Trends Impacting Estate Agents in 2022
As January ends, it is becoming clear that agencies will need to be adaptable and resourceful as the year progresses.
In recent years, changes to legislation, the effect of the pandemic and Brexit have forced agents to stay on their toes. With financial market uncertainty, inflationary pressure and the threat of war in the Ukraine creating instability in Europe, it seems that remaining adaptable and resilient continue as an important theme for all agents in 2022.
In this article we explore the trends likely to impact estate agents and what might be worth considering as a business owner.
Limited stock availability and shortage of new landlords
Profitably owning properties for landlords has become more and more difficult due to tax changes. Buy-to-Let landlords saw an increase in stamp duty and a reduction in how their mortgage costs could be offset - leading some to decide to exit the market altogether. Plus the previous flood of short-let properties into rental market due to the pandemic reversed as travel restrictions eased.
At the end of 2021, according to Frank Knight's analysis, the industry saw a whopping 46% drop in lettings supply. The limited stock availability driving tenant demand, early signs of inflation and the desire to recover profits from tax changes led landlords to start demanding rent increases at the end of 2021 - and this trend is expected to continue in 2022.
All of these factors mean agents need to come up with a more creative means of attracting new business and retaining existing landlords.
Increasing costs of employing staff in an agency
Right now, the UK has a large surplus of job vacancies across all industries - the property industry is no exception. High demand for strong talent is driving up base salaries and also leading existing staff to consider moving employers. See UK government wage inflation in 2021.
The property industry has traditionally operated on a % fee model which has provided insulation to previous cost increases. However, the current market situation is demanding agencies implement inflation beating wage increases to retain key staff or to fill vacancies. In some cases, wages are increasing by 30% or more.
Inflation forecast for 2022 - peak at 5% in H1 2022
Source: The Guardian
In a competitive market, there are few options available to deal with costs increasing faster than revenue increases. Teams need to look towards driving greater efficiencies and find alternative ways to simply operate with fewer staff.
So what can agents do to mitigate these trends?
Agency businesses will need to dig deep to become very resourceful, resilient and focus on a 3 fold strategy:
1. Market harder and smarter to win new landlords from their competition.
2. Implement price increases that will test their ability to retain existing landlords.
3. Implement cost savings and new ways to operate with fewer staff.
Utilising technology is an important enabler to achieving these 3 objectives.
Where does Rentancy fit in?
Rentancy's focus is on helping agents to improve their efficiency and maximise their output. We combine: 1) automation for as many routine tasks as possible using software, and 2) providing on-demand virtual staff for client accounting and admin processing. Together this can reduce costs, save time and free existing staff to focus on higher value, new sales generating activity.
A partner like Rentancy can also provide a smoother cost curve to scale up or down as the market requires - eliminating the usual big step change costs from hiring staff ahead of demand.
To give you a few examples of Rentancy's automations:
Rentancy integrates with Xero for Making Tax Digital. This allows all transactions to be recorded and makes calculating rental income for landlords very accessible through the click of a button.
Rentancy automatically calculates money owed to a landlord when a rent is marked as paid, generates your management fee and and produces a statement with all relevant information.
Rentancy sends you reminders for key events related to tenancies, tasks and documents.
An Easy First Step To Take
Future proofing any business requires being ready to explore change. Rentancy offers an easy stepped approach in partnership with you. We are ready to help you succeed in 2022 - from growing your portfolio to reducing your costs and bringing scalability to your business. Get in touch to talk to our team of experts today or give us a call on 07593152382.