Two new reports out this week look at the lettings industry. Both are revealing. The Association of Residential Letting Agents (ARLA) and digital referencing company Goodlord put the current state of the lettings industry under the spotlight, now that agents have started to adjust to the changes brought in by the Tenant Fees Act.
According to ARLA, rents rose to their highest-ever level in June, with demand also on the increase. Year-on-year, the number of tenants facing rent increases is up from 31% in June 2017, and 35% in June 2018. At the same time, the number of properties under management fell. ARLA chief executive David Cox expects this to be a continuing trend.
“In addition to the repercussions of the Tenant Fees Act, the proposed abolition of Section 21 coupled with the Mayor of London’s recent call for rent controls, will only cause the sector to shrink further. In turn, this will increase pressure on the sector because it will discourage new landlords from investing in the market, causing rents to rise for tenants as less rental accommodation is available.” He said.
Ever since the Government proposed the ban, ARLA has warned that tenants would continue to pay the same amount, but the cost would be passed onto tenants through increased rents, rather than via upfront costs.
Goodlord also surveyed letting agents around the country to take the pulse of the industry during the summer months. They reveal that agents are largely optimistic despite the issues raised by the ARLA survey. The agents surveyed admit they expect to lose revenue following the fees ban in June but they are taking a positive stance, with almost half (47%) of those polled planning to expand their managed portfolio in response.
But perhaps the most interesting feature of this survey is that while letting agents continue to deal with the familiar pain points of the rental business from carrying out referencing to sourcing tenants, more than 80% of them are increasingly looking to Proptech to make these processes easier. This is the trend to watch and we’ll be blogging on this again in the coming weeks.