‘Online agency sector facing acquisitions and mergers’ despite the millions spent

The online agent claiming to be the longest-established in the UK is predicting consolidation, with acquisitions and mergers in the sector.

Mark Readings, who co-founded House Network in 2003, forecast that the industry will shake out over the next two or three years.

He said that the cost of customer acquisition is extremely high for most of the online firms, with millions of pounds being poured into marketing.

He said: “I don’t see how six or seven firms can be spending such vast sums of money and how all of them can expect to be the one that comes out on top.”

However, he is not forecasting that investors will stop pumping millions into the sector.

Well known examples include Savills and LSL, both backers of Yopa; Neil Woodford who backs Purplebricks; Toscafund, which backs easyProperty; and Carphone Warehouse founder Charles Dunstone who is backing HouseSimple.

Will these investors ever get their money back?

Readings said: “It’s still a great sector to be in.”

He said that for anyone interested in the residential agency sector, “Where else would you put your money?”

Readings, who emphasises his own business has been built slowly and organically, says that the online sector is all about potential – and that is what appeals to investors.

But what is the size of that potential?

He said: “If over the next five years the online sector increases its market share from 6% to 25%, it will have done very well.

“If over the next five years, the market share goes to somewhere between 25% and 50%, and there are only five or six players left, then we’ll all be doing very nicely indeed.”

However, he thinks it is naïve to think that traditional agents will face a wipe-out: “When I started the business, it was all about providing customers with choice, and to me that is still the key.

“I also think that online agents and high street agents are showing less divergence. Online agents are charging more, and offering ‘no sale, no fee’ as well as fixed rates; high street agents’ fees are coming down.”

Readings said that high street agents do face a dilemma: “They have interesting choices to make. Trying to go online as well is not easy. The Countrywide offering was always going to fail.”

His business is based in Brentwood, the UK capital of the online agent world, with Emoov just round the corner.

House Network has grown headcount to 63, including 16 Local Valuation Specialists, and recent key hires are Dominic Green (ex-Countrywide) and Richard Durrant (ex-LSL).

The business charges sellers depending on where they are in the country: on a ‘no sale, no fee’ basis, they would pay between £1,000 and £2,000. On a fixed fee basis, the cost would be between £595 and £795. Accompanied viewings are extra, at £375.

That makes it cheaper than many, but Readings does not believe that price is the USP that matters as online agents – he prefers the term ‘non-traditional’ – fight for supremacy.

He says: “Our message is all about customer service. All our staff are employed and we’re staffed until 7pm, although we do use a call centre after that as it enables us to offer a 24-hour service.

“Of course we use technology, but I simply cannot see us becoming a company that is wholly dependent on it. That’s not going to happen.”

It has also recently upped its marketing, promoting a 20-point promise to customers (everything from promising that viewing agents – he uses Viewber – will take their shoes off to offering vendors their own relationship manager).

Use of TV, radio and digital platforms to get the message across has, he says, been successful.

Over the last 20-24 months, House Network has averaged 250 new instructions a month and gone on to sell 78%.

This month the business is on target to get to 400 new listings. He sees no reason why the sales rate should drop.

Government confirms new UK registry of foreign property owners will be created

The Government is to introduce a new register of property ownership that will be the first of its kind in the world, set up to tackle corruption and money laundering.

The register will show who owns and controls overseas companies and other legal entities that own property in Britain.

A draft Bill is due to be published this summer, with the intention of making the register operational in 2021.

The Government has made its intentions known in its response to a consultation on the proposals.

The call for evidence opened last April, with NAEA Propertymark among the 56 submitting a response.

One of the most controversial questions in the consultation was about the impact of the proposed policy on the UK property market.

The majority of respondents thought the register could have a negative effect by deterring overseas investors. However, some thought the proposed register would have a positive impact by improving the reputation of the UK property market.

It will be a criminal offence if those on the new register do not keep their information up to date.


Landlords warn that tenant deposit cap ‘will create charter for rent cheats’

Landlords are calling for the six weeks deposit cap in the Draft Tenant Fees Bill to be increased to eight weeks to avoid “rent cheats”.

The Residential Landlords Association (RLA) is warning that the proposed cap risks creating a charter for rent cheats after it found that 40% of private landlords have experienced tenants not paying their final month’s rent in the past three years.

The RLA said the deposit should provide sufficient extra funds to deal with any major problems some tenants leave behind.

It is also warning that the Bill risks becoming a missed opportunity to improve the position of tenants. It is calling for proposals to enable tenants to transfer deposits from one home to another rather than having to raise fresh funds each time they move as they wait for their last deposit to be paid back.

It also wants the tenancy deposit process to be brought into the 21st Century by enabling papers confirming that deposits have been protected to be sent to tenants electronically, which currently cannot happen.

David Smith, policy director for the RLA, said: “Ministers need to address the problem of tenants failing to pay rent every bit as strongly as rogue landlords.

“It is not unreasonable that landlords should have the security to know that funds are available to cover the unacceptable practice of those tenants who do not pay their rent at the end of the tenancy and, in some case, leave the property in an unacceptable state.

“In a quest for quick popularity, the Government’s plans risk becoming a missed opportunity for fundamental reforms to improve tenants’ ability to access rented housing.”

Woss goin’ on then? EastEnders never ‘eard of tenancy deposit protection?

Did the EastEnders script writers miss a trick – or could it possibly be that they have never heard of tenancy deposit protection?

A recent storyline has focused on wicked landlord Masood Ahmed and his lovely tenant Carmel Kazemi (no cliches there, then).

When Masood, who is facing financial difficulties, returns to Albert Square he terminates Carmel’s tenancy.

She asks for her deposit back but he says he needs to carry out an inspection first.

Although Carmel has left the property in good order, Masood attempts to sabotage the return of her deposit by pouring coffee over the carpet.

He then accuses her of causing the damage, claiming he has photographic evidence and will withhold the deposit until he has assessed the value of the repairs.

It’s only when Carmel threatens to expose Masood as a rogue that he returns the full deposit.

Well, that was probably a whole lot quicker than alternative dispute resolution.

However, it has given the Tenancy Deposit Scheme a very good excuse to highlight its work.

According to Mike Morgan, director of dispute resolution at TDS, there are tenants who are unaware of their rights.

He said: “Masood had a legal obligation to protect Carmel’s deposit with a government-backed tenancy deposit scheme within 30 days of receiving the money.

“However, it’s not clear whether he did in the storyline.

“If Carmel’s deposit hadn’t been protected, she could have taken legal action against Masood for not complying with deposit protection legislation.

“Deposit protection schemes give landlords and tenants access to free alternative dispute resolution services, protecting both parties and resolving disagreements without having to go to court.”

Oh, and a check-in inventory would have been a good idea too.

Barclays raises the amount first-time buyers can borrow – despite Bank of England warning

Barclays yesterday raised its Loan to Income multiple to 4.49 across all its mortgages, meaning that customers including first-time buyers can borrow up to 4.49 times their annual income.

Until yesterday, it allowed 4.49 Loan to Income for those earning over £50,000.

For those earning less, the maximum Loan to Income was four times annual earnings.

Barclays’ move comes after the Bank of England warned of ‘riskier’ lending.

The Bank said earlier this month it was concerned that 27% of borrowers are stretching themselves to take out mortgages more than four times their annual income.

Banks are not allowed to hand out more than 15% of their total lending to mortgage customers wanting to borrow over four-and-a-half times income. The Bank’s concern is the sharp rise in lending at just under this level.

Nine-branch firm acquires smaller competitor to take rental portfolio to over 2,500 properties

Keatons has acquired long-established east London brand Elizabeth Pryce whose two offices are based in Canary Wharf and Wanstead.

This acquisition will take Keatons to over 2,500 managed rental properties with a value in excess £1.25bn.

Elizabeth Pryce and Keatons were both launched in 1998.

Keatons is celebrating its 20th anniversary in May, having opened its first branch in Mile End in 1998 and since then opening a further eight offices across London. It currently has around 100 members of staff.

Keatons is retaining the Elizabeth Pryce team who will work alongside directors to implement the transition.

Keatons co-founder Kye Wheatley said: “This is a really exciting acquisition for us as Elizabeth Pryce has a great reputation in east London and its excellent team of people will further complement our number one position in that area.”

Ask Ami! Energy supplier Spark launches chatbot to tackle simple customer service needs

Energy supplier Spark, which specialises in deals in the rentals market with letting agents, has invested £1.5m to create an automated assistant for customers.

Tenants will be able to communicate online with the smart assistant chatbot called Ami to manage routine aspects of their account such as going paperless, submitting meter readings or accessing bills.

Much of this can already be done through Spark’s website or existing apps, but Spark says this will free up its customer service agents to deal with more complex inquiries.

Chris Gauld, chief executive of Spark, said a second release of the chatbot will include integration with live chat, the ability to set up a direct debit plan and to provide customers with top-up codes for their smart meters.

Spark is also working on a digital home move assistant that will help set up basic utilities, council tax and broadband.

Gauld said: “We’re constantly looking for ways to improve our customer experience and make it easy for them to engage with us.

“This is a bumper month for us, with loads of new digital tech going live after months of hard work by our in-house digital team.

“We see this as key to bringing down prices and increasing engagement amongst renters, buyers and sellers in the home move chain.

“Our customers tell us that they’re really comfortable managing their accounts at a time and in a place that suits them. We’re delighted to step up to the mark and continue to meet that need.”

Debt-ridden Countrywide insists it will re-set itself after disastrous retail strategy

Countrywide has declared that it will re-set itself the disastrous ‘retail’ strategy which was the hallmark of Alison Platt’s time in office.

Its annual report is introduced by executive chairman Peter Long, who has effectively taken over her role in the interim.

Long savages the ‘retail’ approach saying: “The restructuring of the Group in 2015 assumed that sales and lettings was a single retail business and a retailer was recruited to lead this area.”

He says this policy, which led to the recruitment of Sam Tyrer from Carphone Warehouse, was wrong. Tyrer, who also designed Countrywide’s digital offering which, along with its ‘retail’ philosophy has also been reversed, left last summer.

The annual report also spells out the cost of redundancies over the last two years, but Countrywide’s biggest problem appears to be its debt.

During 2016, when the ‘retail’ experiment was at its height, the bill in respect of “associated redundancy” costs was £8,109,000.

Last year, a further £7.9m was spent “in respect of redundancy costs and cost optimisation”.

The AGM, on April 25, is likely to be a lively affair with shareholders being presented with several sets of figures.

These include sales of 41,722 homes last year, well down on the 50,362 of 2016, with 62,646 properties under management compared with 65,352 in 2016.

The numbers exclude the London market, where Countrywide sold 8,778 homes (down from 10,951 in 2016) and managed 26,644 properties, up from 2016’s 25,792.

Countrywide’s annual report for last year is headed “Resetting, Refocusing, Responding”.

It also reveals that the business now has a network of over 850 branches – although Countrywide’s own website seems to talk about the past with its reference to  “1,200 locations across the UK”.


However, the report also refers to “approximately” 649 sales and lettings branches. The business confirms it saw an increased level of staff churn last year.

The report says that “replacing this expertise is a key area of focus”.

Long, who says that this year has started with a management change and a recovery plan, warns: “2018 will not be an easy year for the Group as we strategically reset the business.”

The report, which notes that Platt resigned on January 24 this year, says that Long will receive a fee of £180,000 from that date in recognition of his executive role, on top of the £180,000 he gets as non-executive chairman.

The total amount is fixed, regardless of whether Long under-achieves, meets or over-achieves on targets.

The report says that Platt earned £575,000 in both 2016 and 2017, plus further pay taking her total to £676,000 in both years.

As a non-executive director for Tesco, she retained a fee of £84,500.

  • Countrywide has also announced the departure of Dan Channer, of Finders Keepers in Oxford, which was sold to Countrywide in 2016. He leaves next month and will be succeeded by Paul Rushworth.


GDPR: Don’t let anyone scare the living daylights out of you

Not a day has gone by without some ‘expert’ or other telling us about the GDPR May 25 ‘deadline’ and of course the potential for a €20m penalty for breaching the Regulations.

Having been around compliance for far too many years it amuses and irritates me in equal measure, because it happens every time there is any new legislation.

Here’s my take on it. There is not an agent in the UK that will ever be issued with a €20m penalty. It is simply not possible! The figure is bandied around just to scare the living daylights out of businesses. And, given the calls I have had from agents, it has definitely done that.

Furthermore, the concept of a May 25 deadline gives the impression that agents will be penalised on May 26 if they haven’t put everything in place to comply. This again is nonsense. No agent will be penalised on May 26, even if they have done absolutely nothing to upgrade compliance.

Elizabeth Denham, the Information Commissioner, said in a statement: “I want to reassure those that have GDPR preparations in train that there’s no need for a Y2K level of fear. GDPR compliance will be an ongoing journey. It’s an evolutionary process for organisations.”

I believe that it is almost inconceivable that Information Commissioners Officers will proactively enforce the legislation in the early stages for several reasons.

First, because they will not have the manpower or resources to do so. I know of only three agents that had ICO action taken against them under the Data Protection Act in the past five or six years.

Secondly, the Regulation covers ever single business in the EU that holds even a small amount of personal information about individuals, and so does anyone really believe that little estate agency businesses will be anywhere near the top of any priority list? Of course, they won’t.

Thirdly, there are multiple interpretation issues still to be resolved and more will arise as matters progress.

Lastly and probably the most important is that the ICO have far bigger fish to fry than small estate agency businesses.

We have all heard of the problems these large international organisations have had in the past with compliance to the Data Protection Act. They are the ones that should worry, because surely, the ICO will focus on them – if only because that is where the big penalties are lurking!

Look back at Anti-Money Laundering enforcement by HMRC. They only really had estate agents to think about and who did they hit early on? The corporates. Why? Big penalties!

I don’t want any agent to think that they can be complacent, because that would be trivialising the obligation changes, when they are important. I also do not want agents to think it will be fine to sit back and wait, because it won’t be.

The biggest risk for agents will be email marketing and the potential for complaints to be made. If the correct route isn’t taken when consumers’ personal data is obtained or when consumers tell agents they want to ‘opt out’ or be ‘forgotten’, it will leave agents open to a complaint. In these cases, you may be looking at paying compensation, so get that right. Oh, and watch out for the professional compensation chasers.

Given the points made above I do not believe that 100% compliance is possible currently, but implementing a set of basic changes over the next couple of months will get most agents into a reasonably compliant state and this can be improved, where necessary, in the months that follow.

With this in mind Compliance-Matters have put together a compliance pack specifically aimed at agents. It includes an audit form to complete, which gives advice where a non-compliance is indicated. It also includes several template documents and clauses for agents to adapt to fit with their business model, including a policy template.

EYE readers can buy this pack until May 1 at a 50% discount by quoting Property Industry Eye. Simply click HERE for more information or for an application form.

David Beaumont runs EYE’s free compliance helpline (0161 727 8191) for our subscribers, and heads up Compliance-Matters, a business specialising in providing compliance services to agents on the many requirements agents must meet

Property sales bounce back in all but one UK region as first-time buyers replace investors

Residential property transactions rebounded in most UK regions during February, HMRC data shows.

The taxman’s UK Property Transaction Statistics for February 2018 shows 83,230 sales last month on a non-seasonally adjusted basis.

This is an improvement on the 81,580 recorded in January and reverses two consecutive months of falls.

England saw a 3% increase on a monthly basis to 72,140, while Wales was up 1.8% to 3,790.

Northern Ireland saw a 14% jump to 1,950, while Scotland was the only region to see a fall, down 14.2% to 5,350.

However, on a seasonally adjusted basis, HMRC says the transaction figures are down 0.3% on a monthly basis to 101,010, down 0.7% annually.

Brian Murphy, head of lending for Mortgage Advice Bureau, said: “What we can interpret from the statistics is that the housing market is continuing on a steady course, with transaction numbers broadly unchanged on the previous month and only very slightly reduced on the same time last year.

“This underscores industry forecasts that the market will continue to perform at the same level this year with a relatively steady number of transactions at a topline level, although the mix of buyers is changing as we see fewer investors, but the slack being picked up at entry level by first-time buyers.

“Having said that, as we continue to see a diverging regional picture with some areas experiencing a significant upturn in buyer activity, this overall trend masks the fact that some towns and cities have seen higher than anticipated levels of buyer activity in the first two months of this year.

“This ‘two tier’ market is therefore propping up the more subdued levels of activity in London and the south-east, a reversal of what we’ve seen in previous years, and potentially an indicator of what we may see over the course of the next few months.”

* However, haart’s monthly report found that transactions were down in February.

The agency said that buyer demand surged 20% last month and was up by 14% on February last year.

It also reported a rise in viewings and a 15% increase in transactions in London.

But transactions generally across England and Wales were down, however, by nearly 7% on the month and by 3% year on year.

Haart also says that house prices at exchange are down 2% on the year.

All the figures are from haart’s own network of some 100 branches in England and Wales.