MRI Software’s own Trevor Youens, Senior Director Residential & Partnerships, recently participated in a Fixflo-hosted webinar looking at the lettings industry in 2021.
Trevor joined Zoe Bywater – Director of Lettings at Belvoir Bedford, and David Smith – Partner at JMW Solicitors, to talk about the key challenges faced by lettings agents over the past year, and the changes and opportunities ahead.
Here are some of the key themes and outcomes from the chat.
Is this the end of the high street lettings agent?
It’s impossible to talk about 2020 without referencing the COVID-19 pandemic. The lettings industry’s response to lockdowns and associated legislation changes were top of the list for discussion. A widespread shift to remote working, while a challenge for many agents to overcome at short notice, was more successful than many had expected. Businesses reinvented how they arranged viewings, signed tenancies, arranged maintenance and managed communications – and did so in not much time at all.
While panellists felt the technological changes made by agents over the past year are likely to reap further benefits over the long term, the idea that 2020 marked “the end of the traditional high street agent’s shopfront” was more controversial. While Zoe saw an opportunity for agents to continue to benefit from an efficient remote working model, Trevor pointed out that survey data showed many customers still saw a physical presence as an important factor when choosing an agent. As the phased lifting of lockdown restrictions happens, a physical office presence is likely to remain important.
Fast-changing legal requirements – and more to come
Solicitor David explained that the raft of changes to the legal landscape is a huge risk factor for lettings agents, both now and in future. While agents are already under pressure to respond to fast-moving changes to court working practices and eviction processes, it’s important they stay up to date to respond effectively to even more changes planned for the rest of 2021.
EICR certification requirements on all tenancies in England from 1 April are likely to lead to a shortage of available electricians to carry out checks and remedial work. While many agents are struggling to navigate tight deadlines and misinformation, it’s unlikely that this deadline will be extended, and while local authorities have been advised to be reasonable when handing out fines, it’s vital that agents demonstrate they’ve taken as many steps to achieve compliance as possible.
Data protection is also a high priority, mainly due to challenges associated with Brexit and the creation of a new UK data protection regime – not to mention significant increases in data security breaches and subject access requests. It’s time for agents to urgently review their data protection processes to avoid being caught out by cyber threats, and to remain vigilant for more changes to come.
The case of Northwood Solihull Ltd. v Fearn & Ors also poses a tremendous risk to landlords and agents in 2021. If an agent has signed a prescribed information certificate within the past six years that isn’t signed by a director and correctly witnessed, the Northwood Solihull ruling means that a Section 21 notice cannot be served, and agents could be liable for a penalty of three times the deposit amount. While this ruling is currently being challenged in the Court of Appeals, it could lead to a vast number of claims if upheld. Agents need to think carefully about ensuring that current tenancies and renewals are compliant to reduce their potential liability.
Streamlining processes to relieve margin pressures
While there are challenges ahead for lettings agents, Trevor explained that there are some positive signs as well.
MRI’s data shows that despite what agents might be expecting, there’s not been a huge increase in arrears and defaults when compared to the same period last year. There has, however, been an average 8% reduction in rent levels across the country, with bigger drops in central London.
We’re also seeing a sustained level of interest in the UK’s Build-to-Rent sector from investors in the US and beyond, with a high level of mergers and acquisitions in the space pointing to continued strong performance post-Brexit. This creates opportunity.
On the other side of the coin, rapid changes in working practices and regulation are likely to squeeze profit margins through 2021. It’s more important than ever that agents review their processes from the ground up to identify outdated approaches and pinch points which could be streamlined. Trevor considers onboarding, deposit release and maintenance to be the most common areas where agents could make improvements.
Resisting the temptation of ‘shiny tools’
When carrying out this streamlining process, all panellists agree that it’s important to think strategically and not get distracted by ‘shiny tools’ which look good but don’t effectively solve business problems.
Zoe stressed the importance of using technology strategically, freeing up human resource to focus on communication and relationship building, rather than automating communication and potentially damaging engagement.
David talked about the importance of integration across proptech solutions, ensuring that systems spoke to one another and that data did not have to be manually copied across multiple systems, leading to potential errors and GDPR risk.
Finally, Trevor shared a top tip for agents to help them select to the right proptech solution to meet their requirements: look for systems which have grown and evolved over time in the industry, rather than stitching together a few single-feature tools. Older, more established systems might not necessarily be as ‘shiny’, but are more likely to provide the levels of efficiency and integration required to help lettings agents thrive.
Want to hear more? You can watch the full on-demand webinar here.