The market is dead, long live the market

Listening to all the coverage of the tenant fee ban, all I hear is consumer groups talking about how some agents charge tenants extortionate, unjustifiable fees. 

Journalists ask questions about how these unjustifiable fees can be justified and self-righteous politicians revel in their self-righteousness. 

However, amid all this mutual moral backslapping, I have questions that keep nagging at me and refuse to go away.

Why, I ask myself, has no one asked why these tenant fees have to be banned altogether? Isn't this going from the sublime to the ridiculous? 

How can punishing the great majority of fair-minded agents because of the poor behaviour of the few be justified? I understood the concept of imposing limits and guidelines but banning agents from charging tenants completely, well this smacks of something else altogether. 

Let's be honest, estate agents aren't exactly the most popular people and they do not garner the respect or sympathy of the common man. Few will mourn their passing or defend their rights, especially when there are votes to be had by demonising them. 

Demonising the estate agent demonising the landlord - two groups of staunchly conservative voters have been demonised because there are less of them than there are tenants. 

The government is in a tough spot. Let's face it, they aren't exactly over-endowed with character, charisma and enthusiasm, are they? Mr Hammond is a number cruncher, they call him ‘Mr Spreadsheet. He may have got a First in Economics, but he failed the optimism test that's for sure. 

His dystopian view of the reported £60 billion cost of Brexit is likely to create a self-fulfilling prophesy of doom. His offer of austerity without end has to be sweetened by something, there has to be a scapegoat, a group of people who can be vilified and punished in the name of the new inclusive society new conservatism is supposedly all about.

Where a leader knows where they are going and is able to inspire their followers with positive belief, the followers will follow the leader anywhere - into battle, into the teeth of the storm, they won't question and they will endure whatever hardships may come in the knowledge that what has to be done has to be done. 

However, where you have the wrong person in charge, no matter how clever they are, if they can't lead then no one wants to follow and that type of non-leader needs a scapegoat and we my friends are it. So, if you feel like a pariah, get used to it - because that's what you are now.

I have already read what some agents have been saying, how they agree with the idea that tenants should be protected from overcharging cowboys - not them of course - the others who have spoilt it for everyone. 

This attempt at being reasonable won't work, it simply reinforces the validity of these non-valid politically motivated measures. 

The politicians aren't interested in good agents, they don't care about our livelihoods of the livelihoods of our staff. All they care about is votes, getting re-elected and pandering to the biggest constituency.

Another example of the distorted view being peddled is the reference to some letting agents that earn 30% profits. If there are agents out there earning a 30% profit they are very exceptional. What about the average agent who doesn't earn a fraction of that or the thousands who go bust because they can't turn any profit in an open and free market which for some years has provided intense competition? 

I have already written about the deeper agenda that is going on here, about the desire of government to have fewer larger landlords to regulate. By the way, fewer larger landlords will need fewer larger agents, that's why they have penalised the small individual landlord, leaving the way clear for the rise of the corporate mega landlord who will be encouraged and rewarded by subsidies and tax breaks. 

However, I think there may be another principle emerging here - the Pareto Principle, otherwise known as the 80/20 rule. It seems to me the market is being capped at 20% private rental, 80% everything else. It's ironic that the PRS has grown from 2% to 20% without needing any interference, but suddenly it has to be interfered with and this interference will ruin it.

Rant over for the moment, I will retire to consider Donald Trump, Nigel Farage, the fact that all that glitters is not gold and every cloud has a silver lining. 

The silver lining will be the way we adapt to this change. We won't stop it, remember, we are all pariah's now but we can benefit from it if we are smart. Now that would be a turn up, turning adversity into advantage. We estate agents are a hardy breed, it will take more than the political equivalent of the Ebola virus to keep us down. 

The market is dead, long live the market.

*Simon Shinerock is Chairman of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.