Could fees ban be less dire than once feared? A large-scale franchise agency has stated that its preparation work in anticipation of the tenants fee ban has resulted in a less drastic impact than once feared. Within a trading statement given to the City and shareholders, The Property Franchise Group explained that in the year 2018, the company’s income from management service fees increased by around 14 per cent, to £9.5m. This is an increase from the year 2017, where the income from this source was at £8.3m.

Around 68 per cent of these fees were received from the lettings sector, with services for 55,000 managed properties with tenants. However, in the statement, the firm explained that early signs indicate that 2019 will become another challenging year in the property market, with continuing uncertainty surrounding Brexit, which has the potential to diminish volumes in sales transactions. Due for introduction in England on 1st June 2019, the tenants fee ban was originally expected in April, and although it will lower lettings revenues for the group by around £0.5m for the full year of 2019, the negative impact is less than previously anticipated.

Earlier this month, Belvoir, another franchise operator, suggested in a trading statement that it would also experience a smaller impact from the tenants fee ban than anticipated previously. In their statement released earlier this month, The Property Franchise Group added that other proposed regulatory changes focusing on making the lettings sector more professional should provide the company with circumstances for growth, as independent and smaller agents may find a reduction in revenues alongside expanding regulation increasingly challenging. However, the group explains that they are well-positioned in order to take advantage of any opportunities which could arise by the reduction of competitors and the acquisition of managed property portfolios.

The Property Franchise Group also explained that through its assisted acquisitions programme, it supported franchisees through 28 acquisitions, and increased its managed property portfolio by 3,115 in 2018. The resilience of this network franchise model has proved itself many times over the past five years, the company explains. When combined with an active underlying stream of revenue from the management of let properties, even the benefits of an under-performing market are clear.

In a year which saw the online and hybrid property sector fail to make inroads into the traditional high street agency’s market share, with a number of players in the sector failing or struggling financially, The Property Franchise Group has made good progress with technology such as EweMove, and has grown its profitability. Even in political uncertainty, the company is confident it will continue to outperform the market.

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