The number of agencies will ‘undoubtedly’ fall because of legislative changes and the tenant fees ban.
The forecast has come from Belvoir boss Dorian Gonsalves, who says his own franchising firm is on a buying spree of independents wanting to exit the industry.
He said that Belvoir has already completed on ten acquisitions this year and has “more many acquisitions in the pipeline, with several close to completion”.
Gonsalves said that the acquisitions so far made this year have added almost 3,000 properties to the network and over £3m of additional turnover.
He said: “The number of properties that has been added to the network so far this year is already greater than the total number of properties added during the whole of 2017.
“There are 13m people renting properties in the UK, with 4.5m households, and the sector continues to grow.
“I have already forecast that there will be continued growth over the next five years, and at the same time the number of letting and estate agencies will undoubtedly fall, partially because of changes in legislation, plus the tenant fee ban that is on the horizon for 2019.
“We estimate that there are about 10,000 independent agencies across the UK, and Belvoir has developed a ready-made exit strategy for any agent who may find themselves struggling, or who simply decides that the time is right for them to sell.
“Our innovative Assisted Acquisition Programme and our dedicated acquisition team enables Belvoir franchisees to buy up these businesses, integrate them into their own business, and then go on to look for the next opportunity.
“We are very confident that the second half of the year will be extremely successful, and that 2018 will be another record year for Belvoir, and for our franchisees.”
Belvoir’s biggest acquisition to date was of Northwood, two years ago, on June 7, 2016.
The purchase price was up to £22m, with £11.5m paid upfront.
The balance – the two-year earn-out payment – must be due shortly, according to the Stock Market announcement made at the time. It could potentially be £10.5m.
As EYE reported this week, Belvoir has agreed a new financing deal with HSBC, worth up to £17m.
Comments (9)
Some services like Inventories protect both parties, so rather than charge both, consider it that the cost is split. This is how stupid the ban thinking is; it’s not the split or perceived double charge, its the amount – if it were £20 nobody would care.
If they cap fees for say a change of tenant to £50+ VAT, what do you all seriously think the answer will be if a tenant wants to change?
We often spend 20 minutes just discussing the procedure with both tenants! It’s rarely just a case of print off a new piece of paper is it. So one tenant wants to leave and get replaced by another…the landlord won’t pay for a new reference so who will? £50 less corp tax and costs…?. if you value your work at that much I fee sorry for you.
The whole ban thing to help the housing market is a complete dumb con waiting to backfire (just as I said the assault on landlords will – and now is); yet meanwhile a mortgage company can charge what they like as an app fee for a first time buyer loan?……..whats the difference? oh yeah, MP’s fathers own banks, not letting agencies.
I haven’t met a single person who says that lettings agents do not do work that pertains to a tenant and that the agent should do “work” for free. The argument by the champions for tenants is that the tenant shouldn’t pay. Strange as these same people including the tenants insist they get paid for doing “work”. It is a lame duck to argue that its the responsibility of the landlord as the ban may even include defaults by the tenant. A cap should be the answer with all defaults liable to the tenant with an adjudicator overseeing, just as there is with deposits.
A simple solution is to make it a criminal offence for tenats to provide false references (fraud), breach of tenancy agreement, criminal damage and rent arreas. But then the courts would be unable to cope, so let the agents do it instead for free.
Agents need to be brave enough to ask the landlord what they are worth. If they can’t they need to go.
If references need to be done or inventories these should be capped NOT admin fees.
Everyday there is a piece from one of “the big boys” such as Belvoir, Martin & co etc telling us independents that if we do not surrender to them we will cease to exist soon. Well, I am having the best year I have ever had, flooded with new landlords ( some fleeing agents who have been take over as the service level has fallen off a cliff and the price has gone through the roof.). I do not think it is the independents who should be worried, I believe it should be the big boys who should be very nervous. I own the building I am in, I am not paying franchise fees or having to make X because I have shareholders to appease. I will not have rates forced on me next year so that there is parity amongst branches, I will simply wait to see what everyone else charges come the tenant fee ban and then price below that. My service levels will remain the same or better due to my low cost base. Being small and local gives me a distinct advantage as well as landlords like working with a truly local supplier. I believe the tenant fee ban is proving to be an opportunity for a small independent letting agent like ourselves. I do not need to wait and see what happens with the fee ban, I just need to wait for the fallout from the big boys and be there to pick up the business they lose from higher prices and lower services.
This.
What you write rings true Stokeagent51.
Our clients come to us because we are a small independent family firm with local knowledge. In their eyes small is good.
I couldn’t agree more. The small agent can weather the storm, even be prepared to do stuff for free as if the ban takes effect. It is the big boys that have the massive overheads as staff salary is the main concern, which will be impacted by a ban making a massive hole in their budgets. They will need to loose staff resulting in reduced level of service or increase workload onto others. There are only so many hours in the day and maximum working hours is looming on the horizon with Corbyn. Relying on increase of sales is risky with the current price cut war with on-line disruptors. History has shown that some of the big boys have had to borrow to stay afloat, while the little person just has only to stick to a viable business plan, as history has shown for decades. There certainly is going to be trouble ahead and it is not the big boys that are best placed.
Completely agree, letting agents will be forced to add sales or do more sales business. Without the heritage they will follow the lower pricing models in the main.
This combined with less transactions overall in sales and in general lower fees while having overheads increase is going to be the perfect storm.
I recon 20-30% of branches will close..
Some of the closures will take it hybrid and work from home. Some will simply get into trouble with HMRC etc and close for good.
I agree with the ban.
You should only be able to charge one party.
I believe about 30% of letting agents will close. These agents will try and turn Into Hybrid agents and cause more issues for the property industry by Low Fees No Service.