A rental payment provider has called on letting agents to start preparing for the incoming ban on upfront fees charged to tenants in England.
PayProp suggests that agents should do this by streamlining their processes and also consider alternative revenue streams. This, the firm suggests, should include streamlining their financial processes and adopting business platforms that enable them to scale efficiently.
Ban on Letting Fees
A ban on letting agent fees charged on tenants is widely expected to be implemented in England at some time during 2018. Presently, there is a similar consultation taking place in Wales, while fees have been banned in Scotland since 2012.
It is feared that the majority of letting agents will lose a substantial proportion of revenue when the ban is introduced. As part of its consultation, the Welsh Government reports that fees charged to tenants amounts to around 19% of an agent’s income.
Neil Cobbold, Chief Operating Officer of PayProp in the UK, observed: ‘It’s clear that we could soon reach a point when upfront letting agent fees charged to tenants are banned in all 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.’
Addressing the first point, Mr Cobbold noted that the most common reaction would be to increase landlords’ management fees.
However, PayProp suggests that streamlining financial processes could present a better option, as it could assist agents to generate new revenue streams, manage cash flow and ultimately becoming more efficient.
Concluding, he 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.’