Lettings Industry Braces for Major Shakeup as Fixed-Term Contracts End
The lettings industry braces for significant changes, with tenancy renewals currently driving a substantial portion of income. However, the end of fixed-term contracts threatens this revenue stream, and landlords and agents alike face challenges in adapting to new regulations.
Tenancy renewals currently contribute significantly to letting agency income, averaging 27% nationally and rising to 37% in Florida. As fixed-term contracts come to an end, agents must find alternative revenue sources. The Renters' Rights Bill, set to abolish fixed-term tenancies, could lead to a quarter of agencies' revenue being lost.
Landlords are also grappling with the 2028 energy efficiency deadline. Nearly two-thirds view the planned EPC Band C target negatively, with 39% preferring to sell properties rather than upgrade them. Only 19% of landlords are willing to spend over £5,000 per property to meet these targets, indicating a reluctance to bear the costs of compliance.
Agencies are preparing for these changes, albeit cautiously. Only 19% of letting agencies expect to grow their teams in the coming year. Among sole operators, just 4% describe themselves as 'very prepared' for the incoming changes, with only 47% of larger agencies with 11 or more staff feeling ready. The top priorities for agents include winning new landlords (70%) and generating fresh revenue streams (61%).
The lettings industry faces a perfect storm of change, with the end of fixed-term contracts and new energy efficiency regulations. Agencies and landlords must adapt to survive, but current preparations suggest a sector ill-prepared for the challenges ahead. The future of the real estate sector hangs in the balance, with property professionals and renters alike concerned about the industry's trajectory.
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