Is the lettings fee ban an opportunity for tech companies?
Last week the government announced that it will be coming in line with Scotland, and will be making the charging of any fees to tenants illegal. There has always been controversy around the charging of fees to tenants, for what can be seen as simple admin tasks. These costs on average come in between £202-337 according to figures from ARLA and Citizens Advice respectively, which accompanied with a month’s rent in advance and increasingly six weeks rent as a deposit, can be a huge financial burden on tenants looking to rent a property.
On the other side, an industry, that against all the odds is still growing (with 19,000 estate agents in the UK and a new agent opening every 1.6 days in London) will lose a significant revenue stream from their business. Will tech companies benefit from this?
Online Letting agents, such as No Agent or Properly, already offer in most cases no agency fees to tenants as a part of the USP, and have still not managed to conquer the bricks and mortar agents. Let’s be honest, people like negotiating face to face when it comes to property. The industry is unlikely to move entirely online anytime in the near future.. However, complementary tech businesses to the standard High Street Agents, can potentially use the loss of income to the agencies to their advantage.
Take Reposit, for example. Reposit is a new, online platform, that seeks to fundamentally change the industry standard of a landlord or agency taking a tenancy deposit (often 6-8 weeks rent) as cover against damages, rent arrears or cleaning charges. They charge the tenant’s one weeks rent, as a fee, and in return cover the landlord/agency up to the value of 6 weeks rent. The legislation and cost of registering a deposit disappears, as no money is taken, but the same security remains. Agents earn commission on every Reposit they put in place, meaning they can benefit from a new income stream to their business, and all the while making their tenants happier for it, letting properties on average two and a half weeks faster due to it now being hundreds, in some cases thousands, of pounds cheaper. It is this kind of partnership, and rewards structure that we see moving the industry forward, and seeing the new innovative way of doing things as an opportunity rather than a threat.
Further information can be found at https://getreposit.uk/letting-agents