For anonymity and the avoidance of a P45, the identity of the Secret Agent must remain hidden. In the latest missive, our mole is contemplating fee levels...
There’s a lot in the property press at the moment about rents and values getting back to pre-recession levels – well, in London at least.
On that basis that I’m an agent, I’m therefore rather looking forward to fees also getting back to their pre-crash levels.
Billionaire art dealers will pay £180 per sq ft for an office in St James’s, Bond Street Zone A’s have surged past £1,100, and overseas money is comfortable buying investment kit at yields under 4%. These are all benchmarks which are either at par or above what was prevailing when Girls Aloud and Craig David were still in the charts.
Accordingly, the casual observer would be forgiven for thinking that agents’ fees are now gradually edging up to a similar parity. Not a bit of it. The stark truth is that fees – whether you’re talking about leasing or investment – are probably still on average about 40-60% below what they were in the Noughties boom.
As the crash took hold, commentators confidently predicted that there were simply too many agents serving the UK property scene and that hundreds would leave the sector and go into other businesses.
This gloomy prognosis prompted the marvellous gag:
“What do you say if you want a Chartered Surveyor’s attention?”
“Big Mac and fries, please mate”
But after seven years of relative business famine there has been no great exodus from the profession. Agents seem to be as numerous as ever, but fees are still at their ‘get-work-wherever-you-can’ levels.
So will we ever return to the good old days when you could trouser 10% of the first year’s rent for putting an occupier together with some offices or persuading a retailer that they simply had to be on Sloane Street?
I think not.
Whisper it, but some of the fee structures of the past were not linked to the actual performance that was notionally being rewarded.
Today, you can still make a very tidy living in the agency game: my five-years-out-of-college colleague has just made £600k commission on a single investment deal. But, in every sense, he made that deal happen and was involved in everything from the tax structure to picking the client up at Heathrow.
It’s the run-of-the-mill everyday deals that won’t see the disproportionate fees any more. And that’s right and proper: we should make our money because we’re good – not just available.
the casual observer would be forgiven for thinking that agents’ fees are now gradually edging up