What we have also had to do, though, is accept that in order to survive, grow and prosper we need to become more efficient and effective at delivering our core proposals, as well as adding additional income streams where we can.
This is similar, in many ways, to the world of lettings. We all know lettings can be hard work, but the upside is steady income. Some letting agents will now be worrying about this income being affected by the impending ban on charging fees to tenants.
Undoubtedly, this is one of the most important issues in the industry as we speak – with anyone who is anyone talking about it and its possible implications. The property reaction to the Autumn Statement was almost entirely based around this one topic, with some taking the glass half-empty approach and others taking a glass half-full one. What everyone agrees upon, however, is the pressing need to replace the lost revenue that this move will unquestionably cause.
For some, this will come in the form of increased rents, with tenants bearing the brunt of the costs as agency fees are shifted from the tenant to the landlord and back to the tenant (multiplied by five). This might happen, it might not, but if it does it is unlikely to be immediate. So, if you’re a letting agent who relies on 10% of your revenue coming from tenants and that revenue disappears overnight, how do you cope in the meantime?
For larger, profit-heavy letting agents, this hit will probably be absorbed. For others, it could prove the final straw.
If you are one of these agents facing an existential threat, what can you do? Well, the first thing is to make efficiencies – in other words, cutting costs.
To do this, you might consider cutting down on print advertising. Many local free papers have gone out of circulation or are desperately clinging on for dear life, so you may have to ask yourself whether it’s necessary to advertise here. Does print advertising have as much relevance in a switched-on, online, heavily digital world? It may be time to move on. To say “thanks, it was great while it lasted”, but to appreciate the way the world is changing and adapt accordingly.
Assuming you’ve made certain efficiencies and cost-cutting measures, what next? Well, one other way of replacing lost income without increasing commissions is to do more deals. This means taking on more property and letting and selling a higher proportion than you do at present.
That’s what I want to help agents to do. We’re all in this together, after all, and we’re eager to create a network of agents – working in tandem – to help the industry as a whole. We are behind agents, championing their cause, looking to aid them.
Pitch alert!
Thinking along these lines, we’ve tried to come up with solutions to help the industry. One of the biggest problems that we’ve come across from speaking to thousands of agents is the struggle to gain more instructions.
We know that attracting – and then converting – traffic from your own website is the modern-day equivalent of alchemy.
Before entering into the world of marketing and PropTech, I earnt my living generating leads in the mortgage market, fintech if you will. Using this knowledge and experience, I decided a few years ago to come up with something to help the very agents who read our publications, to turn my hand to a bit of estate agent lead alchemy (if that doesn’t sound too pretentious!)
What we were eager to tap into was people’s innate need for instant gratification. As a result, we created an instant online valuation tool for sales and lettings that agents could use on their own websites.
The results, if I can do away with modesty for a minute, have been stunning. From a standing start around 15 months ago, we now have over 2,509 offices using our ValPal tool - currently generating over 1,000 valuation leads a day for our members, already more than Zoopla and OTM.
Talking of instant gratification, did you know that most people do an online valuation of their property at around midday? According to our stats, the hours of 12–1pm every day in November were the busiest, generating 1,967 seller and landlord leads for our agents.
So, if you haven't got ValPal on your website, what are you waiting for? We can have you up and running immediately and we’re currently offering some great deals to anyone signing up before Christmas. You can have those leads coming in from as little as £5 a month with no setup fees, less than the cost of a packet of mince pies (and a lot sweeter into the bargain).
Pitch Alert 2!
On a serious note, ValPal is only the start of what we are trying to achieve. We want to provide agents with buyer and tenant leads generated at low cost from your own website and databases.
This new project - which we’re calling Project X - will be rolled out in the new year to ValPal subscribers, forming the basis of a next generation network of agents who we will equip to not just survive the loss of tenant fees but to actually prosper from the changes that are coming. We are working on a series of initiatives in our secret lab, to help all our agents win.
In the past, we have had to evolve, change, adapt and look at ways of turning a crisis into an opportunity. The result has led us to embark on an exciting journey to a big destination. We want you with us and we want to be with you every step of the way!
*Nat Daniels is the Chief Executive Officer of Angels Media, publishers of Estate Agent Today and Letting Agent Today
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The eternal issue with all things property is that they always get discussed on a national scale- which is madness. How can you possibly put an agent working in far flung regions where rents average £400 a month with London agents with average rents around £3000 per month.
The implications are vastly different- do many (if any) have any sympathy for the likes of Foxtons? With fees of 11% Let Only and 17% Fully Managed you have to ask how they could ever justify charging both Landlords AND Tenants £350 + VAT for a contract. Moreover- you have to ask why Landlords, paying the highest fees in the Land, acquiesced to any additional charges.
Whilst the financial impact on this legislation will mean a huge revenue lost for Foxtons is anyone sorry? No- in fact those of us who have always taken a fair approach to fees are actually livid because it is the greed of agents like this that has caused this whole situation.
Yet, turn your attention to a regional lettings agency getting £400-500 for a let and you have to wonder how on Earth they will survive without additional revenues. At that rate, there are no margins, the profits are miniscule and the additional fees and charges essential in simple financial terms.
What I also find odd, however, is how much the various Tenants Rights action groups are hailing this a success. Really? Whilst, yes, in theory (and on the basis that hidden costs do not escalate to offset these charges) you have saved the average Tenant @ £250. Thats it. Is that going to prevent Tenants struggling to make ends meet find security- no. Does it give Tenants the long sought after security of tenancy- no. Does it prevent rent increases (many of which are often more over the year than the fee)-no. Whilst some agents will struggle and some will barely blink (these fees account for around 1.5% of our lettings revenues) the reality is Tenants will think they have won something and they havent.
Should I be at all surprised that, once again, the government has looked to legislate an area of our industry with little or no consultation? Yet another, poorly thought out, knee-jerk reaction that creates good press but nothing else of any good really comes from it and the spotlight is once again turned on our industry vilifying us all for being theifs and charlatans ensuing that we will never escape the dreaded '3 most hated professions' (you would have thought, with politicians in the same group, they might want to work together a bit more).
The ban is the stupidest idea yet; If the tenants don't pay a fee to the agent there is no contract or obligation from the agent to the tenant and conversely there will be nothing to prevent tenants applying for multiple houses at the landlord's expense. As there will be no obligation between to the tenants no doubt agents will continue to advertise the house and if a "better" tenant comes along (i.e bigger income, no pets etc) the agent can jump ship whenever he likes and who can blame him. The tenant can jump ship whenever he likes.... the system is socially floored from day one and will favor the ultra-low risk tenants only if landlords or agents are expected to invest their money in referencing a tenant. Imagine walking into a shop and the shop has to give you money - that is how stupid this idea is. The more people mess with a free market, the more it backfires. If they want to help housing - what about the average £1000 mortgage arrange fee for a £90 valuation! of course that won't get banned because of all the "chums" that run the banks.....
We charge fair low fee's to the tenant and NO 'Check Out Fee' If Tenants do not have to pay a fair fee for the administration of their tenancy application, they have no commitment and inevitably, this will result in us processing a lot of applications at the landlords expense, as someone has to pay for it and then they will pull out. Instead of basing their opinions on Cities throughout the UK, the Government should take into account the thousands of small Towns where tenants are not being charged extortionate fees and a much poorer market.
I personally disagree with the ban for obvious reasons, however having a cap/limit on what agents can charge could be a better solution. Next year only the great agents will survive, anyone not up to standard I feel this will be their last straw.
I am a firm believer that if you focus on what is best for the client and that alone you are already ahead of the majority of the agents, recommendation is a sleeping giant that only a number of agents seem to tap into. Great agents wont be afraid by the Autumn statement, they will adapt and take this is an opportunity. Well said.
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