Countrywide’s executive chairman and group managing director have spoken to Estate Agent Today about the impact of Brexit on the company, but with reassuring claims over how they will manage the Tenants Fees ban and possible referral fees restrictions.
Peter Long and Paul Creffield this morning released their company’s 2018 figures - profits halved to £32.6m but with the Back To Basics recovery programme producing improving performance in terms of market share and recruitment.
However, in a follow-up interview with EAT editor Graham Norwood, the company's senior figures warn that Brexit remains an outstanding problem which threatens the stability of the housing market for the first half of this year at least. “It’s a major headwind for the company and the housing market. People have a reluctance to put their home on the market and a reluctance to trade up. It’s a case of wait and see, they say, and this is particularly the case in London and the south east of England” according to Peter Long.
“What we need is clarity on Brexit, when it happens and what it means. It’s undoubtedly the case that there will be a reduction in income in the first half of 2019 because of this uncertainty - we’ve put it at £3m to £5m - and to be honest we don’t know if we’ll make that up in the second half or beyond” he cautions.
Long told EAT that he had seen the actions of LSL, Foxtons and others in terms of cutting branch networks as a way of preparing for such headwinds - but he says that no decisions on branch changes have yet been made by Countrywide.
“Of course we’re looking at estates but we’re not going to be thrown off course. The Back To Basics recovery programme is three years or so and we’re only one year through that” he adds.
Long says that Countrywide’s commercial arm, Lambert Smith Hampton, is also suffering from Brexit uncertainty, in line with the wider commercial property sector.
But while political and economic volatility is hurting Countrywide and the rest of the industry at the moment, the company says it is much better prepared to counter other headwinds facing it in 2019 - specifically the Letting Fees ban and, possibly, restrictions on referral fees as part of the government’s reforms of the house buying processes.
Countrywide warns the Tenants Fees ban may cost it as much as £9m in revenue this year but it expects this to be mitigated by year end. "We have eight to 10 initiatives in place to mitigate the Tenant Fees ban” explains Paul Creffield.
He says one of these is to ensure that a uniform approach takes place on fees across the lettings operations of the Countrywide empire. “Some companies had special deals for friends and family, for example, so we’re changing that and making fees uniform” he says. In addition Countrywide has developed tools for its landlord clients to cope with the plethora of varying selective and other rental licensing regimes that exist in different localities.
“Developing a product like that helps our clients and produces additional income - this is the sort of thing we’ve been developing for some years in anticipation of the ban” according to Creffield.
On referral fees - currently the subject of a 12-month review by government and the subject of new guidelines from the National Trading Standard Estate Agency Team - Creffield says Countrywide is in a “virtually unique advantageous position.”
It has its own regulated in-house legal firm, he says, so while Countrywide does currently pay referral fees in some areas, it is well placed if there is a sharp clampdown or even a ban on fees in the future.
“If the government bans them altogether, which is possible, then I can overnight stop them at Countrywide and we’re in a position to benefit because of our in-house firm. We don’t think any of our competitors can do that” he adds.
You can see the full report on Countrywide’s 2018 figures and the progress it’s making on its Back To Basics recovery programme here.