Hatched founder says he still believes in online agency business model

Hatched founder Adam Day spoke yesterday of his disappointment that it is closing – and said he still believed in the business model, despite Connells saying it did not work financially.

Separately, Purplebricks emphasised its ongoing investment in its own business, saying that in the UK it is both sustainable and profitable.

Day, who had previously worked for a high street agent, founded Hatched in 2006 as what is thought to be only the second online agent in the UK.

He sold it in 2015 to the Connells Group in 2006.

He said: “Connells were a huge support to me and the business when they acquired Hatched, and it’s great news that those staff who worked so hard for me before acquisition and since, are being offered alternative employment within the group.

“From a personal point of view, I’m obviously disappointed that the business has closed as Hatched was one of the original pioneers of online/hybrid estate agency.

“I truly believed in, and still do believe in, the model that I created back all those years ago.”

Day is now head of estate agency at Emoov, joining in June after a year-long spell at easyProperty. Emoov itself declined to comment on Hatched’s closure.

However, a spokesperson for Purplebricks told EYE: “Purplebricks has in the last four years built a sustainable and profitable UK business, based on a new, fairer, more transparent model which has saved our customers over £108m in commission payments in 2017 alone.

“We are successful because we get results for our customers, with recent data showing that we sell more houses and complete on properties more quickly than any of the other top ten brands.

“Our ongoing investment in technology and people continues to win over more customers, driving further market share growth.

“Purplebricks is proof that the right people and quality execution has been key to why we are the most successful estate agent in the UK in such a short time.”

Sam Mitchell, CEO of Housesimple.com, said he disagreed with Connells’ view that the online/hybrid model generally doesn’t work, but did agree that upfront fees are not the right solution for customers,

He said: “That’s why earlier this year Housesimple became adopted a No Sale, No Fee only model.

“And unlike the high street agents, who still charge home sellers a percentage of the sale price which can run into thousands of pounds, we only charge a flat fee of £995 whatever the value of the property.

“At the same time we offer great customer service and support the home seller from start to finish, to ensure a smooth sales progression.”

Meanwhile City analyst Anthony Codling, of Jefferies, reiterated his ‘underperform’ rating of Purplebricks after yesterday’s announcement of the closure of Hatched.

Codling gave a share price target of just 94p for Purplebricks shares.

Codling said: “Connells, one of the largest and most profitable estate agents in the UK, has pulled out of the hybrid agency market saying that the online model is not commercially sustainable, echoing our long held view.

“This is likely, in our view, to add to Purplebricks woes this week.”

Despite this gloomy assessment, Purplebricks shares yesterday closed up 3.3% at 230p.

Robert May’s start-up Rummage makes top appointments as it gets set to challenge portals

Industry challenger Rummage4, founded by Robert May, has a new chairman.

He is Peter Andrew, who is also deputy chairman of the developers’ trade body HBF.

He reveals his appointment here:

https://www.hbf.co.uk/people/peter-andrew/

Separately, we understand that another top name, from the City, is joining Rummage4 in November, to head up the company.

May has not denied this latter appointment, yesterday telling EYE only that these are “exciting times”.

May has been telling agents, including in posts on EYE, that his business will offer more, and cheaper, leads to agents than the portals, while also giving its agents a lot more market information.

May’s information on Purplebricks sales underpinned a report from Jefferies earlier this year which challenged the figures, saying  that Purplebricks sells some 50% of the properties it lists.

No date has yet been given for the launch of Rummage4.

https://rummage4property.co.uk/About/about.html

IT nightmare for agent as its website is hacked by Islam fundamentalists

Yesterday, a well-known agent’s website was hacked by Islam Warriors.

They used the Gibbs Gillespie website to push their message that human rights are not optional, and that terrorism is not Islam.

At the same time, very loud music was being belted out.

All that could be seen of the Gibbs Gillespie site itself was an image of previous awards and their negotiators at work, plus the live chat – apparently disabled by the hackers – and an invitation to find the firm on social media.

Very shortly after we took this screengrab yesterday afternoon, the site went down completely.

Yesterday evening, a spokesperson for Gibbs Gillespie – a multi award-winning firm with branches across Middlesex, Buckinghamshire and Hertfordshire – said: “We closed our site immediately when we became aware of the attack.

“A team of experts is reviewing and upgrading wherever possible all security protocols.

“So far as we are aware, no data leaks have occurred and all personal and financial data held by Gibbs Gillespie remains secure. The site will reopen as soon as we are fully satisfied with the reinforced security.”

This morning, the site is more recognisably that of Gibbs Gillespie, but is still down, with a holding message saying it is undergoing maintenance.

We wish the firm well in trying to get back to order – and since the tweet that alerted us to Gibbs Gillespie’s problem warned that “agents aren’t liked at the best of times”, perhaps our readers should take notice.

https://www.gibbs-gillespie.co.uk/

Tenancy fees ban inevitable and changes to Bill very unlikely, warns ARLA boss

The tenant fee ban will trigger “a seismic shift” in the way the lettings industry operates – and will put businesses under huge strain.

David Cox, CEO of ARLA, also warned that things are only going to get worse.

He was speaking at a webinar yesterday hosted by proptech company Goodlord.

He said: “There’s no silver bullet, because every agency runs their business differently, but I think everyone needs be looking first at how they can reduce their costs and how they can maximise their income.”

He also warned that implementation of the measure is inevitable.

He said it is unlikely that there will be any substantial changes to the Bill as it stands before it comes into effect – likely to be on April 6 next year.

He suggested that lobbying was futile with no politician opposed to the ban.

Cox said: “There’s no dissent at all. I cannot overturn the will of 650 MPs with no support in Parliament.”

Cox went on: “Landlords are starting to get a bit twitchy and some are leaving the market – and while the Government continues to attack the Private Rental Sector, it’s only going to get worse.

“We’ve been advocating strongly that they need to take a pause and look at what has worked and hasn’t worked and then fix it.”

He also said that the ban will have a negative impact on tenants: “Agents have got to reduce costs – businesses will be put under strain and pressure.”

Cox said that a new authority is being established to monitor and enforce the new legislation, which has been missing from the industry to date.

He said: “I think everybody accepts that enforcement in our industry is beyond atrocious.

“The new authority will be able to offer guidance on how to implement the law so we might have a little bit of consistency of interpretation, which we haven’t always had, and prosecute agents.”

Cox’s talk was followed by a Q&A with an industry panel, which discussed how technology could help letting agents overcome its challenges.

David Thomas, founder and director of Liberty Gate, an estate and lettings agency in Nottingham, said: “You’ve got to focus on cutting costs and increasing revenues, and that’s really where the proptech can come in and help.

“Automating processes is ultimately saving us time and money, especially on the administration side.”

Graham Lock, who started House Network in 2005 and was managing director at The Property Franchise Group before becoming an independent consultant, said the tenant fee ban is “a really good opportunity for agents to reassess their business”.

He added: “Now is the time to review all your processes and what you’re doing with technology. If you do nothing you risk not innovating as an agency.

“Agents are looking at increasing their fees, but if you’re not improving your business and your service at the same time, you’ll miss out.”

Debbie Franklin, an independent consultant who spent 27 years with Andrews Property Group, agreed: “You need to look at your processes almost as though you’re starting from scratch. It’s really key you do that properly.

“Take a step back and think how can I change that? Don’t think you can just keep doing the same thing you’ve always done – you have to keep evolving and innovating.”

Purplebricks ‘ran competition among its agents to try and get vendors to cut prices’

Purplebricks has allegedly run a competition in Australia where its local agents were incentivised to pressure sellers into cutting their asking prices by between 5% and 20%.

The agents, in New South Wales, had to secure reductions on three properties in order for their names to go into the NSW Raffle, which offered a $500 prize “generously supported by Kenny Bruce”.

Any further reduced properties secured the agent another raffle ticket.

The claims are in the Australian Financial Review, which says that an email it has seen described the promotion as an “awesome opportunity to get our customers’ homes realigned with the market place and make sure we get the job done for them”.

The publication reports also seeing a spreadsheet showing how one vendor agreed to cut their asking price from $1.2m to $1m.

Altogether, over 100 vendors cut their asking prices.

The Australian Financial Review says that Purplebricks “battled an increasing number of unsold homes and angry vendors who paid between $5,500 and $7,000 upfront”.

It also quotes a former territory owner who said: “We were told that they wanted to clear residual stock ahead of Kenny Bruce coming here and bringing in a new way of working.”

Bruce, co-founder of Purplebricks along with brother Michael, is in Australia following the departure of its sales director.

The Australian Financial Review alleges that it was threatened with an injunction to prevent publication of the vendor-discounting competition.

However, COO Neil Tavender later said: “[It is] entirely normal for any professional real estate agency to incentivise and reward their people to achieve realistic sale prices in a fast moving and ever-changing real estate market.

“At Purplebricks, we constantly assess market conditions and continuously review every house on its merits. The seller is involved and engaged in these conversations and ultimately it is their decision.

“More broadly, what’s clear is that we have a small group of disgruntled former agents looking to sensationalise and paint the company in a negative light at any opportunity.

“This minority has a clear agenda and are using the media as a vehicle to publicise their views, but we will not let this distract us from offering Australians a cost-effective way to sell their homes that cuts out commissions that are in place to benefit traditional agents, not sellers.”

EYE did approach Purplebricks for comment on the claims in the story.

https://www.afr.com/real-estate/residential/purplebricks-ran-competition-to-pressure-vendors-to-cut-prices-20180919-h15kx2

Former letting agent appears in court on fraud charges

A former letting agent has appeared in court on charges of fraud.

Angela Treneer, 71, of Falmouth, appeared before Truro magistrates.

She is the former owner of Premier Property Management in Truro, Cornwall.

She faces four charges, two of which were that she participated in a fraudulent business between April 1, 2009, and March 31, 2017; one charge of using a false instrument, namely a letter purporting to be from Lloyds Bank; and one charge of conspiring together with Elizabeth Treneer that she acted upon a false document, called a dissolution of partnership agreement, with intent to pervert the course of justice.

She did not enter any pleas.

The case will be transferred to a hearing at Truro Crown Court next month. Treneer was given bail.

https://www.cornwalllive.com/news/cornwall-news/angela-treneer-letting-agency-premier-2021359

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The Property Ombudsman expels four agents owing more than £440,000 in redress

Four agents have been expelled from The Property Ombudsman’s (TPO) after failing to pay almost half a million pounds of redress.

The unpaid awards amount to a total of £441,094.

Camborne Properties Ltd trading as Harper Brooks makes up the bulk of money owed.

The sales and lettings and management agent in Liverpool had received 100 separate complaints from leaseholders for not paying them rent owed.

Most of the complainants have been investors from Asia buying from the developer to let to students prior to the development being completed.

TPO’s press release described how a leaseholder had bought a property, to be let as student accommodation, from a developer who was targeting the build to let market.

When the leaseholder acquired two apartments he entered into a management agreement with Harper Brooks that they would guarantee the rent payments, but the leaseholder did not receive rent from December 2016 through to the end of 2017, apart from a minimal payment in March.

Having failed to meet their obligations under the agreement, TPO supported this complaint and Harper Brooks was directed to pay the outstanding rent owed and an additional award was made for aggravation, distress and inconvenience. The total award was £9,900.

All complaints about this agent were reviewed by TPO and £431,715 was ordered to be paid, of which £419,079 was unpaid rent under the guaranteed rent agreements.

Although this agency no longer appears to be operating, it has been referred to the National Trading Standards Estate Agency Team for further investigation, the Ombudsman said.

In another update, Middlesbrough agent TeesSurveyors Lettings Ltd (TSL) has been expelled after failing to pay £3,133 of awards in two cases relating to non-payment and late payment of rent

In one case with this agent, a tenant found the property they were renting had been repossessed and it turned out TSL was the landlord, while in another the agency failed to pass on rent.

TSL did make two payments totalling £1,200, but no further payment or correspondence has been made since.

In Isleworth, west London, The Drake Lawson Ltd trading as Alexander Reed, has been expelled for the non-payment of three separate awards.

The first complaint was raised by a tenant concerning the holding deposit which he paid when he was out of the country. Having failed referencing, the tenant requested a refund, but the agent refused saying that the deposit was non-refundable in the event that he failed the application process, something the tenant maintained he had never received any documentation for.

TPO made an award of £300, a full refund, to reflect the fact that the agent couldn’t demonstrate that they had notified the tenant in writing of the circumstances in which the holding deposit would be forfeited.

One landlord’s complaint about the agent concerned a number of issues including the unauthorised withdrawal of the tenant’s tenancy deposit from a recognised scheme, a delay in the payment of rental income and the agent’s complaints handling system.

TPO criticised the agent for withdrawing and then failing to re-protect the deposit leaving the landlord exposed to the risk of his tenant taking him to court, failing to address payments with the tenant at an earlier point in time and not recording, acknowledging, investigating or responding to complaints. An award of £500 was made.

Another landlord complaint against the agent related to a shortfall in rent owed. When the tenancy came to an end, it was apparent that the landlord had not received the remaining four months of rent, which the tenant had paid to the agent before vacating.

The Ombudsman made an award of £3,946 which included the money owed and £200 compensation.

The fourth TPO update warns that a Halifax sales and letting agent trading as Secret Property and Wara has been expelled for failing to pay an award of £2,300.

The firm was referred to TPO when potential buyers of a property were unhappy that a £2,000 reservation deposit was not returned after they withdrew from a purchase despite assurances that it would be.

The agent was ordered to refund the £2,000 deposit and make a further £300 award in compensation for aggravation, distress and inconvenience caused.

The updates mean all these agents are trading illegally by not being part of a redress scheme.

However, none appear to now be active on Rightmove.

Companies House documents show Harper Brooks, TeesSurveyors and Wara have been dissolved.

Secret Property and Drake Lawson Ltd both have an active proposal to strike off and are late filing their accounts and confirmation statements, Companies House documents show.

Andrews gives its charitable owners £1m dividend to spend on good causes

Andrews, the estate agent founded to make money for good causes, has announced a dividend of £1m payable to its charity owners.

Andrews Property Group is making the payment to Andrews Charitable Trust and Speaking Volumes.

It is the largest dividend since 2004. Since 1985, the business has handed over £10m.

Andrews was founded by philanthropist Cecil Jackson Cole, whose vision was that the more successful the business was at making money, the more it could give.

Most of the £1m – 85% – will go to Andrews Charitable Trust whose major focus is a housing scheme called [establish].

The project aims to purchase 50 homes in areas where Andrews has a presence, at the rate of one a year, to support young people leaving the care system.

Group chief executive David Westgate said that Andrews’ investment in good causes allows it to stand out as a business doing things differently.

He said: “[establish] is about so much more than just giving young people a roof over their heads.

“We’ve committed to not only providing newly renovated homes, but to ensuring they come with on-going support and maintenance.

“The young people who live in them are given access to specially-trained Andrews’ mentors and if they’re interested, they can take up paid apprenticeships with Andrews.”

Speaking Volumes is the newly rebranded name of the former Christian Book Promotion Trust. A third former owner, the Christian Initiative Trust, has been wrapped into the Andrews Charitable Trust.

‘Unbelievably boring’ Housing Secretary banned from breakfast TV show after refusing to appear for interview

Housing Secretary James Brokenshire has been labelled as boring and been ‘banned’ from appearing on ITV’s flagship breakfast show Good Morning Britain.

High profile TV presenter Piers Morgan hit out at the cabinet minister after he refused to appear on the programme amid concerns over how he has previously been treated.

Brokenshire’s aides told the programme that they were also unhappy with Morgan’s negative tweets about Prime Minister Theresa May.

Morgan read a letter to the programme which said: “Piers’ tweets following the Panorama special on Theresa May making clear he does not think the PM is a leader and that Brexit is quotes a farce, and that he cannot be trusted by us to do a fair and balanced interview with James.”

Morgan added: “The truth is you’re an unbelievably boring person. I didn’t even know we were going to be interviewing you, if I’d have known I would have cancelled you.

“And you’re now banned from ever appearing on Good Morning Britain as long as I’m sitting in this chair.”

Brokenshire was making public appearances to promote an extra £2bn of funding for social housing.

Law Commission seeks ‘impossible consensus’ as it launches leasehold reform consultation

The Law Commission has unveiled its long-awaited consultation on leasehold reform, admitting that achieving consensus between landlords and leaseholders will be impossible.

The Government last year asked the Law Commission to review the enfranchisement process for houses and flats to make it simpler, easier, quicker and more cost-effective.

Its consultation proposes removing the requirement that leaseholders wait two years before looking to purchase their lease and extends the criteria, allowing those on housing estates to purchase theirs either collectively or individually.

The Law Commission has proposed more rights for leaseholders, such as standardised form for claims and new rules that a notice will have been deemed to have been served on a landlord if posted to a previously specified address.

This means leaseholders will not have to take time-consuming and costly steps to locate their landlord where they have not been provided with up-to-date contact details and will not be faced with assertions that landlords have not been properly served.

The document also outlines ways to reduce the costs of leasehold extensions and freehold purchases, including introducing a fixed costs regime for non-litigation fees, and providing a simplified formula for valuations of the premium charged on the transaction, with an online calculator to support valuations.

The Law Commission warns that any formula couldn’t be one size fits all as the professional costs may outweigh the premium, suggesting there could be a different regime for lower value claims.

In a nod to rights of freeholders, the Law Commission says it will develop a human rights analysis of the valuation options, warning changes could impinge on the right to peaceful enjoyment of property.

The document said: “The interests of landlords and leaseholders are diametrically opposed, and establishing consensus between the two interest groups in relation to valuation but also in relation to many of the other issues we are considering will be impossible.”

Professor Nick Hopkins, Law Commissioner, said: “The current system is complex, slow and expensive and it’s failing home owners. Many feel that they are having to pay twice to own their home.

“Our proposals would make it easier and cheaper to buy the freehold or extend the lease of their home, ensuring the system works for ordinary home owners across the country.

“We want to hear views from across the spectrum on how this complicated area of law can be improved.”

Housing minister Heather Wheeler said: “The Government is committed to banning leaseholds for almost all new build houses and restricting ground rents to a peppercorn.

“It’s also unacceptable for leaseholders who want to buy their freehold or extend their lease to be faced with overly complicated processes and disproportionate costs.

“I welcome the Law Commission’s proposals that have the real potential to help those leaseholders who are having to deal with these outdated practices.”

Commenting on the consultation, Mark Hayward, chief executive of NAEA Propertymark, said: “Thousands of home owners are stuck in leases across the country facing escalating ground rent, charges for making basic alterations and growing more concerned that their homes are unsellable.

“Helping those who feel trapped by their situation is a real challenge and we hope this process will result in a robust solution for all those affected and who are unable to sell their homes.”

The consultation closes on November 20.

https://s3-eu-west-2.amazonaws.com/lawcom-prod-storage-11jsxou24uy7q/uploads/2018/07/Leasehold-home-ownershi-buying-your-freehold-or-extending-your-lease.pdf