Letting agents sell ahead of the Renters’ Rights Bill

I’m sorry, I must be really stupid.

So, on the one hand the government is saying that there is no evidence that the RRB (and presumably EPC changes) are not causing landlords to exit the market, on the other hand:

“The government’s own forecasts paint a grim picture, projecting a £391.7 million hit to letting agencies over the next 10 years, driven largely by landlords selling up.”

Reply to the comment left by Ryan Stevens at 05/03/2025 – 10:24
Yup, sounds about right….

Reply to the comment left by Ryan Stevens at 05/03/2025 – 10:24
Ask Mr Pennycook, he knows!

Reply to the comment left by Stuart Rothwell at 05/03/2025 – 10:42
I use a letting agent: The letting agent that I use is quite a large one and has no intention of exiting although I suspect that many of the small letting agents will disappear.

As far as I can tell from the available, reliable public sources of information, what is happening in the PRS market is that increasing numbers of smaller landlords are selling up and there is growth in the number of larger, incorporated landlords. This means that the supply of rental properties is not declining dramatically, but is not going up even though demand is increasing as a consequence of societal change and net migration.

Government tax policy favours a reducing number of incorporated, more ‘professional’ landlords who will charge HIGHER RENTS, without favouring growth in the SUPPLY of accommodation. This of course will drive rents up for tenants in the PRS and will also create increasing pressure on social housing providers, on the benefits bill, and indirectly on tax receipts generally, at a time when the government needs to reduce expenditure on benefits and healthcare and increase expenditure on defence.

At the same time as government policy favours a static or reducing supply of rental accommodation provided by a smaller number of incorporated landlords when demand for accommodation is on the increase, government policy is also likely to favour a smaller number of more professional letting agents who are more able to maximise rents, plus efficiently deal with the problem of evicting problem tenants and dumping them on the social housing sector.

My agent used to advise me to hold rents down a bit to reduce the risk of void periods. My agent does not give this advice any more of course because government policy has increased the risk of incentivising long-term tenancies this way. One of the reasons I use an agent is in order to be able to get rid of a tenant when I need to. If every ‘i’ has been dotted and ‘t’ crossed then when the government tells me that I can no longer continue to rent a band D property I can just offload the tenant and do whatever I need to do with my property (which might not be renting it out).

Government policy needs to favour the supply of high quality rental accommodation via the tax system….e.g. by not penalising small landlords…allowing rollover relief for small landlords…introducing capital allowances for energy efficiency improvements….allowing more than one family to rent under the rent-a-room scheme without having to become a licensed HMO etc….but doesn’t.

As long as the government pursues policies like this there will be a demand for good agents.

A letting agent income depends upon the number of properties they manage. As landlords leave the PRS, agent income is going to reduce. At the same time new regulations will mean more work for agents that require more staff that they simply can’t afford. So smaller agents sell up and their portfolios but not their staff are absorbed into fewer bigger agencies.
A scarcity of landlords is keeping management charges static, but as your small local agents disappears, replaced by bigger more remote ones, you can expect charges to rise and service levels to drop. More costs to pass onto tenants.

Reply to the comment left by northern landlord at 05/03/2025 – 12:09
That’s absolutely right and that’s what I’m expecting: Agent fees will go up and these will be passed on to tenants in higher rents.

Reply to the comment left by Beaver at 05/03/2025 – 12:15
Not quite sure how than pans out, if all we are doing is increasing rent to cover costs then it will be difficult to get tenants to pay increased rent to cover inflation and all our admin.

Reply to the comment left by Ryan Stevens at 05/03/2025 – 12:18
If somebody increases your costs then you have to increase the rent for this to remain sustainable. If the situation becomes unsustainable because you can’t increase rents ahead of costs then you do something else.

That ‘something else’ is likely to be getting rid of your tenants, and if you have to get rid of your tenants even if they don’t want to go because of badly thought through government policy, that’s not your fault as a landlord.

Reply to the comment left by Beaver at 05/03/2025 – 12:15
….and if you self manage that means you can also charge more as market rate increases too….

Reply to the comment left by Ryan Stevens at 05/03/2025 – 12:18
At this rate it is anticipated that private landlords will easily be able to show that even a minimal £24 pcm rent increase per month will be ENTIRELY down to added costs just to be able to legally continue letting the property as is.

1. Selective licencing anything from £15 a month upwards (£900 licence over 5 years for example)
2. RRB Property portal listing (?? annually /12)
3. Ombudsman membership (?? annually /12)
4. Cost of admin for all the above (?? annually/12)