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The market is dead, long live the market

Listening to all the coverage of the tenant fee ban, all I hear is consumer groups talking about how some agents charge tenants extortionate, unjustifiable fees. 

Journalists ask questions about how these unjustifiable fees can be justified and self-righteous politicians revel in their self-righteousness. 

However, amid all this mutual moral backslapping, I have questions that keep nagging at me and refuse to go away.


Why, I ask myself, has no one asked why these tenant fees have to be banned altogether? Isn't this going from the sublime to the ridiculous? 

How can punishing the great majority of fair-minded agents because of the poor behaviour of the few be justified? I understood the concept of imposing limits and guidelines but banning agents from charging tenants completely, well this smacks of something else altogether. 

Let's be honest, estate agents aren't exactly the most popular people and they do not garner the respect or sympathy of the common man. Few will mourn their passing or defend their rights, especially when there are votes to be had by demonising them. 

Demonising the estate agent demonising the landlord - two groups of staunchly conservative voters have been demonised because there are less of them than there are tenants. 

The government is in a tough spot. Let's face it, they aren't exactly over-endowed with character, charisma and enthusiasm, are they? Mr Hammond is a number cruncher, they call him ‘Mr Spreadsheet. He may have got a First in Economics, but he failed the optimism test that's for sure. 

His dystopian view of the reported £60 billion cost of Brexit is likely to create a self-fulfilling prophesy of doom. His offer of austerity without end has to be sweetened by something, there has to be a scapegoat, a group of people who can be vilified and punished in the name of the new inclusive society new conservatism is supposedly all about.

Where a leader knows where they are going and is able to inspire their followers with positive belief, the followers will follow the leader anywhere - into battle, into the teeth of the storm, they won't question and they will endure whatever hardships may come in the knowledge that what has to be done has to be done. 

However, where you have the wrong person in charge, no matter how clever they are, if they can't lead then no one wants to follow and that type of non-leader needs a scapegoat and we my friends are it. So, if you feel like a pariah, get used to it - because that's what you are now.

I have already read what some agents have been saying, how they agree with the idea that tenants should be protected from overcharging cowboys - not them of course - the others who have spoilt it for everyone. 

This attempt at being reasonable won't work, it simply reinforces the validity of these non-valid politically motivated measures. 

The politicians aren't interested in good agents, they don't care about our livelihoods of the livelihoods of our staff. All they care about is votes, getting re-elected and pandering to the biggest constituency.

Another example of the distorted view being peddled is the reference to some letting agents that earn 30% profits. If there are agents out there earning a 30% profit they are very exceptional. What about the average agent who doesn't earn a fraction of that or the thousands who go bust because they can't turn any profit in an open and free market which for some years has provided intense competition? 

I have already written about the deeper agenda that is going on here, about the desire of government to have fewer larger landlords to regulate. By the way, fewer larger landlords will need fewer larger agents, that's why they have penalised the small individual landlord, leaving the way clear for the rise of the corporate mega landlord who will be encouraged and rewarded by subsidies and tax breaks. 

However, I think there may be another principle emerging here - the Pareto Principle, otherwise known as the 80/20 rule. It seems to me the market is being capped at 20% private rental, 80% everything else. It's ironic that the PRS has grown from 2% to 20% without needing any interference, but suddenly it has to be interfered with and this interference will ruin it.

Rant over for the moment, I will retire to consider Donald Trump, Nigel Farage, the fact that all that glitters is not gold and every cloud has a silver lining. 

The silver lining will be the way we adapt to this change. We won't stop it, remember, we are all pariah's now but we can benefit from it if we are smart. Now that would be a turn up, turning adversity into advantage. We estate agents are a hardy breed, it will take more than the political equivalent of the Ebola virus to keep us down. 

The market is dead, long live the market.

*Simon Shinerock is Chairman of Choices Estate Agents. For more information on Simon, see his blog or his LinkedIn profile.

  • icon

    Great article and couldn't agree more...As a young agency owner I haven't yet had the good fortune of understanding that politicians are truly only in it for themselves... I do now.
    I'm personally not quite over the shock that in a democracy us agents aren't allowed to charge people for the service we are providing to 'both' parties. However, we are pariahs as you say...great agents will have been prepared for this already, good agents will get over this quickly and adjust well...the others should get in touch and see if we can strike a deal haha.

    Simon Shinerock

    Thanks Joe

  • Simon Shinerock

    You will only be able to read this article in today's Times if you have a subscription, a story in itself but you don't need to read the story to get the point.http://www.thetimes.co.uk/article/generation-rent-finds-its-champion-x323srhqk?shareToken=e2875eb4a2b67c6c89d75ee507629db6 Vicky Spratt, the apparent saviour of generation rent and by association the mortal enemy of all estate agents is a 28 year old daughter of privilege who, as a result of a) becoming a journalist and b) feeling aggrieved at how much money she payed a particular agent, decided to wage war on us all. Ms Spratt, with the help of her employer got 250000 voters to petition the government to ban tenants fees and as it looked like a vote winner, that's what they are going to do. The only thing is it will, as Ms Pratt will find out, be a Piric victory. Actually I don't think she probably cares much, she is intelligent enough to know this is not a solution and there lies the problem. It's so easy for young people caught up in a competitive world to see the problems they face and then, because they lack age and experience, come up with a solution that has already proved itself not to work. She spouts on about security of tenure, rent caps and regulation as if these artificial artifices will somehow improve the situation when history shows they will make it worse. The trouble is I doubt this reality suits her career goals, never mind, we can't stop the swing of the pendulum, just get out of its way.

  • John Bullock

    Simon fantastic article and so true how the public are being sold a pup as all stock is passed to large corporate investors. Very sad when most estate agents have been run by small family businesses historically.

    All these challenges do present opportunities which are risks to be managed. Nevertheless the rapid pace of change and the depth of change have been generated by the government not to correct the market but to position competitive advantage to corporate investors. Sadly many small family businesses will be impacted detrimentally and fail. As they focus on how to deal with the changes they forget what they do well. It is as they government intended.

    For those of us up north, as s24 Finance Act kicks in (Jan 2019) when landlords receive their first tax bill, our margins will be impacted as well as landlords and the question is not so much how we over come the changes but whether the return on each pound we spend is worth the effort. I of course I am referring to diminishing returns as I am confident I will over come the restrictive legislative changes but the question I can't answer is whether the victory was worth the fight. Time will tell.

    Simon Shinerock

    I hope not but it may be we are all being suckered for the second time. The first time was in the 70ies when the PRS was strangled by the rent acts. In hindsight this amounted to a confiscation of property from the then landlords who were demonised (Rachmanism) as a group. Since 1988 those aspiring to financial freedom have chosen property as their vehicle to achieve it. Unfortunately this property is now seen as a prize for incompetent government to disguise their incompetence. It's the easiest thing in the world to crush the dreams of those who have done something with their lives in the name of social conscience. I hope not but if this pendulum swings too far we could be looking at the second great confiscation

  • icon

    Suggest people read the latest research from Property 118:

    Simon Shinerock

    I like my article better 😉


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