Letting agents who only rely largely on let-only services will be hit the hardest when the tenant fees ban comes in April next year, a senior industry figure has predicted.
The shock of losing so much fees revenue will be so harsh that the let-only business model will no longer be profitable and could be wiped out entirely within the industry, says consultant Adam Walker.
“After the credit crunch many sales-only agents turned to lettings when their sales pipeline fell off a cliff edge, and relied on offering let-only packages and low-price full management services,” he says.
“Unable to prove any track record as letting agents in front of landlords, they competed on price.”
Walker says these kinds of agencies will be highly vulnerable when the ban comes in and their fees income is reduced, in some cases by up to 50%.
“Estate agents that have a healthier balance between let-only and full management will suffer a less severe reduction in income, probably by up to 15% following the ban,” he adds.
Tenant fees ban
“A healthy lettings business should be receiving two thirds of its rent from repeat business, which in turn will protect it from the ban’s effect as well.”
Speaking during a presentation at today’s Negotiator Conference at the Grosvenor House hotel in central London, he also predicted that many large corporates will be forced to ditch their let-only services rather than lose money on the costs of offering it.
“Let-only business owners must adapt or die, but I believe whatever happens it will leave a more professional and profitable industry in its wake.”