A leading PropTech entrepreneur says letting agents must provide value for their landlord clients through technology, transparency and service if they are to survive the coming year.
A combination of new legislation, market consolidation, a challenging market and changing consumer habits - all coming up in 2019 - mean agencies must adapt and evolve to remain successful, according to Neil Cobbold, chief operating officer of PayProp UK.
He says landlords are reeling from a series of tax and regulation blows.
According to research by Belvoir, the proportion of landlords selling up to three properties increased over the course of 2018. Meanwhile another agency, Knight Frank, has reported that tax changes have directly prompted many London landlords to sell rental properties.
"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" says Cobbold.
"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.”
Cobbled says the Tenant Fees Bill - banning upfront fees and capping security and holding deposits - will cause the biggest shift in the letting agency business model in recent years. It’s set to come in to effect at some point this year.
“It's a daunting prospect, but it can provide a range of positive outcomes for letting agents. It’s already forcing agents to look for new revenue streams, while becoming more efficient and reducing administration costs at the same time” he claims.
However, that is only the highest profile of a number of challenges to which agents must rise, he 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.
"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" he concludes.