Housing Minister denies Renters’ Rights Bill will harm supply
6 months ago | 29 comments
Agents face revenue hit as reforms threaten to slash income
9:55 AM, 2nd October 2025, 6 months ago
9
Letting agents could see their earnings plummet by more than a quarter when the Renters’ Rights Bill takes effect, one firm says.
According to Goodlord, contract renewals currently generate 27% of typical agency income.
However, the proposed elimination of fixed-term tenancies under the Renters’ Rights Bill threatens to wipe out this substantial revenue stream entirely.
The data, in its eighth annual State of the Lettings Industry report, shows that London’s agents could be hit hard since renewals account for 37% of agency earnings.
PRS is under pressure
The firm’s chief executive, William Reeve, said: “The sector is under huge pressure on all fronts – tenants, landlords and agents alike are feeling the strain, with more changes and uncertainty still to come.
“This is a resilient sector that’s used to weathering storms, but the pressure seems to be increasing rather than abating.”
The survey of 2,750 letting agents, landlords and tenants, represents the largest study of its kind to date.
The report will be published on 7 October and despite the legislation being weeks away from Royal Assent, most letting agents admit they are unprepared for the changes ahead.
Smaller operations appear most vulnerable, Goodlord warns.
Just 4% of sole operator agents describe themselves as ‘very prepared’ for implementation.
Most agents not ready
Among agencies employing between two and 10 staff members, only around a quarter feel ready.
Even larger agencies with 11 or more employees show concerning gaps in readiness, with less than half (47%) saying they have adequate preparations in place.
Now, some agencies are reshaping their business strategies with seven in 10 agents (70%) identified attracting landlords as their primary focus area.
Meanwhile, 61% said discovering alternative revenue sources was high on their agenda, while 39% were targeting higher management fees.
Despite these ambitious financial goals, just 19% of agencies plan to expand their workforce over the coming year.
EPC standards and costs
Beyond tenancy reforms, proposed EPC standards continue to generate concern among landlords.
Nearly two-thirds (63%) view the suggested EPC Band C target negatively, with many either unwilling or unable to make necessary investments.
Investment in EPC updates means nearly half (45%) of landlords said they would spend no more than £2,000 per property on improvements.
Only 19% would spend more than £5,000 – which is much lower than the proposed £15,000 cap.
With compliance set to be required by 2028, 39% of landlords indicated they would prefer selling their properties rather than investing in mandatory efficiency upgrades.
Tags:
EPC band C requirements, fixed-term tenancies, landlord exodus, letting agents revenue, periodic tenancies, Private Rented Sector UK, property letting reforms, rental market changes, renters rights bill, UK Housing Legislation
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Member Since February 2021 - Comments: 106
10:03 AM, 2nd October 2025, About 6 months ago
Naive LLs who let agents renew…… simple
Member Since July 2013 - Comments: 1996 - Articles: 21
10:15 AM, 2nd October 2025, About 6 months ago
It is going to be a problem for both landlords and agents when all tenancies become periodic. A letting agent will usually charge between 8 and 10% of the first year’s rent plus VAT when granting a 12 month lease. This is equal to a month or so’s rent. If the tenant leaves in the first year, will agents refund landlords? Agents also, commonly, press tenants to sign a new 12 month AST when the contractual term of the old one expires. They will no longer be able to do so.
So on the one hand, landlords will need more professional help as the Renters Rights Act will be complex and Draconian in the penalties for breach, but on the other hand agents’ incomes may go down, leading to lack of investment in training and technology.
Member Since January 2024 - Comments: 340
10:44 AM, 2nd October 2025, About 6 months ago
Some agents already charge monthly, not up front, I guess this will become the universal model.
However, agent’s employees may feel the difference because I know some agents charge landlords monthly, but pay their employees commission upfront, based on the length of the tenancy. So I imagine agencies will have to revert to paying employees their commission monthly.
Member Since February 2020 - Comments: 360
10:49 AM, 2nd October 2025, About 6 months ago
The agents will get the same revenue. Tenants will just up and move at a whim, meaning more changes. This could make up for the lost revenue.
Member Since April 2017 - Comments: 40
10:57 AM, 2nd October 2025, About 6 months ago
Reply to the comment left by Ryan Stevens at 02/10/2025 – 10:44
That could be a good thing as it would perhaps create more stability amongst agency staff
Member Since July 2013 - Comments: 1996 - Articles: 21
12:16 PM, 2nd October 2025, About 6 months ago
Reply to the comment left by Downsize Government at 02/10/2025 – 10:49
How will that work? There will be much more admin. More setting up tenancies, referencing and credit checks, check-ins, checkouts and inventories to prepare none of which can be charged to tenants.
@Ryan Stevens Some agents only charge for initial finding. If 10% of monthly rent plus VAT is charged every month, agents will charge indefinitely until tenants leave.
Member Since February 2018 - Comments: 627
12:45 PM, 2nd October 2025, About 6 months ago
The notion of agency charges being levied monthly and commission paid monthly too instead of upfront has precedent, direct lifecassurance sales agents typically started on an ‘indemnity’ commission model, paid up front but with an earnings period of one to four years, when successful, most moved to an ‘accruals’ model, i.e. paid when earned, Good lord, who’d have thought that a possibility.
p.s. I have had GL referencing requests which require consent to a seventeen page T&C, I’m quite happy to provide a reference but I’m not jumping through their paper hoops.
Member Since May 2021 - Comments: 389
5:39 PM, 2nd October 2025, About 6 months ago
Changes in the Terms of Business between the agent and the landlord will also have to be changed which could result in landlords being able to exit the arrangement free of charge depending on what the actual termination clause says of course.
Member Since February 2020 - Comments: 360
7:32 PM, 2nd October 2025, About 6 months ago
Reply to the comment left by Ian Narbeth at 02/10/2025 – 12:16
They charge to landlords.