In today’s fast moving environment it is vital that lettings businesses are both fully compliant with the myriad of legislation affecting the sector and are maximising the commercial opportunities available, particularly as commercial pressures and legislation are impacting significantly.
The next BIG challenge is likely to be the Renters Reform Bill that is due to go through parliament in 2023 and will likely become law in 2024.
There are a couple of huge changes proposed with this new legislation that, without a well thought out and proactive plan of action, could see letting and managing agents lose significant revenue streams and have new management issues to resolve.
Of course, Opportunity is effectively the other side of any Threat coin and good agents will not wait and hit the panic button but will get ahead of their competition and maximise the opportunties that will be created.
Change can be challenging to manage and takes time - the Lettings Health Check will identify strengths, weaknesses, opportunities and threats for you to action.
Minimum Energy Efficiency Standards (MEES)
In autumn 2020, the government began a consultation on tightening the MEES rules. It’s important to note that the proposals are currently just that, and no regulations have been drafted yet. The consultation closed in January 2021.
The main proposed changes were as follows:
The plan is to enforce this from 1 April 2025 for new tenancies, and from 1 April 2028 for existing tenancies.
* In September 2023 the Government announced that this requirement would, for the foreseable future, be shelved and that the current minimum E rating would continue. *
The government says this would be sufficient to bring more than 90% of D-rated properties up to a C rating, as well as nearly 60% of E-rated properties. It’s not clear whether existing spending would count towards the new cap.
This would control in which order work is carried out, so improvements to the fabric of the building (ie insulation, windows and doors) must be done before additional measures such as new heating systems are installed.
The current exemptions would remain largely unchanged. Additionally, the proposals recommend clarifying the rules for listed buildings and those in conservation areas, and introducing a central database of compliance and exemptions.
Tenant Fee Act
The tenant fee ban came into effect on June 1st 2019. Replacing "lost" revenues, cutting costs, developing new propositions is always vital.
With a positive and well thought out and implemented plans, clients that I work with have actually significantly increased their fee income having made changes to cope and maximise success.
Client Money Protection, Electrical Safety Regulations, Fitness for Human Habitation and Smoke and Carbon Monoxide Alarm Regulations
It became mandatory from April 2019 for letting agents to have CMP (Client Money Protection) in place.
In addition, the Fitness for Human Habitation Act became law in 2018 and July 2020 saw new electrical safety requirements and the provision of safety certificates needed on all residential lets.
On October 1st 2022 new regulations concerning smoke alarms and carbon monoxide alarms became law.
These requirements are mandatory and require compliance but they also present excellent commercial opportunities for agents and property managers.
Undesignated Client Accounts
Recent years has seen growing pressure on letting agents from banks in regards undesignated client accounts. Many agents have had the threat of having these accounts closed which would effectively put their lettings operations out of business.
We have considerable experience of successfully working with clients on their compliance and systems to avoid the banks taking such Draconian action.
Ombudsman Code of Conduct - Referral Fees
To coincide with the Tenant Fee Act, The Property Ombudsman introduced a new code of conduct which makes it a mandatory requirement for agents to disclose any referral fees, commission or other "secret profits"
National Trading Standards have made it clear that they will use Consumer Protection Regulations to prosecute agents who fail to comply.
As well as a review of the entire lettings business operation, we will undertake an audit of a selection of property files to ensure compliance with legislation, regulation and codes of conduct. This will involve a detailed site visit as well as desktop research.
We will also undertake a review of current products and services, fees and commissions and highlight areas where practical opportunities exist to increase revenues, reduce costs and increase margins.
Failure to comply with lettings legislation could have a devastating effect on a business and its owner(s) with failures in some areas carrying significant penalties including fines and imprisonment. In addition, shortcomings could result in compensation payments and awards being levied through the courts or redress schemes or an inability to enforce terms of business and secure fees.
Good business practice is vital but does not exclude ensuring that the business maximises the commercial opportunities that exist from a well-delivered portfolio of services and products.
If you are operating a lettings business you need to ensure compliance and good business practice, whilst not missing out on fee earning opportunities, and that is where The Lettings Health Check comes in.
The Lettings Health Check is a detailed audit of your lettings business concentrating on compliance and commerciality.
The Lettings Health Check can be offered as two separate sections - compliance and commerciality - or at a reduced collective cost, the full report.
Each Lettings Health Check will result in a detailed report and draft business plan that the business can use as a template for improvement.
The Lettings Health Check could be the best investment you make in your lettings business - to discuss further or to book a Lettings Health Check – please call or email us at firstname.lastname@example.org.
We look forward to being of assistance to you.
The Lettings Health Check will be undertaken by Michael Day MBA FRICS FNAEA FARLA
We engaged Mike to do a full Lettings Health Check for our business.
I had been to several of Mike’s seminars over the years and always liked what I’d heard; a clear, professional and easily transferable distillation of agency regulations and law. So, after attending one of these recently, I engaged him to have a look at our lettings business.
Mike spent a good two days analysing and reviewing our protocols and practices, and then gave a comprehensive, and perhaps more importantly, comprehensible report on his findings.
All delivered in a matter-of-fact and personable manner. Invaluable.
His report gave us direction and detail which we will integrate in our business over the coming months.
I would consequently highly recommend the Lettings Health Check to any agent, a good value and profitable investment.
Patrick Rampton - Director
We engaged Michael Day of Integra Property Services to carry out a Lettings Health Check of our business and this was undertaken in August 2018.
Michael attended our offices and spent a full working day interviewing staff, auditing files and company procedures. He also undertook some desktop research and looked at much of our documentation and reviewed our website. In addition, he looked at our current commercial arrangements in regards supplier agreements, and the fees and charges, revenue and profit from ancillary income streams.
We subsequently received a very detailed but easy to digest report from Michael that highlighted his findings and made 112 recommendations and provided a template business plan for future action.
The recommendations ranged from a couple of essential compliance matters to a number of commercial business opportunities and we have subsequently reviewed and put in place a programme of improvement. As well as helping us “de-risk” our business and ensure compliance with the myriad of legislation, we believe we are much better placed to generate greater volumes of business and greater revenues which, given the impending tenant fee ban, will be essential.
My business partner Darren, myself and all the staff were delighted with the positive and solution conscious approach taken by Michael and feel that our business is in a much stronger position as a result of having invested in an independent review – the Lettings Health Check.
Chris Harper - Partner
As an independent firm of Chartered Surveyors, we were seeking a professional third party objective overview of our Lettings business to assist in forming its future strategy.
Michael’s approach was thoroughly professional, helpful and informative and his advice and report subsequently given certainly achieved our initial objective.
Since his visit he has remained readily available for further discussion and we continue to implement a variety of his recommendations. We would not hesitate to recommend Michael’s services.
Kate Trewhella - Partner
We have been using Michael Day & his company for regulation compliance & business planning for a number of years now and he recently completed a very detailed Lettings Health Check for us.
This resulted in us making a number of positive changes to our operation. Michael is always very knowledgeable, informative & helpful to all of us at Frank Schippers Estate Agents and we would have no hesitation in recommending him.
Frank Schippers - Proprietor
"As a relatively new business I think it’s always important for someone independent to come and take a look under the bonnet to make sure we are firstly compliant with all regulations, secondly have all the right systems & processes in place.
Mike came along and not only pointed out some areas of improvements but also showed us where we could & should be making some charges. I recommend everyone gets Michael in to take a look.
I’m reassured that we are doing everything correctly, commercially & with integrity."
James Brock MNAEA - Director and Co-Founder James & James estate agents