The next few years are going to be some of the most exciting and positive for the industry.
There are over 150 pieces of legislation, numerous Acts, licensing schemes to navigate and a plethora of compliance checks to fulfil. Barely a month goes by without some ‘announcement’. This year alone, there were eight Government consultations.
Arguably some of the legislation hasn’t been properly debated, but in truth, the industry hasn’t helped itself. This onslaught of peace meal rules and regulation is not the fault of landlords or agents, rather the failure of successive Governments who haven’t built enough homes. The Private Rented Sector consequently expanded in a very short period.
Regulation should bring respect
Lord Best’s working party (ROPA) has now published its report to MPs with recommendations for Government on a new regulatory framework for property agents – which amongst other things will require a practitioner to be ‘licensed to trade’, with a system of minimum entry requirements and continuing professional development.
It has also set out a model for an independent regulator backed with a legally enforceable ‘Code of Practice’ – it’s the only way the industry will ever be fully respected.
Agents have a legal responsibility to safely put a roof over people’s heads. It’s way beyond just a transaction.
Tax squeezes have reduced income and the proposed removal of Section 21 may, for some, be the final straw; too many obstacles? Or will 750,000 landlords switch from letonly mode?
Therein lies the opportunity. Most practising agents can barely keep up with the barrage of changes. So how do landlords have any hope?
Research shows that in 2018 over half (59%) of landlords are aged 55 or older and one third are retired. They aspire to be diligent landlords, they want tenants to have safe and comfortable homes. Longer tenancies aren’t an issue – indeed the longer the better. At the very least they need to cover their outgoings. Otherwise, with lower projected future capital gains, frankly what’s the point?
Service and strategy
The ban on fees to tenants has focused minds, but how many agents provide the service that is really needed? Landlords need a cost-effective way to maximise rental yields and ensure their properties are compliant.
How many agents agree a strategy with their client: when to exit; inheritance and wealth planning; effective use of equity; re-financing; budgeting and forecasting? 12 statements and ad-hoc property reports isn’t enough.
How many track property data to accurately advise on sale or acquisition and tell the landlord how their property is really performing – the ROI against that promise.
Landlords want clarity and transparency. They long for better communication, less duplication and crave simplicity –particularly with administration, accounting and taxation. They want quality property management, but it has to be ‘delivered’ and be ‘cost-effective’.
Sadly, many agents are shrinking services, relying instead on ‘proptech’ that no one fully uses nor understands. Landlords are consumers too and will pay more (for less) if they see a product that is genuinely helpful and time saving, as well as offering improved quality and real value.
Opportunities and responsibilities
A huge opportunity then for agents to add value by changing the perception of the industry for both new and existing landlords (and indeed new and existing tenants), many of whom aspire to own a home.
Landlords should be retaining the property wealth in the family, not running scared of regulation and qualification. They need forward-thinking agents to help them survive and achieve improved returns.
Agents have a legal responsibility to safely put a roof over people’s heads. It’s way beyond just a transaction. It is an understanding of what consumers really need. If we can do that then the industry can be trusted and respected.
Being prepared and responsive to the policy landscape to modernise on all fronts and adapt systems, skills and services is key. This is a last chance opportunity to rediscover their purpose, before it’s too late.
Safe, cost-effective ‘regulated’ letting and renting is entirely possible and coming to a town near you.
Frank Webster is a former vice-chair and director of Finders Keepers who now advises both property owners and businesses on adapting to change and maximising return on investment.
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