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After stamp duty and agents’ fees, it’s time to seize the initiative

Let me set out my stall from the beginning.

Firstly with two buy to lets managed by an agency, I understand and support the principle of letting agents charging fees to tenants - providing, of course, they are proportionate, transparent and not duplicating the fee I pay the agents as a landlord.

Secondly, just because I’m a journalist it doesn’t mean I can’t do the maths on stamp duty. 

SDLT levied on high end homes has become too large since the 2014 Osborne reform and there is substantial evidence that it is deterring buyers and, as a result, reducing income to the Treasury. 

So yes, I think there’s an unanswerable case for a reform of stamp duty.  

But our industry has evidently not done a good enough job to lobby, educate, persuade or cajole not just government, but opinion formers too, on these two issues. 

Last month’s Autumn Statement - where stamp duty remained untouched and letting fees levied on tenants were banned - surely provided crystal clear evidence of that.

There has been a predictable backlash by a few random individuals against industry bodies for apparently doing too little: that, however, is to under-estimate the hard work, research, lobbying and time-consuming-but-essential schmoozing at party conferences that estate and letting agency groups and landlord organisations have done for years.

So why did we fail when ‘they’ - Generation Rent, Shelter, Citizens Advice and others - succeeded in persuading ministers, newspapers and celebrities to their cause?  

Partly it is because the industry misread the political mood music over stamp duty.

A government attempting to out-UKIP UKIP by appealing to the Just About Managings and Left Behinds was never likely to slip in a stamp duty change that would reduce the transaction costs on homes priced over £1m. 

Can you imagine the Daily Mail’s headline had that happened, let alone the Mirror’s?

Partly, too, it is because our industry is too fragmented to address the letting agency fees issue voluntarily - even though, ironically, so many within the industry wanted to. 

With the NLA, RLA, ARLA, UKALA, NALS, RICS, three Ombudsman organisations and other bodies almost unanimously in favour of some kind of action on letting agents’ fees - even if it was just to make them more transparent to tenants and landlords alike - each group seemed nonetheless to act separately, at different speeds, with different goals.

A very few wanted fees on tenants banned completely, others wanted caps but were not suggesting what those should be, while others again wanted no restrictions on fees at all but greater transparency. 

And, let’s be honest, one or two organisations may have been as interested in ‘getting one over’ a rival group as in providing an industry-wide solution.

The end result was that everyone wanted something, but no one group carried enough sway to effectively galvanize a united view across the industry. 

And don’t even talk about how such a disparate industry would have policed a united view if it had come up with one... 

If that was unhelpful over letting fees, it may be disastrous when the government reports on reforming and modernising house buying. Those proposals may fundamentally affect every element of our business.

Is there any chance of rival groups - the ones that knew something had to be done about letting agents’ fees, but couldn’t agree what in good time - seizing the initiative to act in concert? So that industry, for once, speaks with one voice?

There’s plenty of evidence in recent years that the government is unconvinced that the industry itself can reform or police itself: isn’t this the time to prove the politicians wrong?

*Editor of Estate Agent Today and Letting Agent Today, Graham can be found tweeting all things property @PropertyJourn

  • Simon shinerock

    Well put Graham, as a pro remain anti Trump anti UKIP sort of guy, Iately I've been forced to reevaluate my position when it comes to supporting the establishment. Not that I'm an establishment kind of guy either, I've hardly trumpeted the virtues of OTM and to be honest my views on the NAEA and ARLA should not go to print. However, amidst this malestom of change I'm beginning to think that we need an anti establishment leader to come forward, one who can put aside political correctness and cut through all the pettty infighting and unite the industry on the fundamental issues we are now facing. If their were an anti establishment election for such a person and if the whole industry could be united in support of it then I would run, I don't aspire to being the Donald Trump of estate agency but from what I can see I'm better equipped to lead the industry's interests than anything or anyone out there right now.

  • Sophia Mose

    Graham, I believe that the main enemy of the property profession is public opinion. Politicians tend to pander to public opinion and don’t think things through long term. Although lobbying as one body of course would be a huge improvement, before being able to effectively lobby with politicians, estate agents as a profession, must change public opinion.

    Although public opinion of estate agents often is based on a few bad apples only, I have a strong suspicion (would be interesting to get your view on this) that the main reason for the public’s lack of respect is the fact that in the UK (or is it only Scotland and Wales?) there is no education or experience requirement whatsoever for entry into the profession. In practice, I’m sure many agents will have a relevant degree or experience. But that’s not the point. I believe that it’s disastrous for the image/perception of the profession that any idiot can set up shop or work with an agency. I’m an experienced commercial lawyer and have worked in various jurisdictions. I have been a licensed estate agent (working as a buyer’s agent) in France for five years now and still am learning a lot on the law, building/construction and other things relevant to the profession. We facilitate and assist with most people’s biggest purchase in life and I find it truly baffling that there isn’t an exam or licensing requirement for estate agents in the UK. You cannot expect people to know the law that governs the profession if there is no minimum education requirement.

    Here in France the owner of the agency must be licensed, which is only possible if they satisfy strict education or experience requirements. Sales agents who work on commission are registered under the license of the owner and must be supervised. They must make clear in communications that they are not a licensed agent (broker) and they cannot give legal advice to vendors or buyers. In addition, since 2015, property professionals and their agents must follow continuing education in order not to lose their license. Estate agents are often still hated in France (mostly because there's less understanding of conflict of interest than there is in the Anglo-American world) , but there is respect for the profession and the government listens to the trade bodies (there are only two main trade associations here). These trade bodies also have recommended regulations for their members, but I believe that self-regulation is never enough for the image of the profession if entry into the profession itself isn’t regulated in the first place. Not easy to change, but as long as this remains the same, I'm afraid that the UK public won’t respect the profession. What do you think?

  • icon

    The bottom line is this sentence:

    ##But our industry has evidently not done a good enough job to lobby, educate, persuade or cajole##

    Well said (at last!)

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