The next 12 months will shape the future of the letting agency in the UK, according to leading proptech supplier PayProp.
A combination of key new legislation, market consolidation, a challenging sector for landlords, and changing consumer habits will force letting agencies to adapt and evolve to remain successful, the firm believes.
Challenges for agents
Landlords have experienced a turbulent few years of late, due mainly to increased legislation and tax changes.
According to research by estate agent Belvoir, the proportion of landlords selling up to three properties increased over the course of 2018. Meanwhile, Knight Frank has reported that tax changes have directly prompted many London landlords to sell their rental properties.
Neil Cobbold, the Chief Operating Officer of PayProp UK, insists: “In 2019, it will be important for letting agents to continue to approach the buy-to-let sector with a positive mindset, reminding landlords at every opportunity why the rental market continues to be a good place for investors with the right agency partners.
“Agencies will need to strive to retain their clients, while securing new business. Providing an appealing landlord proposition that is transparent and tech-enabled will gradually become a minimum requirement, as landlords increasingly look to save time and money.”
The imminent introduction of the Tenant Fees Bill, which will ban letting agents charging upfront fees to tenants, and cap security and holding deposits, will cause the greatest shift in the letting agency business model in recent years.
Cobbold explains: “As we’ve said all along, the fees ban is a daunting prospect, but it can provide a range of positive outcomes for letting agents. It is already forcing agents to look for new revenue streams, while becoming more efficient and reducing administration costs at the same time.
“This means that, post-introduction of the fees ban, we will have a leaner sector made up of proactive businesses that provide a wider range of services for consumers.”
Successful letting agency
The way that letting agencies operate has been evolving steadily over the past few years, but 2019 could represent a more significant and widespread change.
Cobbold says: “There are a number of important questions the owner of the typical agency will be asking themselves over the next 12 months, ranging from portal subscription costs to the value of a high street presence.
“And it’s because of these key questions, combined with changing consumer behaviour, and the move towards a more professional and regulated rental sector, that we believe 2019 will be crucial in shaping the evolution of the modern letting agency.”
He concludes: “This year, the most successful agencies will look to adopt a slicker business model, which embraces useful technology such as automation. There will also be an emphasis on improving client retention rates, through accurate administration and processes.”
Although some landlords will look to leave their letting agency if the fees ban pushes up costs for them, we remind investors of the important service that agents can provide, from finding reliable tenants to ensuring that your properties are compliant with the law.