The Lettings Market is Shifting: Efficiency is Key for Agents to Stay Ahead

This week’s DPS report highlighted a major shift in the lettings market: the number of new tenancies has dropped to an eight-year low. Combine this with longer tenancy durations—now averaging 2.5 years—and the financial model for many letting agents is under increasing strain.

Agents typically rely on regular tenancy renewals to generate fees that cover fixed costs and supplement sales income during quieter periods. But with fewer new lets and longer tenancy cycles, it now takes significantly longer to fully earn fees from a portfolio. At the same time, annual sales transaction volumes continue their slow 2% decline, meaning the overall fee pool is shrinking.

The shift from Assured Shorthold Tenancies (ASTs) to Assured Tenancies, alongside the abolition of Section 21, is further reinforcing this trend. With reduced churn, agents who aren’t optimising their operations will feel a growing squeeze on revenue.

This is why I see LettsPay’s open banking adoption as more than just a tech upgrade—it’s an essential cost-saving measure. By automating rent collection and reconciliation, LettsPay is cutting admin, improving cash flow, and enabling agents to operate more efficiently at a time when margins are tightening.

Efficiency is no longer optional—it’s the key to staying ahead in a market where income is stretching over longer periods.

Matthew Gibbard - Commercial Director