“The Tenant Fee ban is a once-in-a-career legislation change and I think it’s going to be adapt or die,” says one lettings director. “We still don’t know what the full implications of it will be.”
“When I speak to other agencies, their main concern is how they are going to survive the loss of revenue,” says Matt Dilkes of Christopher Shaw in Bournemouth. “Undoubtedly, the ban is going to hurt - there’s no denying there’s going to be a revenue loss of twenty to thirty percent, but I think for some agencies who have been charging a lot of fees, it might be worse. We don't charge for sending letters, we don't charge for late rent payments, we don't charge for call-outs.
“What's becoming more and more apparent is that we’re very fortunate we haven’t relied on a lot of cross-selling to make up our income before,” says Dilkes. “So, there are all these extra avenues out there we've never made any money from that we’re now exploring.”
He says they are now looking at services that would enhance the experience of their tenants. “We’re looking at where we can provide an organic experience - for example, a lot of our tenants our young, they are from overseas, they don't know how to set up their bills or Council Tax, or water, or anything like that, so you're actually providing them a service by doing that - we feel that would be a good thing for our tenants. We will tread very carefully until we know exactly what the legislation means, but those will be the opportunities we’re going to be looking at.”
Christopher Shaw has also analysed its existing processes so core members are better placed to respond to larger workloads. “You need to be able to adapt very quickly to changing market conditions,” says Dilkes. “We highlighted that we needed to speed up our working processes as much as possible. We looked at every single side of the business and what software is out there that can make that person's job a lot easier and help protect the tenant, landlord, and the agent.”
Although Dilkes believes increased legislation will be positive for the industry and help drive bad letting agents and landlords out, he is concerned the changes will also have some unintended consequences. “The industry's obviously had a lot of change and landlords have been impacted by increased regulation, too. Unfortunately, I think what this will do is drive some genuinely good landlords who look after their tenants out of the market,” he says.
“The loss of the tenant fees means we've got to pass that cost onto the landlord more and more, the yields aren't going to be as attractive. I think we are going to lose a lot of landlords who are just doing this for a pension investment. They're nice people, good landlords, they look after their tenants, and it's really sad that it's not going to be as attractive to be a landlord as it has been in the past,” says Dilkes.
“I do think these legislation changes are all good things - it's just that they've all happened at once,“ he says. “But I think five years from now we'll look back and the market will be a much better place.”