After compiling the accounts for our financial year 2017/2018, I was keen to analyse the proportion of our total income amassed from tenant fees, considering the forthcoming ban which comes into place in June this year.
I totally understand why this ban has been campaigned for and later passed by parliament. Moving is expensive enough and often tenants represent some of the most financially vulnerable and insecure in society. There is no doubt that agents have exploited their needs and desperation for housing in the past by charging fees that are unreasonably high, At Polecat we have always kept our fees as low as possible. All our fees can be seen here.
As a business we have been frustrated with agents for overcharging and prompting the ban. It’s important for people to realise that for us any tenant charges are not 100% gross profit, as we outsource to a company whom carry out the referencing. These are quantifiable service costs but there are also labour costs for administration and communication between all parties involved, some cases take more hours than others depending on the individual case.
At Polecat we have always thought that a cap on fees would be the most practical solution, however the reality is a complete ban. As a business we now need to evaluate how we compensate for losing 6% of our annual revenue. The immediate thought would be to transfer the fee to the landlord, however we would not want to risk alienating landlords whom are crucial to our ongoing business, so not really a viable option.
We do not want to compromise our levels of service so realistically the business will have to cover the costs of the referencing. We could look at using a cheaper referencing company, however like everything; you get what you pay for and the service we use is excellent and very thorough. Foregoing this might result in a decline in our level of service, something we are not prepared to have happen.
The only other option available to us is to find other sources on income. We are constantly thinking of new ways to drum up business, however in an increasingly challenging market, relying on sales and lettings alone might be a precarious approach. It is well documented that the sales market could collapse at any time amid the current political and economic uncertainty. With this in mind, we have set up a sister inventory company, The Bexhill Inventory Company. This has not only allowed us to bring a cost inhouse rather than outsourcing, but also allows us to increase revenue by offering our inventory services to landlords, not necessarily affiliated with the business, and other agencies. We are all fully qualified inventory clerks and members of APIP (association of professional inventory providers) and offer an excellent and comprehensive service. Full details of which can be found The Bexhill Inventory Company Website