Renting a property can be a very stressful experience. Living your life at the mercy of someone else and possessing very little control is troubling and exhausting.
Currently, over 5 million households, or 21% of the property market are privately rented. This figure is set to rise to 24% by 2021. Over 1.7 million renters believe that they will never own their home because of poor wages and rising rents.
It was statistics like these that encouraged the Tenants Fees Bill to make its way through Parliament without protestation or serious objection. However, it is this Bill that is also a huge concern for the letting agents that depend on their fees to produce a viable and profitable business.
According to the most recent annual Fixflo report, half of the letting agents in England and Wales are contemplating leaving the rental sector as they will be losing money if the legislation passes in 2019.
48% of lettings agent are certain that their earnings will reduce by between 10% and 30% when the Tenant Fees Bill comes into force. Additionally, 10% of respondents believed that they would lose more than 30% of their current revenue, making their business increasingly untenable.
The survey of 401 estate agency firms, also asked what the major challenges will be to the industry in 2019. 41% of respondents were clear that a loss of earnings will make the next year extremely difficult.
32% of agents were worried that the depletion of landlords because of tax reforms will make it more difficult to accrue new business stock; 9% were anxious around a rise in online agencies that can undercut a bricks and mortar business.
A spokesperson from the Fixflo report said: “It is evident that the Government’s measures are not being welcomed by the industry.
“We expect to see further industry consolidation over the next 12 months as the increased costs of compliance need to be spread over larger portfolios to keep compliance costs per property at economical levels.”
Overall, 48% questioned the continued viability of operating a successful business in the lettings industry.
These were sentiments that were echoed in a recent survey of over 100 landlords with 72% concerned that the situation for landlords has deteriorated in the past year and is likely to worsen with the Bill. 30% also considered selling their additional properties and leaving the buy-to-let sector.
When a quarter of accommodation is set to be dominated by private rental properties by 2021, it is clear that improved tenant protection is crucial. Landlords and letting agents have enjoyed charging fees that cripple the tenant and make a prospect of saving money for their own prospect a distant and unrealistic prospect.
This protection to Britain’s most vulnerable is incredibly important and massively overdue. However, if it does half the amount of active agents and 30% of the current landlords choose to leave the sector, will this housing stock be available in five years’ time?
Will this seriously destabilise the market? Or, will a consumer saving improve the housing market?