In light of the government’s recent pledge to ban letting fees, questions are being asked as to what this will really mean for renters, landlords and estate agents.
We all hope that recent policy announcements, such as capping security deposits at no higher than four weeks’ rent, will make private renting more competitive and affordable. However, the true outcome of these policies is still unclear and other market forces may yet make the road to fairer renting a bumpy one.
While a ban on letting fees and the capping of security deposits seem like steps in the right direction, there are concerns that some agents will shift costs on to landlords. This could lead to increased rents as landlords attempt to counter growing agent fees and the loss of security resulting from lower deposits.
Not only are new policies causing uncertainty, but the duopoly of online portals Rightmove and Zoopla could be both good and bad news for the property industry. The portals have been a phenomenal success – which they certainly deserve credit for – but their dominance has led to increased dependency from agents, who now have little choice but to post their properties on these aggregators if they wish to remain competitive.
Agents must abide by the portals’ rules, including paying any fees associated with hosting their properties on the site. This can impact profits and risks, with agents passing on costs to landlords in order to recoup them.
The power balance and the dynamics of the market have changed enormously and will continue to do so. If agents want to remain a cornerstone of the rental marketplace then they must embrace digital transformation.
One answer is to work hand-in-hand with start-ups, collaborating to deliver innovative solutions. Emerging proptech start-ups can help bolster agents’ positions as the go-to destination for renters and landlords. By developing smart, quick and robust tools and services, start-ups can help make the rental process less painful and ease the apprehensions of all stakeholders in the face of tightening regulations and competition from portals.
In last year’s Autumn Budget the government announced a £2m prize for proptech firms who can create credit solutions to tackle the housing crisis by helping renters get on to the property ladder. With a quarter of households in the UK set to be renting by 2021, offerings that allow renters to build their credit score by paying rent on time could have a huge role to play in helping today’s ‘generation rent’ become tomorrow’s ‘generation own’.
This is exactly what Canopy does. What’s more, with our RentPassport and DepositFree cover we can significantly streamline the renter on-boarding process, enhancing operational efficiency, improving deal flow, reducing risk and diminishing loss ratios while also decreasing the time and money spent on handling cash deposits.
Embracing new technology, especially mobile, has allowed many industries to offer customers tailored services. Innovative, agile start-ups can help agents adapt – as start-ups in other sectors such as banking and insurance are helping established players adapt through collaboration. Canopy is collaborating with the businesses in the property sector to help improve transparency and accessibility for all stakeholders.
Tahir Farooqui is chief executive of Canopy