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Official government figures published in November reveal that letting agents could lose more money under the Renters’ Rights Bill than the failed Renters (Reform) Bill, Reapit commercial director Neil Cobbold has highlighted.
However, Cobbold insists that the bill will offer opportunities for “forward-thinking agents” to adapt.
The Impact Assessment published by the Ministry of Housing, Communities & Local Government, reports that the Renters’ Rights Bill will cost letting agencies £391.7m over the next decade as it will lead fewer landlords to use agency services.
The loss in fees is almost 41% higher than a projected £278.7m in agency losses if the Renters (Reform) Bill had been implemented under the previous Conservative government.
The Labour-led Renters’ Rights Bill introduces extensive changes to the private rental sector, replacing assured shorthold tenancies with periodic tenancies, abolishing Section 21 evictions, and mandating stricter compliance standards for letting agents and landlords.
For agents, the increase in losses – an additional £113m over 10 years compared to the Renters (Reform) Bill – will likely heighten concerns from the lettings industry, Cobbold said. The new bill is set to become law in 2025, when agencies will also be contending with higher business costs from the recent budget increases in National Insurance.
Commenting on the figures released by the government, Cobbold said: “Letting agents will understandably be alarmed by the forecasted £391.7m in losses they’re expected to incur from the Renters’ Rights Bill. However, as with the Renters (Reform) Bill, there are opportunities for forward-thinking agents to adapt.
“Key strategies include converting let-only landlords into fully managed clients, as the government puts the figure down to fewer tenants moving – which will shift earnings from one-off placements to monthly recurring service fees.”
Cobbold added: “Providing value-added services such as compliance management, rent collection, and tenant communication can help mitigate the potential revenue loss associated with reduced tenant turnover and increased operational demands.
“Demonstrating the value of an agent’s expertise in delivering a better rental experience for landlords and tenants will therefore be critical.
“Nevertheless, letting agents, landlords, and tenants need further clarity from the government on various issues. For example, details on the scope and functioning of the private rented sector database and ombudsman are critical to help the industry plan and adapt to the Renters’ Rights Bill, which we expect will become law in 2025.”
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