The UK’s largest property franchise business, Belvoir Lettings, says it beat its own ambitious target for its franchisees’ Assisted Acquisitions programme in 2018 - but that this is a sign that the number of agents in the business is reducing.
Under the programme, in 2018 the group contributed £660,000 in loans to its franchisees’ acquisitions - this was approximately nine per cent of the total - while 17 of the deals were funded entirely by franchisees utilising their own cash reserves or sourcing funds from other loan providers.
"Since 2014 we have provided both commercial and financial support to 70 of our franchise owners, many of whom have doubled the size of their business overnight” explains Dorian Gonsalves, Belvoir’s chief executive.
“We continue to witness consolidation within the sector, a trend which supports our 2018 prediction that there will be 20 per cent fewer agents by the end of 2020. This is evidenced by our acquisition opportunities pipeline being far greater than in previous years” he continues.
“Our franchisees are professionally and financially equipped to take advantage of these opportunities and we currently have 83 franchise owners who are actively searching for a suitable match within their territory.”
During the year Belvoir franchisees completed on 26 transactions under the programme, increasing the acquired network revenue to £6.9m over the year - ahead of its own £6.6m target.
These acquisitions add some £600,000 of recurring fees - the group’s main income - and add over 4,400 managed properties, increasing the portfolio by 7.0 per cent and taking the Belvoir Group's managed properties total to over 62,000.
In a note to shareholders, Belvoir says the Assisted Acquisitions programme has been embraced by all three brands within the Belvoir Group with 11 taken up by the Belvoir network, 13 by Northwood and two by Newton Fallowell.
In comparison with 2017, the average size of the business acquired increased by 85% from £144,000 annual revenue in 2017 to £266,000 in 2018.
“This reflects a contraction of the number of agents in the sector not only amongst the smaller but also many of the larger independent agents, as the impact of the number of landlords selling their properties due to a less favourable tax regime and the increased regulation on lettings agents takes effect” explains Belvoir.