A recent study from FixFlo found that 42% of letting agents are gravely concerned about the lettings fee ban. For some agents the ban will see them lose 20-30% of their gross annual profit. The ban on charging tenants letting fees in England  is to make private sector renting fairer and more affordable. FixFlo have created a useful calculator to help you see the impact of the ban.

Working with third party referencing companies

In 2012 there was a tenant fee ban in Scotland. This didn’t stop letting agents from making money. It meant they had to adapt.

Legislation stopped agents directly charging tenants a referencing fee. Instead agents referred tenants to third party referencing companies such as Let Alliance, that would pay the agent a referral fee.

Thus the agent would say to the tenant. You can provide us with XYC referencing information, of you can pay a fee to this third party referencing company and they will do it all for you.

The majority of tenants then pay a referencing fee to the third party company, and the referencing company pays a referral kickback to the agent. All perfectly legal.

Other ways to monetise

Many innovative agents are looking for other revenue sources, this could include offering a check in tour. For instance the tenant pays £80 and the agent then gives a personal tour of the property explaining how all the appliances work, and showing them where everything is.

Other agents are looking at making money from utilities, they choose to work with companies like Homeshift or Spark energy that will pay them referral fees on utility changes.

Buying distressed competitors

For agents with healthy profit margins next year will be a fantastic time to acquire letting books. Poorly managed agencies with tight profit margins will either go bust, or will want to leave the industry, creating acquisition opportunities for well managed and innovative agents, who can benefit from the change in legislation and grow their business. Now may well be time time to start fundraising for your acquisition war chest!

Conclusion

A challenging market helps the most adaptive, hardworking and creative firms succeed. It’s a real opportunity for you to grow your business, while your competitors are left behind. If you’re interested in the space have a read up on the FixFlo Report.

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