The Property Franchise Group PLC, one of the UK’s largest property franchises, is pleased to issue the following trading update.
Trading during the second half of the financial year to date has remained strong, and management are confident that the Group remains in line to achieve market expectations for the full year.
We are pleased to report that the Group has set a new record for lettings revenue at a franchisee level in the trading month of October 2019. Our franchisees reported lettings income of £5.96m. Significantly, this was achieved despite the loss of tenant fee income, following the ban on charging tenant fees having come into effect in England & Wales on 1 June 2019. Tenant fees had previously represented 16% of our franchisees’ lettings revenue in these jurisdictions.
It is largely thanks to mitigating actions encouraged by the Group as a Franchisor that its franchisees have managed to alleviate the impact of the tenant fee ban, alongside some pent up tenant demand feeding through. This is a clear demonstration of the benefits of the franchise business model.
Growth in management commission (the recurring monthly fees which our franchisees charge landlords for property management services) has increased 10% year on year from £3.88m in October 2018 to £4.28m in October 2019. The Group believes it is the high level of satisfaction of its landlord clients that lies behind its better than expected progress in shifting the burden of cost from tenants to landlords, as clients of its franchisees would rather retain their services than do it themselves or instruct another agent.
We had previously advised investors that it could take until the end of 2020 to fully mitigate the lost revenue from the ban, however management is now confident that the objective of full mitigation will be attained by June 2020, one year after the introduction of the ban.
Ian Wilson, Chief Executive Officer of The Property Franchise Group, commented:
“We are delighted that the mitigating actions we’ve recommended to our franchisees have taken effect as hoped and at a good pace. We now expect to achieve full mitigation of the impact of the tenant fee ban a full six months earlier than originally hoped.
Our ability to draw on our wealth of industry experience and act quickly to support our franchisee members provides us with a clear advantage in the market. At a challenging time for the industry, where many independent lettings agencies are considering leaving the sector, our Group continues to show its strength.
The sales market has softened further in the second half, however our lettings business is outperforming our budgeted expectations. Our franchise business model has proven to be remarkably resilient in these testing conditions and we expect this to continue.”