The tenant fees ban means a massive loss of income for letting agents. Landlord website Goodlord estimates the loss at around £200 million in turnover each year. That’s a big blow. UK landlords are already reeling from a series of tax and regulation blows. So letting agents trying to offset their loss of income by simply charging clients more for delivering the same service won’t work. Instead agencies will have to reinvent themselves and develop new income streams.
Adding property management to the mix is an obvious one – it’s a service that agents can still charge for but it’s one that could easily backfire. So be prepared to do it well or not at all.
Ensuring you’re charging your full management fee every time is a good place to start, says Goodlord. Agents should make sure to spell out every single service they provide, from compliance to inventories, and let landlords know what they would be missing out on for a discounted fee.
Proptech expert Neil Cobbold believes providing an appealing landlord proposition that is “transparent and tech-enabled” will be key while at the same time “reminding landlords at every opportunity why the rental market continues to be a good place for investors with the right agency partners”. Added value will be crucial for success in future. What about adding rent protection insurance or void period management to the service offer. What else would clients like to see?
Ask tenants too. How much agents can make from insurance or utility and media switching services is determined by tenant take-up, so understanding and managing expectations is crucial. That way agents can actively improve tenants moving experiences, develop brand loyalty and maybe even generate recommendations.
Property consultant Abi Hookway also puts a positive spin on the fees ban, telling the press this week in the wake of scare stories about landlords leaving the sector in droves, that there may even be an upside if landlords exit the private rental sector in larger volumes. They may create an over-supply of buy to let units on sale – thus making them cheaper for future investors, she says. Abi also suggests that offering longer term management options with a guaranteed rental income could be a winner. She believes many landlords would jump at the chance to avoid the hassle of having to find new tenants, manage rent arrears and deal with disruptive tenants for several years at a time. All part of the job for a professional letting agent.