To what extent is the success of your estate agency within your control?
The estate agency market is changing, possibly faster than ever before. It's a perfect storm, increased legislation and taxation, a slow market and heightened competition. Is your business at the mercy of the waves, or can you plot your course to sunny profitable horizons?
I believe that well run agencies, adaptive future focused agencies will be able to expand their business by buying their competitors who have not adapted to new market conditions. I'd like to explore some of the changes I see in the market over a series of articles. Starting with a quick overview of some of the legislation changes.
Increased Regulation & Taxation in Estate Agency
- Updated in June 2017. There have been an increase in Money Laundering regulations, from HMRC. Money Laundering Regulations 2017: supervision of estate agency businesses.
- Increase in stamp duty. Stamp Duty receipts hit record highs of £8.5bn in England and Wales during 2016, receipts in the capital were up just 1% while transactions fell 17% in the city. Source London Central Portfolio.
Tax changes and New Regulations in Lettings
- Landlords will no longer be able to claim tax reduction on mortgage interest rates, this may reduce the number of landlords in the market, and cause a reduction in lettings agents business. Changes to tax relief for residential landlords.
- Letting agents must conduct Right to Rent checks.
- Letting agents will become regulated, as recently accounted by Communities Secretary Sajid Javid.
- Deposits will be capped.
- Tenant fees will be banned.
Some agents are concerned over increased 'red tape'. The bottomline many agents will be hurt by increased compliance and reduced revenues. It is very likely that inefficient and poorly run agents will be removed from the market by these changes. This posses a threat for estate agents not focused on change, and a significant opportunity for estate agents focused on acquisition and growth. Places to get further information: NALS, ARLA, UKALA.