Letting agents are braced for a ‘painful year’ of change in 2018, ARLA Propertymark claims.
The membership body surveyed 264 branches about their hopes for next year, with 59% expecting rents to be increased as the costs of the lettings fee ban are passed back through landlords to tenants.
Two thirds expect the supply of rental stock to fall in 2018, while 53% think demand will continue to rise.
David Cox, chief executive of ARLA Propertymark, warned that up to 300,000 rental properties alone could come off the market when new energy efficiency standards take effect next April.
He said: “This year was a big one for the lettings industry, and tenants felt the effects of this. Unfortunately, it looks like rising rent costs are going to continue into the New Year as agents need to be moving into a 0% fee business model by October, which will push rents up as the costs are passed through landlords and on to tenants.
“There is a lot of other regulation making its way through Parliament next year, which will more positively affect the rental market however – including regulation of the industry, housing courts and longer-term tenancies. While these policies will be developed rather than implemented, they should start to affect the market as agents adapt their businesses in anticipation.
“In terms of the supply of rental properties, which agents largely expect to fall, we need to remember that the minimum energy efficiency standards coming into effect in the New Year could see up to 300,000 properties being taken off the market because they don’t reach the minimum requirements. This will also – in turn – push rent costs up.
“Overall, the industry is going through a seismic change and the lettings market we know today will be radically altered over the next five years. This change will be painful for agents, but we firmly believe that the industry will come out of the other end stronger, more professional and with a robust reputation among consumers.”
A similar survey of NAEA Propertymark members also suggested the Stamp Duty abolition for first-time buyers may have little impact.
Just a third felt demand will decrease next year, with 46% expecting it to stay the same.
Similarly, 44% expect supply to be flat and 29% thought it would decrease.
The NAEA Propertymark figures were based on 919 estate agent branches but there is no breakdown of how many actually responded.
Mark Hayward, chief executive of NAEA Propertymark, said: “It’s been a big year for the housing market, with the Government pledging to improve the house-buying process, and Stamp Duty relief for first-time buyers coming into effect.
“However, looking ahead to next year, more than half of our members don’t think the tax relief will have a real impact on the number of sales to first-time buyers.
“If we can improve the process of buying a property, we’ll be making vast improvements to the sector which will ultimately make it easier and provide more certainty for first-time buyers.
“Our members want to see Stamp Duty relief rolled out nationally to all buyers, and hold out hope that housing stock will increase. This will be a case of ‘wait and see’ – the Government has made many such promises in the past which we’ve never seen translated into reality.”