The Intermediary – June 2025 - Flipbook - Page 36
BUY-TO-LET
Opinion
Could letting agents
be as valuable as
estate agents?
W
ith the Renters’
Rights Bill
expected to
come into force
in England
later this year,
many tenants and tenants’ rights
groups have welcomed the increased
security renters will enjoy in future.
However, landlord groups warn this
will come at a price, namely further
rent rises and an increase in tenants
being issued with County Court
Judgements (CCJs). This is because
the new legislation will mean a more
complicated and lengthy court-based
process is needed to evict tenants who
stop paying their rent.
While this lengthy process may
provide additional breathing space to
tenants who fall on hard times, any
rent that isn’t paid will still be owed
and can be claimed via the eviction
process. It can easily take a year for
a tenant to be evicted via the court
process, meaning a lot of debt could
accumulate and landlords will be
more inclined to pursue this.
A common reason tenants get into
arrears is because they become ill
or injured and are unable to work.
Workplace sick leave entitlement,
Statutory Sick Pay (SSP) and benefits
oen come nowhere close to covering
the high price of today’s rents.
Unfortunately, renters are far less
likely than homeowners to have
income protection (IP) – research
from Royal London revealed that
while 20% of homeowners had IP, the
percentage fell to 6% among renters.
The missing link
A key reason is that most renters lack
connections to professionals who
would recommend it to them. IP isn’t
something consumers usually seek
out, but rather something sold to them
36
The Intermediary | June 2025
by advisers. Homeowners oen take
out IP when securing a mortgage,
typically on the recommendation of
the mortgage adviser, to ensure they
can continue covering repayments.
Advisers have long established links
with estate agents, with mortgages
being the obvious product needed by
their buyers. I’d like to see similar
referral systems set up between leing
agents, tenants and financial advisers.
This could go a long way to ensuring
that tenants are adequately protected
from the risk of being unexpectedly
unable to work and therefore falling
behind on their rent and potentially
losing their home.
According to the English Housing
Survey (EHS), 35% of households
are now renting, and their financial
commitments are likely to be just as
high, if not higher, than those who
own property. In fact, research from
Zoopla earlier this year suggested it
was cheaper to own a property as a
first-time buyer than rent in most
areas across the UK.
All signs point to the idea that
renters need IP just as much, if not
more, than homeowners. This is
particularly true given that the average
age of a first-time buyer in England
has now risen to 34, according to
Government data, with many renting
for longer than in the past.
Leing agents have, for a long time,
either directly sold landlords or given
referrals for rent guarantee insurance,
which covers lost rent and legal costs
if a tenant stops paying. All evidence
points to the fact they’ve ramped
up efforts on this front to protect
landlords as the new legislation looms.
With this in mind, shouldn’t
they also be preparing tenants by
suggesting IP? There’s no reason this
couldn’t be as mutually beneficial
for agents as referral agreements
CAROLINE PAYNE
is acting head of sales at
Shepherds Friendly
for insurance or mortgages. Beyond
commissions, leing agents would
benefit in other ways, most obviously
by keeping landlord clients happy.
If a tenant becomes ill and has IP,
they are more likely to keep up with
rental payments and less likely to
lead to the aforementioned lengthy
eviction proceedings.
Addressing supply
It’s also possible that income
protection could benefit both
landlords and tenants by helping
facilitate tenancies in the first place.
One of the expected consequences
of the Renters’ Rights Bill is a further
tightening of supply in a rental
market where there is already fierce
competition among renters for
properties. Over the past few years,
we’ve seen a number of companies
spring up offering tenants services
to help them stand out from other
applicants. Firms that reference
tenants in advance of applying and
provide ‘rent passports’, as well as
companies providing paid guarantors,
are just two examples.
In a similar way, it’s possible
that a tenant showing a potential
landlord that they have taken out
cover to protect themself if they are
unexpectedly off work could sway
things in their favour.
Income protection may not be
suitable for all renters, but it seems
fair to assume it would be beneficial
for a significant number. I believe
leing agents could play a vital role in
connecting renters with advisers who
can help them assess its suitability for
their circumstances. ●
