The head of the country's oldest agency recruitment consultancy says the tenant fee ban will hit staffing levels in the industry - especially for independent firms.
Property Personnel managing director Anthony Hesse says: “This new Tenant Fees Act will send seismic shockwaves through the lettings sector - and there’s no doubt that staffing levels will be hit. Lettings agents are having part of their bottom line swiped away, despite the fact there is still administration that they will have to do. So they are going to have to do more work for less income.
“Furthermore, this is a move which is clearly designed to shift the costs to landlords. But landlords will do everything they can to avoid any extra charges. And for some, this will include deciding not to instruct a letting agent at all in the future.”
Hesse says the sector is in turmoil already.
Last month, a survey by the Residential Landlords Association found that nearly half of 6,500 landlords and letting agents questioned are more likely to remove their investment in the private rented sector as a result of the government’s plans to abolish Section 21.
“All of this will reduce the amount of money in the pot for letting agents’ salaries. We are already struggling to fill these positions as it is – but this move is likely to drive even more lettings personnel from the industry, who will be hard to replace.”
He warns the damage will particularly hurt independents.
“This will be particularly acute in firms where fees provide a proportion of an individual agent’s income. In bigger chains, those carrying out tenancy progression will be on a flat salary. But in a small independent firm, that’s often not the case and a level of commission will be involved – which will now disappear altogether.
“Ultimately, for many lettings agents, these fees are a crucial revenue stream and profit margins have to be protected. From a recruitment perspective, it’s hard enough to find people and get them to stay in the business as it is. I suspect that job has just become even more difficult.”