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‘Business crisis’ for industry suppliers as letting agent fee ban (presumably) gets closer
Original Author: Rosalind Renshaw
Referencing and inventory firms are among those considering the impact of the letting fees ban on their own operations – but with so little known on both the detail and the timescale for implementation.
One referencing and insurance firm, which also runs a family lettings agency, called it a “business crisis”.
Let Alliance boss Andy Halstead said his firm’s number one priority is “to develop our proposition to enable letting agents to replace the contribution to profits currently earned from tenant fees”.
He went on: “Whilst our response is simple, the actions required to deliver are complex.
“Between now and January 15 we are holding ten letting agent workshops, and each will be attended by ten independent letting agent business owners.
“So, we will be working with 100 letting agents on a face to face basis, in a workshop environment.
“The objective is to get letting agents to contribute, share their ideas and give Let Alliance a clear steer.
“We have already developed several proposition scenarios and we will share these with our customers and get their feedback on which options are the most likely to succeed.”
Halstead and his son are also letting agents, running Jordan & Halstead in Chester.
Halstead said: “The ban on tenant fees will have a profound effect on that business.
“They represent 15% of our turnover and 66% of our profit. Being directly in the eye of the storm helps us to develop solutions for our 1,500 letting agent customers.
“As is the case in any business crisis, significant opportunities emerge. I am certain that through collaboration, hard work and smart thinking, we and our customers will prosper.
“In fact I forecast that we will be stronger. We will see new operating models emerge during the next 12 months: change and innovation is good for business.”
He said: “At Let Alliance we complete some 200,000 tenant references per annum and protect £500m of annual rents through our rent guarantee programme. We also write thousands of tenant liability and contents insurance policies and manage a landlord buildings and contents book of insurance with a premium of £4m per annum.
“This gives us direct access to some of the leading independent letting agent business owners in the UK and together we can be incredibly creative and deliver world-class support to landlords and tenants.
“Only for the brave, though!”
Martin Totty, HomeLet’s CEO, said worryingly little detail was known and called for ministers to listen to the views of property professionals.
He said: “There is clearly now some uncertainty and it’s to be hoped tenants don’t now assume fees are no longer their liability and risk losing the property they’ve found to rent. This would be an unfortunate unintended consequence of the announcement contained in the Autumn Statement.
“Above all, it is crucial that landlords continue to seek references for tenants, while also protecting themselves in other ways.
“Buy-to-let is a significant investment and letting agents are acutely aware of the potential risks that landlords face.
“If we do eventually move to a position where tenants are no longer liable for up-front fees, landlords will still want to be sure that prospective renters are thoroughly vetted; products such as rent guarantee insurance, which mitigate risk further, will also be important.
“New ideas such as the RICS proposal for a tenancy referencing passport are worth considering and the industry will want to look at all the options for providing the assurance that landlords and their agents will continue to need.
“Helping match tenants and landlords so both have a positive experience is what the tenant referencing process is all about, and that’s not changed following the Autumn Statement.
“However, we need to avoid rushing to ‘quick fix’ solutions without careful thought about how we can deliver the assurance necessary for the effective operation of the private rented sector and its growing share of the UK housing sector.”
