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Uncertain market means additional revenue streams are more important than ever

18 March 2021 1808 Views
Uncertain market means additional revenue streams are more important than ever

Uncertain market means additional revenue streams are more important than ever

The last year has been an uncertain period for many business sectors and although the property market has been allowed to remain open since May 2020, it has had its ups and downs.

Some agents have thrived in recent months, adapting to the new normal and championing a digital approach. Others, meanwhile, have found it more difficult, with recent data from BestAgent suggesting that almost 900 agency branches have closed over the last six months - equivalent to 4% of the UK's 22,000+ offices.

So far this year, a successful rollout of the Covid-19 vaccine is providing light at the end of the tunnel, but for many businesses turbulent times still lay ahead.

For letting agencies, landlord management fees continue to be their main source of income and while retaining landlords will therefore remain a priority, agents can bolster their income by generating additional revenue streams.

With transactions likely to be up and down this year, making the most financially out of each tenancy is absolutely crucial.

 

Three reasons why the market will remain uncertain this year

1. It will take time for the jobs market to fully recover

Due to the financial impact of the pandemic and the forced closure of many businesses as a result of government restrictions, there has been a lot of pressure on the employment market over the last year.

Although there are signs that things are improving, with more than half of UK employers planning to recruit in the next three months, it may take a long time for the employment market to fully recover.

Since March 2020, the Coronavirus Job Retention Scheme, also known as the furlough scheme, has helped employers deal with the financial impact of the pandemic.

The scheme was recently extended to the end of September by Chancellor Rishi Sunak as part of the Budget. However, it has been suggested that thousands of jobs could be at risk when the scheme finally comes to a close.

A wave of redundancies could lead to a rise in rent arrears later this year, impacting landlords' income and subsequently the management fees received by agents.

According to a joint campaign for the government to tackle the rent debt crisis, at least half a million private renters are in arrears as a result of the pandemic.

Despite additional government support, the employment market remains fragile while the pandemic is ongoing. As a consequence, the risk of rent not being paid on time is and agents not receiving their management fees is increased.

2. Further regulation of the PRS

Over recent years, lettings professionals have had to adapt as various pieces of legislation and regulation have been introduced. This year is set to be no different.

In April, a new 2% stamp duty surcharge on property purchases from overseas buyers is being introduced. This could have an impact on the supply of rental property if fewer overseas landlords invest in the UK market.

Meanwhile, during the same month, The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 are being extended to cover all existing tenancies.

Non-compliance with the rules, which require electrical safety checks to be carried out by a qualified professional, could see agents or their landlords hit with hefty fines.

Over the coming weeks, thousands of properties will require an electrical inspection to be carried out as a result of the extension of the legislation.

Moreover, from May, the government's Debt Respite Scheme, also known as breathing space, is coming into force. The new system could make it harder for agents and landlords to recoup unpaid rent from tenants in arrears.

These are just three upcoming changes agents and landlords need to be aware of as the rental sector continues to evolve.

3. The ongoing impact of Covid-19

As a result of the pandemic, letting agents have had to adapt to operating in a Covid-secure way by prioritising virtual viewings and carrying out most parts of the rental process online.

There has also been a marked shift in people's priorities when it comes to their homes. More people are working from home than ever before and this trend looks likely to continue in some form even after the worst of the pandemic subsides.

Moreover, people are now prioritising outdoor space and access to good local amenities as a result of lockdown measures. There has also been a move away from urban areas, with more people looking to set up home in coastal and rural areas.

At this stage, it's hard to tell if these trends are temporary or whether they are set to change the way people let and rent properties for good.

This all adds to the uncertainty around the market, making it difficult for agents to plan for the future. Long-term uncertainty in the market highlights the need for agents to do everything they can to safeguard their income.

 

How can agents combat an uncertain market through referrals?

A simple and effective way for letting agents to generate additional revenue per tenancy is to refer the best services during the moving process.

Agents can partner with Virgin Media to refer tenants who are moving home, providing them with the opportunity to earn a fee when the renter installs Virgin Media's TV, broadband, mobile or phone services.

Tenants will be keen to get the best TV and internet installed in their property as soon as possible. By referring the best packages, agents can save renters time while also reducing the stress of the moving process.

As well as maximising revenue opportunities, agencies which refer TV and internet services can keep tenants happy. This will contribute towards increased landlord satisfaction and all-important client retention.

Virgin Media is a household brand, renowned for its premium products and ultrafast speeds. Its services are available in 15.2 million homes across the UK and steadily growing, with 5G mobile connectivity available in 100 locations across the UK.

Agencies which partner with Virgin Media benefit from on-shore account management, as well as training and marketing support.

 

For further information about how you can generate additional revenue by referring Virgin Media’s services to tenants, contact: becomeapartner@virginmedia.co.uk.

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