the benefits of a healthy PRS. I say confuse as i just don’t want to believe they do it on purpose.
In the announcement today about EPC’s, are they finally realising the brakes need to go on QUICKLY!
In my view, for what its worth, the driving instructor hit the dashboard for the emergency stop some years ago and its just a question now whether these learners that run our country can grind the gears, select reverse and floor it !
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Both posters above, well said, slow hand clap.
It makes you wonder why they are called ” Constituency MP’s ”
None of them seem to know anything about the people in the areas they represent.
Shelter? Spending other peoples money is easy as, especially when they are largely not client facing ( and actually helping ) but lobbying and having a jolly old time doing so, with the virtue signalling that goes with it.
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If agents feel overwhelmed by the changes, Landlords will feel this even more. I’d argue that this is one of the biggest opportunities ever to win over some of the 1m (50%) of Landlords who don’t use an agent at all AND to convert LO over to an RC or FM service. Thoughts will need to be had around fees structure- including if there are any minimum charges applied if a tenant gives notice to leave early in the tenancy (in line with current proposals that they could leave after just 2 months). Whilst there is no argument there will be a lot of work involved in transforming our businesses around the new legislation, there are huge opportunities ahead.
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