Another local, independent Derby agent has been snapped up by a large, London based property group.
The Leaders Romans Group have acquired the rental portfolio of MBM Property based on Friar Gate in Derby.
This is becoming an all too familiar trend now. So, are the local independent agents doing the right thing by selling up to the large property groups, especially with the imminent tenant fee ban looming?
Or should the smaller independent agent stick to their guns and continue to take on their larger competitors?
Only time will tell…
As an independent agent myself, I believe that we offer a more personal service than the larger property groups. As a landlord, if you think the same, then your choice in Derby is becoming rather limited!
One of the frustrations that a landlord has is that he/she has made a decision in the past to choose an independent agent to look after their property, only to find that an acquisition takes place and the landlord is then with a larger property group.
The landlord then has two options; stay and go with it, or move back to the smaller, independent model….
Professional Properties is extremely pleased to announce that we have acquired Cedar House, at 35 Ashbourne Road, Derby to be our new Head Office.
This historic building has been home to other property related businesses including residential developers Birch Homes and Miller Homes. Cedar House was originally home to Andrew Handyside, owner of famed Derby iron founders Andrew Handyside and Co, which constructed Friar Gate Bridge for the Great Northern Railway.
As an innovative and forward thinking agent, we have taken the decision to amalgamate our offices into one, large head office complete with ample parking for staff and customers.
The decision has been taken after numerous consultations and two key developments within our industry;
The Imminent Tenant Fee Ban
As you may be aware, the Government announced in the 2016 Autumn Statement their intention to ban all fees that agents and landlords charge to tenants before and during a tenancy. This was again confirmed in the Queens Speech on 21st June 2017.
Whilst the details of this ban and the timescales involved are still unclear, this ban will come into force at some point in the near future.
It is estimated that when this ban does come into force, letting agents will lose between 15% and 20% of their income. Unless this income is recouped in other ways, many agents will go out of business.
To make up this deficit, everything an agent can do will fall into three categories:
Cut Costs: To make up the income deficit, agents will inevitably cut costs. The obvious cut is staff. Staff are the biggest cost an agent has and, therefore, the easiest to do. However, assuming that staffing levels are correct at the present time, a cut will surely lead to a diminished service.
More Business: Another way of bridging the income deficit is to get more business or develop additional income streams. If this is really an option, why isn’t the agent doing this anyway?
Pass Tenant Fees onto Landlords: This is the easy option. The feeling within the lettings industry, and from our own research, is that the majority of agents will go down this route as their primary source of replacing the lost income.
Many industry experts think that rents will increase in the medium to long term to compensate for landlords increased fees.
By relocating to Cedar House and amalgamating our three current offices, we make a significant saving on our premises costs as well as scale such as photocopiers, telephone systems, parking costs, etc.,
Our aim is to bridge the reduction in income that the tenant fee ban will inevitably cause without a blanket increase in fees to landlords, something that a lot of agents are expected to do.
Trends and Technology
Traditionally, the property market has been driven by high street agents who conventionally advertise properties in their windows and prospective customers are required to visit their office to sign tenancy agreements and numerous other pieces of documentation. However, new technology has changed the face of the industry and certainly streamlining the process for tenants and buyers.
Over 85% of property searches now start online. The online property portals make it easier for tenants to search for available properties and footfall into our high street offices is now minimal. Only 2% of our total number of let properties in the last 12 months came from an initial office visit.
We have also introduced electronic signatures into our business thus allowing the signing of tenancy agreements and other documentation to be done remotely on smartphones, tablets and computers. Recent court rulings have confirmed that this form of signature is completely legally binding. This removes the requirement for tenants and landlords to visit our office, should they wish to sign digitally.
However, one thing technology cannot replace is experienced staff who know the letting industry inside out, as well as having unrivalled local knowledge in the areas in which we operate. This new technology has allowed us to reallocate some of our clerical and administration staff to more customer facing roles thus improving our service for both landlords and tenants.
Having all our staff in the same building also improves internal communications, efficiency and productivity thus enhancing our service.
We feel that this is the right time for us to make this move. The technology is there to remove all geographical barriers for us to continue to provide an unrivalled service and we are confident that we will have the ideal structure to enable us to operate in a fast moving property environment.
We currently have 8 full time members of staff out on the road conducting viewings, preparing inventories, moving tenants in and out and carrying out regular periodic inspections and we have no plans to reduce this number as a result of the ban.
We now have the space and facilities to hold events that we could not hold previously. We plan to hold regular landlord workshops with guest speakers discussing relevant topics within the industry. We also plan to have clinics where landlords and tenants who are not customers of ours can drop in to discuss with trained, experienced staff, any lettings issues they are having.
We feel that the enhancements we can make to our processes and service will attract more business from both new landlords and landlords currently with agents whose answer to the ban will be to increase fees to landlords.
Corporate agents usually tend to avoid cutting costs; they tend to increase fees instead!
Whilst Cedar House has retained its original character, extensive modernisation of the internal specification means that it is able to meet the demands of the 21st century property market so I would urge you to visit us and have a look for yourself.
One last thing…. the MBM landlord who called us when he was contacted about the Leaders acquisition is now happily back with a local, independent agent!