The lettings industry is in a state of flux, awaiting the implementation of the Renters (Reform) Bill. So, what could your agency be doing to prepare?
The Renters (Reform) Bill has now been introduced to Parliament. It's of course not yet the final version. Things may change between now and its implementation, with feedback from both the House of Commons and House of Lords pending.
However, there's plenty that your agency can plan for and plenty that you can be doing to reassure your landlords that there's no need to panic. Here are five things that you can put in place now to prepare for the changes, whatever the final form the reforms take.
1. Read up on all the changes, so you understand all the nuances of what's to come
An obvious point to make, but it's key - make sure that you read, watch, or listen to everything you can about the bill and its contents, so you're prepared to answer any questions from landlords that come your way.
Landlords will be looking for support now more than ever. This means that many may turn to letting agents when they didn't consider using one before - and you need to be ready to offer them the answers that they need.
"These changes are complicated and agents are the only ones that can help landlords make it less complicated," says Sean Hooker, Head of Redress at the Property Redress Scheme, in a recent Goodlord podcast.
"If they want to be a self-managed landlord, there are tools out there to help them. But agents should not be threatened by this - or, rather, good agents should not be threatened by it."
2. Reassure your landlords around the changing possession processes
Once you've read up on the changes, you'll be able to reassure your landlords on how to face any of the challenges it may throw up.
For example, when the bill comes into play, section 21 "no fault" evictions will be abolished. That means that section 8 and potentially laborious court processes will be the sole route to regain possession of your landlords properties, if required.
A longer process could mean more costs building up if your landlords need to evict a tenant due to rent arrears, for example. At a time when landlords are leaving the sector, the more support that you can give them around the incoming changes will help ensure the survival of the industry at large.
Something as simple as offering a rent protection product that can cover the cost of those court processes will help - and can even help you handle the intricacies of the new court processes too.
3. Use data to understand the direction of the market and set rents appropriately
Rental increases will be limited to once per year via the section 13 process, with two months' notice, and rent review clauses disallowed.
Particularly if your landlords have been used to issuing six-month tenancies, you'll need to keep an ever closer eye on the trends in the market, to make sure that you're setting rent prices fairly for both your landlords and your tenants.
You can check the ONS data or see if your suppliers offer any data that can help. Goodlord, for example, publishes a Rental Index every month, with regional averages.
You can then also use this to demonstrate your own value. How do your void periods compare to other agencies in your area, for example? If they're favourable, this is a good way to show how you'll help your landlords' bottom lines when they're worried about the increased cost of keeping up with new regulation.
4. Boost your agency's efficiency to spend more time with your customers
Learning about these changes and then speaking to all of your landlords can take time. To make sure that you have enough of it to spend with your existing and potential landlords, consider automating as many steps of the lettings process as possible.
Many suppliers can offer an integrated service so you can get hours back in your day - hours that you can then spend with your landlords and tenants.
Rent collection services, for example, can now automatically chase your tenants and send them reminders.
You can give your landlords assurance that their rents are more likely to be paid on time, while you get another admin task taken off your hands.
5. Consider the effect of open-ended tenancies on your fee model
Renewals will soon become a thing of the past, with fixed-term tenancies moving to rolling, assured tenancies. That means less money in your pocket from annual and upfront management fees.
There are ways to offer your customers more while boosting your cash flows. Including a rent protection service for your landlords in your management fee can help your agency earn more while offering your landlords extra peace of mind.
You could also partner with relevant suppliers to introduce your tenants to new services to help them with their move-in, such as utilities or tenants insurance - with a commission paid to your agency too.
As well as finding new revenue streams, you'll need to ensure that your business model can withstand the shock of missing out on those annual and up-front payments. Moving to a monthly fee model could help both your agency and your landlords to manage your cash flows.
You'd need to check with your suppliers on how possible this would be too. Does your rent protection provider offer monthly flexible payments? Do your online suppliers charge you a subscription or a single annual payment?
You could also consider how you can incentivise your landlords to choose a rent collection or fully managed service before the changes come into play. This will mean you can help them prepare in advance and spread the admin burden of all the compliance changes to come.
