The Property Franchise Group has issued an upbeat trading statement indicating that it’s mitigated much of the financial impact of the fees ban by hiking charges to landlords.
Bournemouth-based TPFG has six agency brands - national lettings service Martin & Co, west country agency CJ Hole, London operation Ellis & Co, plus Whitegates serving the Midlands and north of England and Parkers operating along the M4 corridor; there is also Ewemove, the online agency which has some physical offices too.
“Our franchisees reported lettings income of £5.96m. Significantly, this was achieved despite the loss of tenant fee income, following the ban on charging tenant fees having come into effect in England & Wales on 1 June 2019. Tenant fees had previously represented 16 per cent of our franchisees' lettings revenue in these jurisdictions” reads the statement.
The the individual branches managed to mitigate the financial impact of the ban “is a clear demonstration of the benefits of the franchise business model.”
Instead, the recurring monthly fees charged to landlords for property management services has increased 10 per cent year on year from £3.88m in October 2018 to £4.28m in October 2019.
“The group believes it is the high level of satisfaction of its landlord clients that lies behind its better than expected progress in shifting the burden of cost from tenants to landlords, as clients of its franchisees would rather retain their services than do it themselves or instruct another agent” says TPFG.
The company says the effects of the ban will now be fully mitigated by June 2020 - six months ahead of schedule.
“Our ability to draw on our wealth of industry experience and act quickly to support our franchisee members provides us with a clear advantage in the market. At a challenging time for the industry, where many independent lettings agencies are considering leaving the sector, our group continues to show its strength” explains Ian Wilson, chief executive officer.
“The sales market has softened further in the second half, however our lettings business is outperforming our budgeted expectations. Our franchise business model has proven to be remarkably resilient in these testing conditions and we expect this to continue."