Last year the government ruled that they're going to bring in a tenant fee ban on letting agents in the UK. This means that letting agents will not be able to charge an admin fee from this year forward for any new tenancy agreements. This is absolutely massive. Last year we found out this was going to come into play on 1st of June this year. 1st of June this year, letting agents will not be able to charge an admin fee.
This is huge and this has hit letting agents across the board usually because 40% of the profit that letting agents make is from admin fees, so suddenly you're going to wipe out their profit. The other part of the puzzle is landlords have not been happy with letting agents for a while. A lot of landlords discussed the service at letting agents give and the RLA surveyed all of its landlords in December 2018, with the new tenant fee ban coming in place and the landlords said that they're thinking about coming away from letting agents. And be particular 56% of the landlord surveyed said they would not use a letting agent.
Now, if you're into property, like me, into rent to rent, this is massive. The reason why this is massive is because it is going to make getting hold of rent to rent properties easier. When 1st of June comes, letting agents can't charge fees, some of them are going to go out of business and there's no two ways about that. Some landlords are going to take back ownership of their property and management of their property.
What is the landlord going to be hit with? They're going to be hit with having to manage that property, having to manage arrears, having to manage disruptive tenants. If you're into rent to rent, this is huge, because for me in my business, I'm thinking, well, I can go to landlords now and say, I will take your property for five years. I will guarantee the rent. I'll look after it and I'll use it to make me money, and I will be able to get more rent to rent deals like that, over the line, due to this happening.
The other thing that's going to happen is a lot of landlords are going to start selling. We've had Section 24 come into place and it's hit them this with their tax returns in January and we now have letting agents issues, admin fees bans, and the fact that they're now fed up with letting agents. They're going to want to either manage their portfolio themselves or sell their portfolio.
When they're going to sell, a lot's going to come onto the market and I think there's going to be huge opportunity to get rent to rent deals, to get lease options and to get property below market value. As you can see, the government bringing the tenant admin fee bans is going to be huge across the board.
Also, in Doncaster we run an estate agency, we run a letting agency and we're already preparing for this shift. Luckily for us we only started our letting agency three years ago and we never actually charged an admin fee. I think we charged £50 per tenant so it's not going to wipe us out and we're going to be okay. But we are estimating that A, hopefully we're going to get more new landlords a part of it. But B, we're also estimating the number of landlords that are going to want to manage their property themselves.
So, if you are into rent to rent, if you want to get lease options, if you want to get property below market value, now is the time to start putting stuff into play and putting feelers out there to get a hold of these landlords who aren't sure what they're going to do, who aren't going to be staying with their letting agent. Now is the time to strike.
What we've been helping people do on our mentorship program, over the last month or so, is starting to prepare and get ready for this and what action they are going to take to get hold of their landlords.
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