The Key for Letting Agents is Preparedness
With the advent of so much change over the next 6 to 12 months, the key is "Preparedness". The changes will be one of the most significant to hit the Private Rented Sector. Unlike most of the changes over the last 13 years, the Legislation will impact Letting Agents. There will of course be a domino effect unless there is some trickery going on that no one within the industry appears to be aware of. The Queen's Speech threw Letting Agents some "curve balls" - a capped refundable security deposit, a capped refundable holding deposit. Whilst we understand that there needs to be clarification on what the Fee Ban will look like, it is bizarre that the "speech" made reference to the word "Refundable" for both types of deposit. If this were the case and the letting agent would be required to refund these monies, there would be little point in taking the monies in the first place.
SME Letting Agents
The concern is for the SMEs - the Letting Agent who has not ramped up tenant fees but dropped the management fee to compete with agents who offer a "Fully Managed" service at 5%. Anyone who can do basic maths is aware that offering such a low fee along with the fee ban will not stay in business for long. So what will happen? Fees to the landlord will increase - there could be a bidding war between Letting Agents, service levels to tenants may drop, rents will increase and some Letting Agents will go out of business. We have been discussing Fees with our clients for the last 12 years.
We have watched the Landlord fees drop to an unbelievable level whilst the pendulum went in the opposite direction towards the tenant fees. Whilst the industry waits for the Draft Bill, the most important point to bear in mind is to be prepared. The Tenant Fee Ban is a definite and it will not go away - consider the impact and plan ahead. Not all Letting Agents have over inflated fees and therefore, a key factor of any business to ensure that the plan for the future is in place.