“The Tenant Fee Ban is going to cost my business in excess of £3,500 per month,” says Tom Kavanagh of Goodlord customer Bloore, King & Kavanagh, a sales and lettings agency in Halesowen, West Midlands. “That’s a lot of money - in the Midlands, that’s two members of staff,” says Tom. “It’s not a small thing.”
Tom thinks agents need to start taking action now, rather than six months down the track when the bill comes into effect, to replace the lost income, looking at both where they can cut costs, as well as generate more revenue.
Tom has also taken the significant step of merging his lettings-only agency, Kavanagh & Co, with another local agency (and fellow Goodlord customer), Bloore & King, which he believes will put both agencies in a better place ahead of the ban. “Lettings-wise, we’ve got about a 45% market share in the town that we’re in, in sales we’ve got about a 10-15% market share - that will improve because we’ll be selling our landlords’ properties when they want to sell them.”
The two agencies decided to merge because Tom felt he was missing out on a potential revenue stream. “I’d received countless telephone calls from landlords wanting to sell because of legislation, tax, and so on, and when that happened, I couldn’t sell their properties - I was gifting them to estate agents and getting pennies for the referral,” says Tom. “Now it means when landlords do want to sell, we’ve got something to offer them.”
Another benefit of merging the two agencies has been reducing their overheads, so the agency can focus instead on “maximising our income streams”, says Tom. One way they’re doing this is by offering additional products to their landlords, such as rent protection insurance, landlords building insurance, home emergency cover and mortgages and other financial services, as well as charging an additional fee for services such as attending court on behalf of a landlord rather than including it within their standard management fees.
Despite the predicted impact of the tenant fee ban, which will cost agencies up to 22% of their revenue, Tom believes increasing regulation will also provide quality agencies with opportunities. “Client money protection will be mandatory, having a qualified person within the business will be mandatory,” says Tom. “That will wipe out some of the unscrupulous cowboys, which means there’s opportunities.”
“There is going to be lots of letting agents who fall by the wayside, so if we can capture those landlords and bring them into a good world, we’ll all make money - and those landlords will be in a better place,” says Tom. “So I think we need to look at it positively - there will be opportunities and we need to make the most of it.”