Franchise chain Belvoir has said that it believes it can substantially mitigate the impact of the proposed ban on letting agent fees.
It had previously said that a ban would cost it 8% of revenue.
It also strongly suggested that some letting agents will go out of business, leaving their portfolios to be snapped up by franchisees – an activity that Belvoir will support.
In a trading update issued yesterday and covering the whole of last year, Belvoir said: “It is now clear that there is going to be a period of consultation ahead of the ban being introduced in 2018, which will determine whether there will be a complete ban on tenant fees or whether some recharges of specific costs will be permitted, possibly subject to a cap.
“This extended period of consultation will ease the group and its franchisees into the transition and give us time to focus on ways in which to build on other income streams.
“Following the ban on tenant fees in Scotland, our franchisees adapted quickly and effectively such that there was no discernible impact on revenue to either the franchisees or the group.
“Furthermore, the group will be extending financial support to franchisees in order to take advantage of the consolidation opportunities expected following the proposed change in legislation, through portfolio acquisitions.
“Accordingly, the board now believes that the potential impact of up to only 8% on group network revenue as previously announced on 24 November will be substantially mitigated by the actions taken during 2017 in advance of the ban being introduced.”
Belvoir, which acquired the Northwood chain of 86 offices last June, now runs a network of 302 offices.
It said group revenue last year – ie, its the management service fee, and not the turnover of the collective business – was up 44% to £10m, compared with £6.8m in 2015.
Belvoir also reported that the ratio of revenue between lettings and sales now stands at 75% to 25%.
However, recruitment of new franchisees was down last year at seven, compared with 11 the year before.
Yesterday, Belvoir said it had sold four of its ten corporate-owned offices and intends to retain only two “for system development purposes”.
Mike Goddard, Belvoir chairman and CEO, said: “2016 has been another significant year for the Belvoir Group. Our acquisition of Northwood in June has enabled us to grow our lettings portfolio substantially to some 54,000 managed properties and thus become the largest property franchising group in the UK.
“This, combined with a full year of trading for our other two recently acquired brands, Newton Fallowell and Goodchilds, and continuing organic and local acquisition growth, has resulted in us growing our underlying management service fee by more than 100% in two years.
“We see many more opportunities for consolidation and the Belvoir Group is in prime position at both local and national level to take advantage, despite the challenging times for the industry.”