Fees Ban: another agency says impact will be less than feared

Another major franchise agency says its preparation work ahead of the June 1 tenants fees ban mean the impact of the measure will be less drastic than once feared.

The Property Franchise Group, in a trading statement to shareholders and the City, says that in 2018 its management service fees income increased by 14 per cent to £9.5m from the 2017 figure of £8.3m. 

Some 68 per cent of those fees were from the lettings sector, where it serviced some 55,000 tenanted managed properties.

However, the statement says: “The early signs are that 2019 will be another challenging year for the property market with ongoing Brexit uncertainty having the potential to dampen sales transaction volumes. The tenant fee ban, due for introduction on June 1 in England was previously anticipated in April and whilst it will reduce the group's lettings revenues by circa £0.5m in the full year 2019, this impact will be less than anticipated.”

Last week a trading statement from rival franchise operator Belvoir also suggested it would see less of an impact from the ban than previously anticipated.

The TPFG statement released this week adds that: “Other regulatory changes proposed, aimed at professionalising the lettings sector, should provide the Group with opportunities for growth as smaller, independent agents may find a downturn in revenues and increased regulation more challenging. The group's brands are well-positioned to take advantage of these opportunities which may arise through the acquisition of portfolios of tenanted managed properties, and the reduction in competitors.”

TPFG says its assisted acquisitions programme supported 28 acquisitions by franchisees and added 3,115 managed properties in 2018. 

"The resilience of our franchise network model has proved itself time and time again over the last five years. When you couple that with a strong underlying revenue stream from managing let properties, the benefits in an underperforming property market have been all too clear to see” explains chief executive Ian Wilson.

"In a year when the online/hybrid property sector failed to make any inroads into the market share of traditional high street agency and a number of the sector's players struggled financially or failed, we continued to make good progress with EweMove, and increased its profitability. The secret of our success is the offer, ‘no sale, no fee’, harnessed to the entrepreneurial drive of a local owner.

"Against a backdrop of uncertain political and macro-economic conditions in 2019, we are confident that our assisted acquisitions programme, the ‘thinning out’ of independent agents, our drive into digital marketing and our strong balance sheet will allow us to continue outperforming the market."