One of the PropTech companies at the centre of the Rent Recognition Challenge contest is calling on letting agents to use technology to offset the expected widespread financial losses caused by the upcoming fees ban.
The Challenge is the exercise run by government to select a firm to provide the technology to allow tenants’ rent records to contribute towards their creditworthiness.
Now the firm RentalStep says that landlords - who it implicitly suggests may pay more if agents are not allowed to charge tenants directly - will need to consider their monthly outgoings and start shopping around for products that could save them money.
The government's impact assessment of the fees ban estimates that the cost to landlords in the policy’s first year of operation will be £82.9m; a cap on security and holding deposits, if it happens, could cost landlords a further £1.3m a year. Meanwhile letting agents are the big losers - £157m or even more in year one according to the impact assessment.
"It’s time for landlords to evaluate their options to ensure the new law doesn't have a negative impact on their property business," says Mike Georgeson, founder and chief executive of RentalStep.
"It’s clear from the government’s figures that the post-fees ban landscape is likely to be an expensive one. Landlords need to shop around and explore alternative options to make sure they are getting value for money when it comes to necessary services such as tenant referencing and property advertising," he claims.
Georgeson says technology and innovation will be key to cost-saving.
"Products that utilise technology effectively can provide more efficient and time-saving processes at a lower cost than many traditional options. The rental market is changing at a rapid pace and if landlords want to remain successful, they need to find solutions that can help them to keep their properties occupied for a lower cost" Georgeson concludes.
His startup recently reported that since January the number of landlords using the firm’s website has increased from 20 to over 400.
There are currently around 1,000 tenants using RentalStep and Georgeson estimates that this number will reach 5,000 by the end of the year.