Belvoir is expecting its landlords to be agreeable to sharing about half the costs of setting up a tenancy after the fees ban.
The business, which reported record results yesterday, believes its franchisees will be able to make up the rest of the missing revenue in the second half of this year.
Tenants’ fees currently contribute an average of 10% to franchisees’ incomes.
CEO Dorian Gonsalves said that in the post-fees world, their letting agents will only survive and thrive “if they do a mix of increasing rents; introducing new income streams; and sharing costs with landlords”.
The acquisition of a financial services business, MAB Glos, has already introduced one new income stream for franchisees.
Despite its name the business operates nationally, with a network of 87 advisers.
Belvoir franchisees will also continue to expand by buying up businesses local to them. Last year there were 23 assisted acquisitions, adding over £6.9m revenue.
The franchisees show great appetite for growth, with 81 registered on the assisted acquisitions programme, and some 24 opportunities under consideration at the start of this year.
Although Belvoir has diversified into sales, lettings supplies 71% of Belvoir’s gross profit; sales contributes 18% and financial services 11%.
Sales commissions have also been raised, now earning an average of £1,800.
Gonsalves said: “Sales will increase as our franchisees get better and better at it.”
He told EYE that there are no plans to launch an upfront-payment online agency offering.
There are also currently no plans to replace Belvoir managing director Eric Walker, but this will be reviewed in the middle of the year.
Gonsalves said that January and February had got this year off to an encouraging start.
Yesterday, Belvoir announced the 22nd consecutive year of profits growth. Will Belvoir be able to report a 23rd?
Gonsalves said: “I certainly hope so.” And yes, he sounded genuinely optimistic.
Yesterday shares in Belvoir, which now has 365 offices across four brands, finished 2% up, at about 103p.
Its a wake up call for those big agents who have been fleecing the market for years, reliant on the onerous fees to keep going. Now they will have to do the job properly!
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“Landlords will ‘share about half the costs of setting up tenancies’ after the ban”
Possibly true but what is certain is that tenants will pay the entire cost in the form of increased rents, increases which will be in addition to the section 24 increases and the SDLT increases. My rents have already increased by 20% in the last few years to cover increased costs and there is no shortage of tenants.
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Heather Wheeler is starting to say she may be able to smell the coffee but all the Govt’s measures that have had an impact on rents are not easily undone. Meanwhile, its the very Tenants the Govt postulate to help that are actually suffering.
Hellooo Mrs Wheeler
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