A survey by Goodlord suggests letting agents are woefully unprepared for the Renters Rights Bill and some could lose over a quarter of their revenue because of the legislation.
The Bill is expected to become law later this month but Goodlord’s State of the Lettings Industry reports shows worrying ill-preparedness.
Sole operator agents are the least ready, with just 4% describing themselves as “very prepared”. Only around a quarter of agencies with 2-10 staff members feel prepared for the changes, while less than half (47%) of agencies with 11 or more staff members say they are ready.
The survey – which is being released in full next week – is also set to reveal fears that the abolition of fixed-term tenancies will have a significant impact on revenue. On average, agents say a quarter (27%) of their revenue comes from renewals. This is especially pronounced in London, where agents report that renewals account for a substantial 37% of their income.
With the Renters Rights Bill set to mark the end of fixed-term tenancies, agencies will need to reassess revenue models to fill this major void – meaning a revenue crisis could be on the horizon for a large number of agencies.
The survey results also highlight clear priorities for agents over the year ahead: winning new landlords and unlocking fresh revenue streams.
With more landlords considering leaving the market, seven in ten agents (70%) said attracting new ones was a focus area. In addition, 61% said finding new ways to generate revenue was high on their priority list. And over a third of agents (39%) said they were focused on achieving higher management fees.
Against the backdrop of these financial targets, only 19% of agencies had plans to grow their team in the coming year.
Outside of the Renters Rights Bill, energy efficiency rules continue to concern landlords and agents. Some 63% of landlords said they perceive the proposed EPC Band C target negatively, with many unwilling or unable to meet the required investment.
Nearly half (45%) say they’d spend no more than £2,000 per property, and only 19% would go above £5,000 – far short of the proposed £15,000 cap. With a 2028 deadline for compliance, 39% of landlords saying they’d rather sell than invest in the required energy efficiency upgrades.
William Reeve, chief executive at Goodlord, comments: “This year’s State of the Lettings Industry report is our largest yet. And the insights could not come at a more critical time. As the full report will reveal next week, the sector is under huge pressure on all fronts – tenants, landlords and agents alike are feeling the strain, with more changes and uncertainty still to come.
“This is a resilient sector that’s used to weathering storms, but the pressure seems to be increasing rather than abating. We hope these insights and full report shine a light on these areas and help decision makers take the necessary steps to ensure the PRS remains healthy, thriving and supported.”
The full report will be released next Tuesday.
