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A recent report from Fixflo, the proptech firm, has discovered that the lettings fee ban could decimate some letting agents’ profits, with around half of agents predicting that they could lose between 10 and 30 per cent of their revenue. Around 10 per cent of those questioned in the survey claimed they could lose at least 30 per cent of their income, as 41 per cent of agents cited their biggest challenge of 2019 as loss of revenue. Meanwhile, 32 per cent of agents confirmed that their biggest challenge would be securing new landlords. One of the most worrying discoveries from the survey was that around half of agents, at 48 per cent, were considering abandoning the industry due to developments in the lettings sector. This supported the survey findings from the NLA (National Landlords Association) which showed that approximately 380,000 buy-to-let landlords were thinking of selling during the next year.

The data provided by the NLA also revealed that almost one fifth of landlords in the UK were considering selling their buy-to-let properties, with around 50 per cent of these being apartments or flats.

Research has increasingly shown over the past few months that landlords are selling up, as buy-to-let investors are continually pushed out of the market by regulatory change and increasing costs, with new landlords deterred from entering the sector. According to Shefflets and Vouch’s Director, Simon Tillyer, market conditions are currently tougher than ever before. He claims that for many agencies, the fee ban puts their existence at risk, unless ways to supplement the lost income from fees are found. Fees currently generate around 20 per cent of this agency’s income, with Mr Tillyer explaining that this is a significant amount of income to replace. Many landlords cannot simply afford to incur these further costs, so the obvious choice for landlords is to pass these costs onto their tenants through increased rents. With such financial burdens to bear, the less profitable agents will not survive, and there will likely be continued consolidation, as large corporates buy out smaller agents.

However, there are still great opportunities to survive and prosper if positive changes are made to businesses to combat the lettings fee ban. By building a strong portfolio of properties, and providing exceptional customer service to tenants and landlords, letting agents can expect to boost loyalty and attract new landlords. Now is the ideal time to review business processes and evaluate what works for your business, and what does not. Consider the level of satisfaction for your tenants and landlords, and what areas could be improved.

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