Online estate agent’s shares down 12% after it cuts full-year revenue forecast to £175m
The fierce battle for dominance among online estate agents has led to a surge in the number of complaints upheld against them for misleading adverts.
A leading barrister has raised several questions about the duties owed by online estate agents to their customers.
In the Opinion, prepared for the UK PropTech Association (UKPA), Ian Rees Phillips of 6 Pump Court explores how the nature of up-front payment for estate agency services may create a conflict of interest between the online estate agent and property vendors.
The housing market looks like a raging sell — according to the directors of online estate agency Purplebricks, who today sold £24 million-worth of shares.
Stock in the Aim-listed agency which lets London vendors sell their homes from £1200 has tripled in value since December, when Purplebricks said it had sold £2.6 billion of property in six months, compared with £2.8 billion in the entire previous year.
Traditional property companies are under attack from many fronts: transactions in November were 7.3pc lower than a year ago. Political headwinds and greater tax burdens mean the market is slowing; policies, such as the ban on tenants paying letting fees, threaten to eat away at revenues; and now, online agents are eating into the market of traditional players by offering lower prices.
The boss of Purplebricks has shrugged off City question marks over its trading and declared the online estate agent was selling “more than ever before”.
Chief executive Michael Bruce was responding to comments from Anthony Codling, an analyst at Jefferies, who noted the firm’s trading update on Thursday did not provide sales figures.
There has been some discussion as to whether firms that use self-employed local property experts – or their equivalents – should be treated as one business, or several.
Earlier this month, PIE reported that Purplebricks’ local property experts were being individually signed up to The Property Ombudsman.
This prompted speculation as to whether there might be other areas where self-employed local experts should be individually treated, including whether they should have their own Rightmove memberships.
A mansion with 18 bedrooms and a sales tag of £24m is being sold through an online agent.
The property, in Grosvenor Gardens, London, is on the market with Manchester-based My Online Estate Agent which says that it will save the owner more than £400,000 in normal estate agency fees.
My Online Estate Agent charges £549.
Online estate agent Purplebricks presented a mixed bag in its first set of results since listing on London's junior Aim market in December.
Revenues at the company climbed to £7.2m from £800,000 in the six months to October 31.
But pre-tax losses widened to £6.4m, from £2.5m in the same period last year, as it spent heavily on marketing and advertising in a bid to grow its market share.
In a move that will come as a major surprise to many in the industry, the Government has officially said it wants to encourage online-only estate agents.
It is to launch a consultation in the New Year.
In a new Treasury paper on boosting market competition, there is a section headed “Injecting innovation into the process of home buying”.
RADIUS Equity has launched a £750,000 Enterprise Investment Scheme-compliant investment into online estate agency Up Estates.
How much would a tenant have to pay to secure a £1,000-a-month flat through estate agents Foxtons? A total of £420, while the landlord would have to pay another £2,448 for Foxtons to find the tenant and manage the property for a year. It is these sorts of extraordinary fees, common across the fast-growing lettings industry, that are (finally) provoking a revolution in new online players, and that will see high street estate and letting agents go the same way as Blockbuster, HMV and Lunn Poly – business models blown apart by the internet.
Neil Woodford, the ‘star’ fund manager who in August pumped £7m into the Purplebricks.com online agency, has turned out to be top of his class for returns.
An assessment of UK equity income funds over the past six months shows Woodford’s own fund, Woodford Equity Income, to be the most successful with backers gaining 7.4 per cent.
A For Sale By Owner website says that a number of online agencies are really private sales sites in all but name.
Franki Chaffin-Edwards, of The Little House Company, said they are simply dressed up to look like agents, for no other reason than to secure listings on Rightmove and Zoopla.
Chaffin-Edwards, who is community and content manager at the private sales website, emphasised that her comments did not apply to all online agents but specifically to some of the cheaper operators.
None of Britain’s burgeoning number of online estate agents has succeeded in breaking into the Fast Track 100, a barometer of successful private companies.
eMoov chief executive Russell Quirk says the role of traditional estate agents has been overstated and that their principal purpose in many transactions is to act as “a conduit to get properties on to the portals.”
Stalwart supporters of the traditional estate agency model had better not watch Sky next Wednesday - that’s when the outspoken online estate agency eMoov has its first TV ad.
The agency, founded in 2010 by estate agent Russell Quirk and since last December linked with Hamilton Bradshaw Real Estate - owned by former ‘Dragon’ James Caan - has bought space for a 30-second ad highlighting the savings it claims can be made when selling on eMoov in comparison to traditional high street agents.
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