A new warning from automated rental payment provider PayProp states that letting agents must be fully prepared for the upcoming ban on upfront fees charged to tenants.
The firm suggests that the way to do this is by streamlining their processes.
Ban on Fees
A ban on letting agent fees charged on tenants is widely expected to be implemented throughout England at some point in 2018. A debate on the ban took place in Westminster just last week.
In Wales, there is a similar consultation ongoing. Fees have been banned in Scotland since 2012.
It is feared that the majority of letting agents will lose a significant proportion of revenue when any such ban is introduced. As part of its consultation, the Welsh Government reports that fees charged to tenants make up around 19% of an agent’s income.
A separate study undertaken by software provider Eurolink calculated that the ban could cost a single office agency £85,000. For a multi-branch network, this could rise to £850,000.
Agents warned to streamline their processes ahead of fee ban
Neil Cobbold, Chief Operating Officer of PayProp in the UK, noted: ‘It’s clear that we could soon reach a point when upfront letting agent fees charged to tenants are banned in all corners of the UK.’
‘That’s why it’s important that agents begin to plan now for how they are going to replace lost revenue – whether through alternative revenue streams, optimisation of business processes for better efficiencies, or through low-overhead growth.’
Concluding, Mr Cobbold said: ‘The ban on letting agent fees is all about a changing market and effective adaptation. The agents who plan their strategy now are likely to be most successful when a ban is finally introduced.’