Dorian Gonsalves, MD of Belvoir, one of the UK’s largest specialist residential lettings agencies, is calling for government clarity on the implications of council-owned estate agencies, following the launch of a council-owned office in Wales, which also incorporates a lettings and property management business.
“I understand that Neath Port Talbot Council recently launched Property Bay Wales, which was specifically designed to generate council revenue following the Government’s Comprehensive Spending Review (CSR) last year. I find this news disturbing on many levels,” says Gonsalves.
“According to recent reports, this is the first local authority venture of its type in Wales and possibly the UK, and the agency is run by existing council staff. The lettings industry is highly complex and requires considerable levels of skill, knowledge and experience. Customer service, professionalism and specialism are at the forefront of Belvoir’s core principles, and we invest heavily in comprehensive training and support for our business owners, to enable them to consistently provide a professional specialist lettings service to clients.
Government Support for Franchise Businesses vs. Local Authority Competition
“Our franchise owners are self-employed and their businesses usually require bank funding when they first open. There is always an element of risk when opening any business, but this local authority initiative represents zero risk as public finances are being used to support it. This is simply not a level playing field. Belvoir is looking to aggressively expand in Wales, thus creating new employment opportunities and we are seeking clarity as to whether local authorities are competing against us.
“I also understand that this agency is undercutting our local agency in Swansea in terms of fees charged. How can this possibly be right or proper when the government is clearly telling the public of its plans to support small businesses because of their vital role in revitalizing the economy through revenue generated and employment opportunities.
“I find it hard to believe that Eric Pickles, Secretary of State for Communities and Local Government, whose party pledged to help and support the free market and small businesses, has allowed Neath Port Talbot Council to form a council-owned agency. Whilst competition in the industry is undoubtedly healthy, there will inevitably be questions surrounding conflict of interest. In addition, where is the transparency if this agency fails to make a profit?
“I have written to the Right Honourable Eric Pickles and also the Housing Minister, Grant Shapps, to express my concerns and to seek clarity. Is this initiative going to be rolled out across the country, so that all lettings and estate agents will be competing with a locally funded lettings agency? Will undercutting continue or will the local authority charge higher fees than estate agencies? I have also asked whether local authorities are willing to offer funding to lettings and estate agents to enable them to grow and develop their businesses, or is this measure a revenue-generating initiative with the potential to damage lettings and estate agents throughout the UK? If this decision is allowed to stand it will set a precedent that could see councils opening a number of other tax-funded ventures that will threaten the future livelihood of local small businesses.”
Confronting the Prospects of Nationalized Lettings Agencies
“This amounts to the nationalisation of a lettings agency”
Belvoir, which has over 140 offices nationwide, has offices in Swansea and Wrexham. Belvoir Wrexham recently won the company’s Gold Award for Customer Service and New Franchise of the Year at the 2010 Annual Awards.
Vaughan Schofield, owner of Belvoir Wrexham says: “I am very surprised that Neath Port Talbot Council have been allowed to do something that effectively amounts to the nationalisation of a lettings agency. For commercial as well as qualitative reasons, this should be of great concern to existing lettings specialists, and I do not think it is in the best interests of landlords and tenants, or indeed any other tax payer.”
“The government should be encouraging local businesses to open and grow”
Ben Davies, who launched Belvoir Swansea in November 2010, together with his partner Daisy Hewitt, says: “I think it’s very sad that the council has been allowed to do this. We are young business people from Swansea, and we have spent a lot of time, energy and money opening Belvoir Swansea, with zero help from the government and local council. This is a time when the government should be encouraging local businesses to open and grow and not try to profit from what is already poor economic growth in South Wales.”
“Local authorities should concentrate on the main issues”
Ben’s business partner Daisy Hewitt says: “So let me get this right – the taxes I pay are now helping to fund a scheme that has the main aim of ‘undercutting’ my own business as well as that of other local agents across South Wales? In my opinion, local authorities should concentrate on the main issues at hand; housing and parking to name a few, rather than trying to compete with the private sector in an industry that requires high levels of expertise and knowledge.”
