Measures towards making the pre-tenancy process more affordable for tenants, such as the upcoming ban on letting agent fees, could benefit landlords and letting agents too, one firm believes.
FCC Paragon, a tenant referencing provider, says that, even without letting agent fees to pay, many tenants will find it difficult to afford hefty deposits for their rental properties.
The firm explains that, if tenants have fewer barriers to moving, the market could be kick-started and landlords encouraged to become more active.
A Cheaper Pre-Tenancy Process can Benefit Landlords and Letting Agents Too
Bryn Cole, the Managing Director of FCC Paragon, explains: “Landlords have been discouraged from investing in property due to controversial tax changes and the introduction of a Stamp Duty surcharge.
“If tenants are incentivised to move and the private rental sector gets a boost, this could encourage landlords to think about expanding their portfolios again.”
A more affordable marketplace for tenants to move between rental properties could also have wider benefits for the housing industry.
“If tenants have more money to save, combined with the recent Stamp Duty cut, this could help to shape the next generation of first time buyers and, subsequently, contribute towards fixing the broken housing market that the Government is desperate to fix,” says Cole.
Now that it has been confirmed that the ban on letting agent fees won’t be introduced before spring 2019, FCC Paragon says that agents have time to prepare, but they still need to act quickly.
“Alternative products, like deposit-free options, which complement the fees ban and improve affordability for tenants, could be one way forward for agents,” Cole believes.
“Come 2019, when fees are banned, agents will need to recoup lost revenue, and therefore they need to explore various different options and determine what approach best suits the needs of their business.”
The firm says that, in the wake of the fees ban and changing attitudes towards renting, tenants, landlords and letting agents must start to consider alternatives.
“With an increasingly transient population – many of whom can’t afford substantial deposits – it may not always be suitable to side with the norm and take the traditional, expected route,” notes Cole.
“There is estimated to be almost six million households privately renting by the end of 2021 and, with the sector growing so rapidly, there is an increasing need to provide different solutions which cater to tenants’ varying needs.”
According to FCC Paragon, one of the biggest obstacles for tenants looking to relocate is having to wait for their previous deposit to be released. This can have a subsequent impact on their chances of being able to afford the deposit for their next rental home.
This could, in turn, have a knock-on effect of more unwanted void periods for landlords and their agents.