Buy-to-let landlords are being advised to think seriously about how they can recoup costs to help pay for higher letting agents fees.
Several reports suggest that many letting agents are likely to review their charges once fees to tenants are banned next year, with a lot of upward pressure on landlord charges after the ban widely anticipated.
The government's impact assessment of the fees ban estimates that the collective cost to landlords in the policy’s first year of operation will be £82.9m, while it also estimates that the caps on security and holding deposits, which will also be introduced next year, could cost landlords a further £1.3m.
It is widely anticipated that the additional cost to landlords will come in the form of higher management fees from letting agents looking to replace lost income.
The impact assessment estimates that the cost to letting agents in the first year of the ban will be upwards of £157m, which is why PropTech startup RentalStep is advising landlords to consider their monthly outgoings and start shopping around for products that could save them money.
“It’s time for landlords to evaluate their options to ensure the new law doesn't have a negative impact on their property business,” said Mike Georgeson, founder and chief executive of RentalStep.
He continued: “It’s clear from the government’s figures that the post-fees ban landscape is likely to be an expensive one for landlords at a time when the cost of letting a property has never been higher.
“That's why landlords need to shop around and explore alternative options to make sure they are getting value for money when it comes to necessary services such as tenant referencing and property advertising.”
Technology and innovation also have an important part to play in keeping landlords’ costs down, according to the PropTech entrepreneur.
“Products that utilise technology effectively can provide more efficient and time-saving processes at a lower cost than many traditional options,” he added.
“The rental market is changing at a rapid pace and if landlords want to remain successful, they need to find solutions that can help them to keep their properties occupied for a lower cost.”