Now that the Tenant Fees Bill has become law, lettings agents will have to change the way they do business in order to stay in the game as £200 million in annual turnover is removed from the industry overnight1.
CreditLadder can be a solution to this problem if you’re an agent wondering how to survive and thrive after the ban.
What used to be a reliable and almost guaranteed source of income for the industry will be swept aside by the ban, which will outlaw ALL fees including for contract renewals, referencing, inventories, check-in/check-outs, and admin work.
Although this won't bother some of the larger letting agents who have the financial muscle to take a hit, for some smaller agencies which rely heavily on tenant fees, it’s going to be tough.
But there are ways to thrive after the fees ban. And that means finding new income streams.
Extra income
The rise of Airbnb is one such opportunity. Several large letting agents including Portico have realised that Airbnb is a chance to make extra money, rather than a threat. Portico, for example, offers an Airbnb management service for landlords including a meet and greet, changeover and revenue collection service. Could you?
Or perhaps try out a guaranteed rental scheme. Many landlords like these schemes because they offer peace of mind. In return for a guaranteed rent, a landlord is paid approximately 75% of the market rate, compared to 90% from a traditional deal.
One lucrative and growing area of additional income for lettings agents is to offer the freeholders of leasehold apartment blocks a management service including tenant acquisition, maintenance, ground rent, service charge collection and financial management services plus commonhold and other leasehold compliance consultancy services.
Also, landlords are facing a significant squeeze on their buy-to-let margins now the tax relief they receive on their mortgage interest has been cut and is to be further reduced over the next two years.
This is an opportunity to offer them insurance which covers against void periods, unpaid rent, eviction costs and accidental damage - costs they may struggle to pay if they didn't have landlord insurance.
More competitive
Arguably letting agents will soon have to compete harder for landlords’ custom when tenants are no longer a potential fees generator and therefore will have to offer the best service in town, which is where CreditLadder can help.
Our service helps agents differentiate themselves in a competitive market by offering a service than enhances tenants' renting experience on behalf of the landlord. It also helps reduce tenant arrears by a factor of 20; our registered tenants have a 0.5%2 arrears rate compared to the national average of nearly 10.53%3.
But whatever your plans, time is running out. The fees ban is likely to be introduced in Spring 2019. Let's see how CreditLadder can help.
References
1. https://www.eurolink.co/news/eurolink-roundtable-on-the-governments-proposed-ban-on-lettings-fees/
2. Internal CreditLadder data
3. Six month rolling average of the Your Move Buy-to-Let Index Arrears tracker.
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
