Lettings group has the keys to success

UPDATE

IN 2016, when Midas recommended Belvoir Group, the estate agent and lettings firm delivered sales of £10 million, profits of £2.4million and a dividend of 3.4p. Results for 2019, expected next month, should show a near doubling of revenues to £19.5million, with profits soaring to £6million and a 7.4p dividend.

During that time, Belvoir shares have risen from £1.21 to £1.78. The performance is solid, but it does not fully reflect Belvoir’s value. As such, the stock should increase materially over the next year and beyond, with brokers forecasting that the price will hit almost £2.40 by 2021. The dividend yield is enticing too – at just over 4 per cent.

Belvoir was founded in 1995 by former Wing Commander Mike Goddard. Now over 70, Goddard retired a couple of years ago but new chief executive Dorian Gonsalves

has carried on where his predecessor left off.

Goddard delivered uninterrupted growth every year that he ran the business. Gonsalves has maintained that tradition and is expected to continue doing so as the group approaches its 25th anniversary. Grantham-based Belvoir is the largest property franchise in the UK, with 365 offices spread across the country.

Offices are run by local franchisees, supported by Belvoir in terms of training, technology, marketing and acquisition finance. The approach encourages franchisees to feel as if they were running their own small companies, so they tend to be both motivated and ambitious. Many have expanded with Belvoir’s support and that trend is likely to continue.

Initially, the company focused primarily on lettings. In recent years, residential sales and financial services have been added to the mix. All three divisions have been making progress, even though the property market was sluggish at best last year.

The sales business is taking market share from other estate agents, and financial services – which centres on mortgage advice – saw revenue growth of 148 per cent in 2019, following a strategic acquisition in 2018.

Looking ahead, prospects are encouraging. Property sales have been picking up since the Tories’ Election victory last December and Belvoir is already reaping the benefits. There is a growing move towards professionalisation of the rental market too, which plays to Belvoir’s strengths as a leader in the field

Estate agents do not always inspire trust, but Gonsalves was a director of the Property Ombudsman for five years, so he is a stickler for fair play and the business is known for looking after franchisees and their customers.