Change is on the Horizon by FORCE, but are we ready?
Well it appears that our industry is rather under the spotlight at the moment… not only are we just recovering from the idea of the Tenant Fee Ban, We learnt on April 1st (April fool’s day of all days to announce this) that further regulation is coming for letting agents across the UK, meaning that the sector will be regulated (something we here at ARLA have been campaigning for a long time for) but also this week, we learn that another of our income streams for letting agents is under the spotlight, our referral fees. So where are we at… at some point in the next 12-18 months, we as letting agents will lose the ability to charge tenants for the services they offer, which means they will no longer have to pay any contribution to the applying, setting up or taking of a tenancy, other than rent and deposit, and even how these are charged, will be controlled Regulation that was announced by the government will be in the form of a code of conduct, high level qualification and at least one qualified member in each office, plus Client Money Protection (CMP) Plus, now the Housing Minister, Sajid Javid want to shine a spotlight on the receiving of commission from other professional services, such as solicitors, accountants and mortgage brokers… but what does this mean? The Tenant Fee Ban has already had a major effect on agents across the UK (Scotland had to deal with this in 2012), and most are already reassessing their business models to identify NEW ways to replace that income or cut costs to survive and continue to trade, without having to lose staff, because many recognise that they stand to lose between 10-25% of their current income. But one of the ways they may have looked at doing this was through additional referral fee income The reports that have been released so far, says that it is only that fees have to be “declared”, which should in theory not be a major issue, but I know that for the FS world, it almost stopped the practice of referral fees, and for letting agents, I don’t believe for most, this is a strong income stream, but for Estate Agents, this will be, as financial services are a major part of their business. But overall it shows where the government’s intention is on the sector as a whole, full declaration, complete transparency and the controlling of fees in whatever guys, throughout… so WHAT can we do to get ready… Many Independent agents I have spoken to, run their business day to day and are still fully “on the tools”, which unfortunately means they never get the time to step back and analyse/manage or plan their future strategy, they also quite often are unaware, of exactly how their income is broken down and what are the key numbers in their business. I believe that looking at how the government is analysing our businesses, WE need to be one step ahead… so my tips are as follows:
- Know your Numbers: Firstly, analyse your income and find out exactly WHERE your income comes from and what your expenses are, be fully aware of every element of your business and ask yourself… could this be better, can I improve, and what would be the effect, if I lost this?
- Business Plan: Take a day out of the office with your senior team and PLAN, STEP BACK from your business and say… WHERE is this going, what does it need to look like and what numbers need to change to get there?
- Implement: Relay your plan to the team, let each and every one of them know they numbers THEY need to achieve and how important that is to the business, then meet weekly with the team to keep them on track and have some private strategy time every month to review YOUR strategy and its progress
- Change: our businesses, will probably not be able to continue as they are, we all need to accept that the Status Quo has got to change, so we need to get comfortable with that and that begins with OUR mind-sets as business owners