If you were to lose 20% of your income how would you replace it
If the governments draft tenant fees bill passes all the way to legislation will it really be a kick in the teeth for the industry or will we see a much leaner and efficient range of letting agencies emerge?
I can see why so many letting agencies are jumping up in arms about the proposed ban on fees, some stand to lose a sizeable proportion of their income should the bill ever make it to law.
However, will it cause the catastrophic damage to the industry that some are claiming? I have spoken to a few of our letting agent clients and it seems that for some tenant fees amount to about 20% of their income. If you were to lose 20% of your income how would you replace it? More cost effective and leaner or look at other income streams?
One of the questions I would like answered is when considering this bill who opinions have the government considered, have they obtained a balanced point of view or is this a knee jerk reaction to media…? Worse is it a ploy to obtain votes?
Should these tenant fees just be part of the cost of running a letting agency and be managed as part of cash flow? Is it time for letting agents to restructure their business model?
Rather than a ban would a cap be a better idea or do we let competitive forces sort out the weak from the strong. With more and more companies offering bespoke services, will they eventually drive down tenant fees?
I can understand why some letting agents and landlords want the fees to remain. If you are absorbing the tenant fee costs, how do you factor in the percentage of those that fail a reference/credit check? What percentage will change their minds and decide not to let a property? Is this just the nature of business that letting agents will have to get used to and manage effectively?
One element of the proposed legislation that I am not comfortable with is the limit to holding deposits unless the law changes and a tenant can be taken to court for criminal damages to a property. The proposed bill would limit holding deposits to no more than one week’s rent, and security deposits at no more than the equivalent of six weeks’ rent. Having seen the damage many tenants cause especially if they are being evicted six weeks is not enough.