Knowledge is power in the fight against lost revenue
Turn your calendar to June and you may have circled the 2nd in red pen – the deadline when agents must respond to the proposed ban on tenant fees in England. The consultation paper has made it clear that all recouping avenues have been blocked off, with a simultaneous ban on landlords and third parties charging fees to tenants too.
Just how much will this cost lettings agents? Someone at the Department of Communities and Local Government has been busy with a calculator, finding average tenant fees using the sums charged by 50 randomly selected letting agents. When totted up, each tenant would have generated revenue in the region of £700 during their life cycle as a renter – we’ll leave you to multiply this rough figure by the number of tenants you help and suggest a lie down in a darkened room.
The threat to your business isn’t just lost revenues. It’s from landlords looking to sell up and leave lettings altogether, from landlords ready to haggle over property management costs and from the omnipresent online agents looking to undercut high street counterparts.
So how can you add value to your lettings business when incomes are set to reduce and competition increase? Knowledge is power and an opportunity has been highlighted by, interestingly, an online agent. Upad conducted research regarding how much their landlord clients knew about the incremental changes to mortgage interest relief. To quote from Letting Agent Today: “Upad claims 20% of its landlord clients are unaware or “only vaguely aware” of the change; no fewer than 47% have no idea what it means for their tax burden when the mortgage interest relief is phased out completely in 2020.”
It begs the question, what level of service do online letting agents give their landlords? Is there a bespoke approach? A personal touch? A sharing of specialist, buy-to-let expertise? Apparently not if a fifth of Upad’s landlord clients are in the dark over drastic changes to their income.
Step in the High Street letting agent who is wearing industry qualifications, a physical presence, a rich heritage and a respected reputation as a badge of honour. Surely High Street letting agents can reach out and help the 20% of landlords with Upad and the thousands of others out there who are in the dark about how much tax they should be paying. Lettings professionals should be educating, assisting and supporting landlords as if they were an endangered species (they practically are!). If there are gaps in a landlord’s knowledge – fill them. If they need an expert to guide them – provide the map. If they’re feeling wobbly– be ready with a steady hand.
By Simon Duce: Simon.Duce@arpm.co.uk
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