Changing Face of Estate Agency
Traditional estate agency is making way for lower cost, localised sales and lettings franchises, says property and lettings expert Sussanne Chambers, managing director of HomeXperts.
The New Year is started and this is always a time for reflection, as the trends of the past year are analysed and ‘experts’ try to take a best guess at what the next year will bring.
Ten years ago, who would have predicted that social networking websites, such as Twitter, Facebook and Youtube would be so massive? Now even estate agents have their own social networking websites: Ageants and Juicy Red Apple!
As social changes happen all around us the face of housing and estate agency has also changed dramatically during the past five years. Renting a house has become the solution for many people as more transient, chaotic lifestyles make the flexibility to move more important. Young people struggle to get onto the bottom rung of the housing ladder as financial institutions continue with tight lending criteria. During the past ten years there has also been a dramatic improvement in standards of rented homes in the UK in the wake of the Housing Act 2004. Currently 16% of properties in the UK are currently privately let and this figure is expected to rise to 20% over the next ten years.
The credit crunch and continuing problems within the property sector have seen estate agents in their droves closing their doors. But what statistics do not show is the number of satellite branches which have been closed as traditional High Street Agents batten down the hatches and cut costs in an effort to fight the effects of tougher financial times, fewer instructions and reduced commissions.
This reduction of localised agents across the UK has left a gap in the market for a new breed of estate and letting agent. The past year has seen a number of new personal agents start to gain share of the market, filling the space left by the vacating traditional agent. These businesses, which have been set up during the credit crunch with low overheads, often have the owner working from a low-cost, non high street office or at home.
This new breed of self-employed letting and estate agents seems to be a hit with landlords and vendors. Today’s vendor or landlord does not want to deal with the ‘Saturday Girl’ who may not be able to answer even the simplest questions. Discerning vendors want to deal with the business owner who delivers outstanding service levels, is knowledgeable about the local market and personally motivated to sell or let their house.
As the new year starts many employed and unemployed people will be thinking of branching out and setting up their own business; but how can they minimise the considerable start-up risks? For new businesses the figures do not read well – the CBI states that 90% of new businesses fail within the first five years. In contrast, statistics show that if the new business is a franchise, the figures are reversed: 90% of new franchise businesses succeed. The franchise sector has remained remarkably buoyant throughout the downturn. Statistics from the British Franchise Association (BFA) show that nine out of 10 franchises remained profitable throughout the recession.
During 2011 Nat West launched a £100 million franchise fund and Peter Ibbetson, chairman of small business for NatWest and RBS says: “Everybody wants to see banks funding business growth, as well as helping new businesses get off the ground to create jobs – this is exactly what this fund will deliver. The industry has shown itself to be virtually recession-proof, so for the many people left out of work by the recession franchising is a great way to start up a business – plus they get the support of a big brand behind them.”
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