It has been a challenging market for the residential lettings industry in recent times, with rents dropping for the first time in six years in the first quarter of this year. It has been suggested that this was down to the pandemonium created late year, with many landlords rushing to buy before the stamp duty surcharge came into play, this has caused an influx of properties available to rent. It has also been reported that there was a drop in the number of tenants registering, which obviously had an effect too.
I’ve spoken to many of my clients here in South London about this over the past few months as despite this they have achieved record figures. When I pressed them for more information as to how they had achieved these record months, they attributed this to taking the change in the market as a positive opportunity to hone their skillset rather than focussing on the doom and gloom that has been portrayed in the media. They said that they had taken the time to invest in training and development and employees were learning more about their vendors, applicants/tenants and the market in general. In turn they have passed the benefits on to their clients by educating them on market conditions thus allowing them to offer a more bespoke, knowledgeable and trusted service.
When asked about the future for residential lettings there was a common theme that seemed to crop up, which is the abolition of lettings fees. There is definitely a concern in industry in regards to this, as many see this as a significant challenge in months to come. The fees are being scrapped but in reality they are not, the referencing still needs to be done, the inventory need to be undertaken etc, these jobs do not cease to exist because the fees have been abolished.
The bulk of these fees will no doubt be passed on indirectly to the landlords, by passing these fees onto the landlord the concern is that this will cause landlords to shop around more than ever, thus meaning that there will also be pressure on residential lettings agents to keep their agency fees competitive, and in order to do this they will have to absorb a portion of the fees. This will put a squeeze on income for estate agents as they will have less money coming in and as mentioned before the residential lettings support staff will still need to be paid. Rents will no doubt rise also due to the increased agency fees, which could also lead to an increase in landlords renting privately, which will lead to added pressure on the lettings agents.
Yes, the next few months will be a difficult few months, however now more than ever, continuing to educate landlords on the market conditions and the significant role that residential lettings support staff play is important. As after the initial knock on effects, which will no doubt cause landlord to shop around based on fee, we should then begin to shift move back toward service again.
Only time will tell but the one certainty is, we have seen difficult markets before and we will see them again, estate agency has always survived as people will always need a roof over their heads.
What is your take on the future of the industry?
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