23rd Jan 2017 09:09
LONDON (Alliance News) - Belvoir Lettings PLC on Monday said it now expects the impact from the UK government's proposed tenant letting fee ban to be "substantially mitigated" by actions taken during 2017 ahead of the ban being introduced.
Property franchise group Belvoir said it achieved a solid performance in the final months of 2016, with continued underlying organic growth in franchise management service fee income and further growth from portfolio acquisitions at a franchisee level.
Belvoir said it anticipates its results for 2016 to be "broadly in line" with market expectations, noting revenue for the year is expected to have risen 44% to GBP10.0 million from GBP6.8 million the prior year.
The group's ratio of revenue from lettings to sales now stands at around 75 to 25, compared to 77 to 23 the prior year.
Belvoir said that, since the Autumn Statement, in which UK Chancellor of the Exchequer Philip Hammond confirmed the government plans to ban letting agents' fees to tenants, it has become "clear" there will be a period of consultation ahead of the ban's introduction in 2018.
The consultation will determine whether there will be a complete ban on tenant fees, or whether some recharges will be permitted, subject to a cap, Belvoir said.
In this period, Belvoir will focus on ways in which to build other income streams, and will extend financial support to franchisees to take advantage of consolidation opportunities which it expects to see, following the proposed change in legislation, through portfolio acquisitions.
As such, the group said it now believes the potential 8.0% impact on its network revenue, which it announced in November, will be "substantially mitigated" by actions taken during 2017.
Belvoir noted its franchisees in Cardiff and Derby West both acquired a portfolio of a local competitor in recent months, which it said has added GBP220,000 in total to network revenue.
In 2016 as a whole, the total value of additional revenue to Belvoir's network increased to GBP1.5 million, and Belvoir said these portfolio acquisitions going forward would be a "key part" of its growth strategy. To reflect this focus on its franchise networks, Belvoir said it has sold ten corporate offices out of its 302-office network to respective branch managers and franchisees.
"2016 has been another significant year for the Belvoir. Our acquisition of Northwood in June has enabled us to grow our lettings portfolio substantially to some 54,000 managed properties and thus become the largest property franchising group in the UK," said Chairman and CEO Mike Goddard.
"This, combined with a full year of trading for our other two recently acquired brands, Newton Fallowell and Goodchilds, and continuing organic and local acquisition growth, has resulted in us growing our underlying Management Service Fee by more than 100% in two years," Goddard added.
Elsewhere, the group said it has issued and allotted 803,284 new shares to the vendors of independent UK lettings franchise Northwood GB Ltd, which Belvoir bought for a total of GBP22.0 million, funded in part through a placing.
The shares were issued at a price of 116.67 pence per share, and shares are expected to be admitted to trading on Friday.
Shares in Belvoir were up 0.5% at 109.50p on Monday.
By Hannah Boland; [email protected]; @Hannaheboland
Copyright 2017 Alliance News Limited. All Rights Reserved.
Related Shares:
BLV.L