In 2021, anything that affects tenants is something that letting agents ought to know about. As we know, moving home is stressful for tenants and homeowners. The emerging news on energy bills will affect the home moving process. Better still, this will present an opportunity for forward-thinking letting agents with their home movers. This article will cover what’s happening with energy bills, how this effects home movers, and the opportunity for estate agents.
What’s happening in the energy market?
Millions of UK citizens will see an increase in the price of their energy bills as the price cap increases by 12%. The price-cap was introduced by Ofgem (energy regulator) in 2020 set the maximum amount that an energy supplier could charge their customers. Ofgem has increased the price-cap by 12% due to the sharp climb in gas wholesale prices.
How does this affect home movers?
It may be surprising to many, but a staggering 23% of the UK’s population are on the poverty line. Moving home is an expensive and time-consuming process. When tenants change address, they can have thousands of pounds in moving costs. In fact, research from online change of address service Slothmove.com shows that the average cost of moving home is £3,838. With that in mind, gas & electricity bills are one of the expensive utility bills in the home, applying pressure to a tenant’s or homeowner’s budget. This translates into an additional £139 per year in bills.
Every Letting Agent’s worst nightmare is a vacant property or, worse still, a tenant who isn’t paying. Some tenants might not be aware of the increase in utility bills and the increase might affect their ability to afford the property. If tenants are not able to budget the risks of defaulting on the rental payments increases. Home movers moving into their new property may also not know the true cost of their utility bills.
On the other hand, if the letting agent runs a House with Multiple Occupants (HMO) or covers the cost of utility bills, there is risk here also. Letting agents across the UK will need to increase their budget for energy utilities by at least 12%. With thousands of letting agents running hundreds of rentals, the price difference can certainly affect the margins. Either scenario is something that letting agents must be aware of. However, the great news is that this presents an opportunity for letting agents to support these home movers.
What’s the opportunity for letting agents to help home movers?
There are two opportunities for letting agents to help existing tenants and those changing address. Firstly, we want to make sure that existing tenants are aware of changes to their energy bills. Estate & letting agents of 2021 should be maintaining regular contact with their tenants. Those estate agents who stand out will be the ones who produce helpful materials and guides to help make their home movers experience easier. It’s not just the energy bill increase, we also have
an increase in National Insurance by 1.25% in April 2022, which will also push budgets.
For those new tenants that are changing address, estate agents might consider pulling together a home utility guide. The industry trend is towards going beyond the transactional and creating a value-driven relationship. In practice, this might look like a monthly newsletter that details such changes. Equally, having engaging and well-designed resources on an agent’s website including tools and budget calculators can make a difference. Not only does it decrease the likelihood of tenants defaulting, it also builds relational equity. This relational equity with tenants creates ‘sticky-ness’, and develops long-term relationships
Final thoughts
Ultimately, anything that affects a tenants’ finances is relevant to the letting agent. With that in mind, double-digit percentage increase in energy bills must be thought about. Firstly, if the letting agent covers those bills it is a huge financial impact. Secondly, if the home mover covers the energy bills they at the least require support. Providing that support by integrating into your digital journey will reinforce the tenant-letting agent relationship. And speaking about this in advance will improve the home moving journey.
