I am sure many of you have read the myriad of negative views about the challenges that face our industry.
However, I see opportunity.
For years, many of us have campaigned to have the industry regulated and finally it seems this will actually happen.
As a founding member of SAFEagent’s campaign for compulsory Client Money Protection, I am delighted that the Government has listened and this is now on its way.
Even the much maligned tenant fee ban brings with it positives.
Yet all I read is a negative outlook of near Armageddon for our industry.
I see things differently. I think regulation will start to level the playing field and prevent some of the sharp practices which disadvantage professional, compliant agents.
The tenant fee ban is a blunt instrument, but we will have to live with it. It will mean that those agents who undercut commissions to landlords to generate instructions and instead milk as much cash out of tenants as possible to subsidise income will have to compete on different terms.
I am fed up hearing about good agents who have lost business to another as a result of a 5% full management deal or lower which will no longer be sustainable. Currently, many of those on a race to the bottom are not burdened by the costs of voluntary regulation, training and compliance.
The way some tenants are treated reminds me of the song ‘Master of the House’ from Les Miserables: ‘Here a little slice, there a little cut, Three percent for sleeping with the window shut…’
The big corporates for once aren’t immune from change. They have milked every income stream out there. Where will they turn?
Many of their offices make very marginal profits and I can foresee them consolidating their own branches into larger ‘hubs’. Join this with the internet ‘call centre’ businesses covering huge territories, and local branches will become less prevalent and more valued where service will be king.
I also despair reading that rents and deposits will rise by eye watering percentages over the next five years. Well, in context, the latest inflation rate is 3.1%. Over five years with compound interest they would rise 16% anyway.
Deduct that from predictions and they don’t look like the sensational headlines they purport to be. Prices rise: if they don’t, everyone moans and predicts a crash.
As part of our own acquisitions drive at Northwood, we have looked at more businesses than I imagined. We have this week completed on our 11th acquisition since June and have more in the pipeline. Our appetite is growing, as are enquiries, and we see this trend continuing. Ironically this may be the antithesis of the Government’s belief that its plans would increase competition, as we warned.
Next year, should be treated as a trial run before legislation bites rather than an opportunity to milk every penny before it does. Trade as if tenant fees are already history: put them to one side and use them as a contingency fund when they are.
Growing demand in the private rented sector is such that landlords will have tenants and will still enjoy capital growth long term.
Even the most modest price increases outstrip miserly interest rates on savings and offer inflation-proof security which pension funds may not.
Yes, there are issues, and landlords may well be worse off: however, buy-to-let is still a great long-term investment.
The biggest threat to your businesses is doing nothing.
Change is inevitable and those agents who have taken stock and planned for the new order will be just fine. For those unconvinced, our acquisition team (and ours will certainly not be the only one) awaits your call…
* Eric Walker is managing director of Northwood, part of Belvoir
An insightful and professional view. Our sector needs to be recognised as reliable and professional to give our existing and future landlords the confidence to invest their capital and our existing and future tenants the service they deserve. Once we are in this place perhaps the government will see our sector as an area to support and aim legislation at growth.
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Good article. Thank you.
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Well Said Eric.
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On the nail as usual Eric.
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Very good article Eric
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Anyone in a senior position within the industry – branch manager, owner, director – with a negative outlook, should be writing their notice. Positivity is crucial in any sales role, its as simple as that, especially if you are meant to be leading others.
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Great article
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Finally an optimistic view on what lays ahead. Well said.
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I personally agree in places but others not so much. I agree with the race to the bottom comment. However how many landlords will pay the tenants share of the referencing when they ban tenant fees? They will either become DIY landlords or with the increase in level taxation just sell up their properties and the housing crisis will become far far worse. With all that at least one third of the landlords will consider dropping their agent, this is not good for anyone. Regulation is something that should’ve been put in force years ago and we wouldn’t even need to consider a tenant fee ban because the QUALITY agents out would continue to provide the excellent service that they are charging for.
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