Renters’ Rights Bill will cost letting agents £400m

Letting agents in the UK are facing a huge financial blow, with government figures revealing potential losses of nearly £400 million over the next decade due to the Renters’ Rights Bill.

The Impact Assessment, published by the Ministry of Housing, Communities and Local Government, estimates that the Bill will lead to a 41% increase in agency losses compared to the previously proposed Renters (Reform) Bill.

This is primarily attributed to fewer landlords opting for agency services because of the new legislation.

Letting agents will be alarmed

Neil Cobbold, the commercial director of proptech firm Reapit, 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.”

He adds: “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.

“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.”

Reforms to the private rented sector

Labour’s Bill introduces a range of reforms to the private rented sector (PRS), including the abolition of Section 21 evictions and the implementation of periodic tenancies.

These changes, coupled with stricter compliance standards for letting agents and landlords, are expected to impact the industry’s revenue streams.

The government’s Regulatory Policy Committee has expressed concerns about the quality of the impact assessment, particularly the evaluation of the Bill’s wider impact and the potential exodus of landlords from the market.

‘Better rental experience for landlords’

Mr Cobbold said: “Demonstrating the value of an agent’s expertise in delivering a better rental experience for landlords and tenants will 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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