Impact of Tenant Fees Act on Letting Agencies

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Letting agencies are continuing to feel the impact of the Tenant Fees Act six months after its introduction by the government.

According to the upcoming State of the Industry Report from Goodlord due next week, the act has had a significant impact on many letting agencies’ revenues.

31 per cent of respondents said that their agencies had lost between 10-20 per cent of their revenue as a result of the Tenant Fees Act. 28 per cent said their agencies had lost up to 10 per cent of their revenue.

These figures align very closely with the market’s predictions from last summer, when 31 per cent % respondents said they expected to lose between 10-20 per cent of their revenue, and 32 per cent saying they expected to lose up to 10 per cent – demonstrating the impact most agents were preparing for.

A significant slice of the market – 17 per cent – said their agencies had lost between 21-30 per cent of their revenue since the Act came into force, which was slightly less than the 21 per cent who expected to lose this amount when asked six months ago. 10 per cent of respondents said they had lost more than 30 per cent of their revenue, higher than the 6 per cent who foresaw that level of loss last summer.

Only 15 per cent of survey respondents said that the Tenant Fees Act has had no impact on their revenues. This was more than the 10 per cent of respondents who predicted that the Act wouldn’t have any impact on their revenues, as recorded in the Goodlord 2019 Summer Report, suggesting that some agents were well-prepared for the ban and have adapted their revenue model successfully.

35 per cent of agents said they were worried about ongoing compliance with the Tenant Fees Act and the penalties for not doing so. In contrast, only 22 per cent cited the new anti-money laundering regulations, which came into force last month, as a source of concern. This demonstrates the long-term, sustained impact the Act is having on agents and their business models.

With compliance around the ban continuing to cause anxiety, it’s no surprise that more than half of agents surveyed (53 per cent) said they were concerned about the potential introduction of additional legislation, such as rent controls.

Tom Mundy, COO at Goodlord, commented: ‘It’s clear that the Tenant Fees Act has had a significant impact on the industry. The majority of agents have seen revenues hit and a large slice of the market continues to worry about compliance. These figures show just how pivotal this legislation has been, with few emerging unaffected by the changes.’

He concluded: ‘With further pieces of key regulation due in 2020 and beyond, it’s essential that agents stay nimble and prepare their business models for more change to ensure they continue to prosper this decade.’

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