Savills is the latest agency to warn about the possible threat of Coronavirus to its business activities and success this year.
In its preliminary final results for 2019, issued this morning – and showing a strong performance for the international property group – the company says: “It is difficult accurately to predict the full impact of this issue on our business for 2020 as a whole. However, given the nature of the real estate market, we would anticipate that any near term slowdown caused by sentiment and specific measures taken to combat COVID-19 would generally result in a temporary delay in activity rather than an absolute loss of business.”
It continues: “In Asia, particularly China, it is clear that COVID-19 is having a significant impact on transactional activity and may have a similar effect elsewhere, depending to an extent on the length and severity of each outbreak. Our focus is on the welfare of our staff and clients and we have instituted protective measures in locations potentially affected by this virus.”
The trading figures for the company – which has a vast commercial and international infrastructure as well as its UK resi sales and consultancy activities – show a successful 2019.
Today’s statement says: “Our UK residential business continued to perform well in challenging conditions for much of the year which saw the UK market volume of transactions with values greater than £1m declining by two per cent year-on-year. “Against this backdrop and buoyed by the clear General Election result in December, Savills UK Residential business performed well, growing revenue by six per cent year-on-year.”
The company also says it successfully acquired and integrated London agency Currells.
Countrywide’s share price fell by as much as 17 per cent at one point yesterday afternoon as investors assessed the latest pratfall by the company – the collapse of its bid to sell its commercial arm.
As we reported yesterday there was an announcement from Countrywide a few minutes before the Budget, prompting industry cynics to say that this was a classic example of attempting to bury bad news.
The announcement effectively admitted that its bid to sell Lambert Smith Hampton to Monaco-based John Bengt Moeller for £38m was dead in the water, with new buyers being sought.
The revelation was described on Twitter as a “shambles” by respected property commentator Peter Bill, the former editor of Estate Gazette.
In a brief trading update released at the same time Countrywide reported a £17m drop in revenues last year and revealed the tenant fees ban had cost it £12m.
Within a few minutes of the announcement the Countrywide share price plummeted from 265p to 220p; it recovered slightly during the afternoon to close at 232.4p, down well over nine per cent.
Nested is the latest online agency to base a marketing campaign around criticism of established estate agents.
In three 30-second TV ads it accuses established agencies of failing to give a complete service to their customers.
Instead it claims to be “unique” in supporting vendors both through the sale of their existing property and their purchase of a new one.
A statement issued to the press in support of the advertisements accuses High Street agencies of focussing “only on selling properties” and asking what it would be like if other professions did the same approach “and only did half a job.”
Despite the onset of the Coronavirus crisis, one of Nested’s advertisements features paramedics and an ambulance “with hilarious results” according to the press statement issued on behalf of the agency.
“Making the investment into producing an … advertising campaign has been a huge step for us at Nested, and we’re excited to see how the ads are received by consumers. They aim to highlight our novel and hassle-free approach to an archaic and fragmented industry” says Ben Bailey, head of brand and communications at Nested.
Almost exactly a year ago Nested, which offers vendors a form of guaranteed sale, laid off 20 per cent of its workforce because of a drop off in business according to a technology publication.
This was despite the fact that in 2018 Nested raised £120m in one funding round and £80m in another, as well as earlier funding when the company launched.
Nested operates in London only – although in 2017 it told Estate Agent Today that it hoped to expand to cover Bristol, Oxford, Cambridge and Manchester the following year.
An agency has repaid a £6,000 reservation fee to someone who thought they had purchased a property for £83,000 but was later told they must pay £100,000.
The Sunday Times reports a case where a reader made what they believed to be a successful bid of £83,000 for a property in Newport, south Wales, in an online auction held by Pattinson.
At the time of the auction they paid a £4,150 deposit and the £6,000 reservation fee.
But when they later tried to visit the property they could not, and told the paper: “My solicitor subsequently confirmed that the house had been repossessed … by the bank that had provided the mortgage for the previous owner.”
The buyer was told the purchase could only go ahead if they paid the bank’s valuation of £100,000; the buyer could not afford the higher cost but received back only £3,685 – the deposit minus legal fees.
The £6,000 reservation fee was kept by Pattinson at the time, as the firm had said from the outset that the fee was non-returnable.
The buyer concludes in its comments to the paper: “I think it is highly unethical for an auctioneer to list properties under a repossession order without disclosing this to potential buyers.”
The newspaper’s personal finance section pursued the case and obtained guidance from the Royal Institution of Chartered Surveyors that all relevant documents relating to a property should be available for inspection – online, at the agent’s and auctioneer’s office or at the seller’s solicitor.
The buyer claims to have previously been sent a pack containing a draft contract, the property information form and other documents – but none that raised concern with their solicitor.
“RICS found no evidence of misconduct by Pattinson” says the newspaper; nontheless, the paper asked Pattinson to refund the reservation fee – which it has now done.
The newspaper goes on to say that the company apologised for having failed to respond to the buyer’s recent queries. “It said it had been in an ‘unfortunate position’ as ‘the repossession after the sale had been agreed was completely out of our hands’.”
Almost eight in 10 sellers have instructed High Street agents in the past year – a significantly higher figure than 12 months ago.
The study involved 6,000 people and was conducted for Zoopla; specifically it shows 79 per cent instructed High Street agents in 2019, whereas in 2018 the figure was 66 per cent.
Some 20 per cent of the same instructed online agents – although Zoopla’s research shows only nine per cent actually sold through online firms, suggesting the rest went on to commission High Street companies.
“Estate agency as an industry is increasingly diverse and the emergence of onlines and hybrids have certainly given the market a new dimension. That said, with research indicating High Street agents steadfast in their appeal, it suggests all operators are working to differentiate and add value to consumers whether it’s through local knowledge, sage market insight or competitive fees” says Zoopla’s chief commercial officer, Andy Marshall.
“We are also seeing agents actively diversify the services that they offer vendors. Not only does this reap financial rewards for their businesses, but also provides a one-stop shop and eases pain points for buyers and sellers” he adds.
Regionally, High Street agents are most popular in the South West, with 83 per cent of vendors using a traditional firm in 2019. East Anglia and Wales follow with 82 per cent. Scotland saw the lowest proportion of sellers opting for a High Street agent – 64 per cent.
The portal’s survey also suggests that, aside from their core business, agents are diversifying revenue streams.
Some 43 per cent are now offering mortgage advice and brokering, with 42 per cent providing legal services.
The Zoopla survey – conducted before this week’s government statements about possible disruption in the near future caused by Coronavirus – also shows 52 per cent of agents anticipating more properties coming on to the market in 2020.
This is significantly higher than the 39 per cent recorded in 2018.
Estate Agent Today understands that three senior figures have departed from a key central London branch of Knight Frank.
Each of them was a partner in the company and they formed the senior management at the agency’s Kensington office: it is not known why they left.
They are believed to be Tom Tangney, who had been in the industry for over 35 years and had been at Knight Frank for 20 years; Pete Bevan, who had been closely involved in high value PCL sales for some years; and office head Sami Robertson, who was regarded as a key contact in the agency for some Far East clients.
Knight Frank recently lost central London legend Daniel Daggers, known in the industry as Mr Super Prime, who was the subject of media speculation with regard to posts of properties on Instagram. He had sold £3.85 billion of properties including a £95m mansion at London’s St James’s Park, bought by a US billionaire, and an unmodernised off-market house sale in central London worth £45m.
Knight Frank has provided EAT with a lengthy statement about the three Kensington departures, which we have published below; it does not mention any of the three departures by name.
“This is a great opportunity to ensure we have the strongest management and hire the best talent in the market. We firmly believe in recruiting or moving talent from within and in parallel to this, always looking for the very best external candidates within the market who have indicated they would like to join our award-winning team.
“Immediately after the department head for Kensington left the firm, James Pace, proprietary partner and head of the Chelsea office, moved to lead the Kensington sales team. James has been in the Knight Frank Partnership since 2006 and opened the Chelsea office in 2007, building a highly successful team and an unrivalled track record in the Chelsea and wider prime central London market.
“Supporting James, William Allen also joins the Kensington sales team as partner following 10 years at Strutt & Parker in their prime sales team, specialising in the Kensington and Holland Park markets. Tom Van Straubenzee, who jointly runs Knight Frank’s Private Office, will also take up a strategic position working closely with James, William and the existing team moving forward, assisting both vendors and buyers.
“In Chelsea, Charles Olver was promoted to Department Head for sales, taking over from James Pace. Charles has been with the firm for over ten years, based in the Knightsbridge office where he has been a Prime Central London negotiator.
“James is a true asset to our team, with over 25 years of experience and an exceptional track record earned during his time running the Chelsea office. Together with William’s local market knowledge and strong client relationships, they will bring a renewed energy and direction to the Kensington office. Charles is a highly respected agent in Knightsbridge and we look forward to him bringing his enthusiasm and understanding of the PCL market to his new role in Chelsea.
“Kensington is a crucial part of the Knight Frank network of offices and we expect it to remain as such well into the future.”
Increasing numbers of reports suggest that the government will use next week’s Budget to confirm a three per cent stamp duty surcharge on the purchase of homes by non-UK tax residents.
The new surcharge – strongly hinted at by the government for many months – would be on top of existing stamp duty on a property, and on top of the current three per cent additional homes surcharge.
The Financial Times, citing well-placed sources in The Treasury, suggest this measure will be finally confirmed by new Chancellor Rishi Sunak in his first Budget on March 11.
Leading PropTech entrepreneur Neil Cobbold, who is chief sales officer at automated payment platform PayProp, says this new stamp duty will be welcomed by domestic investors who may see competition from their overseas counterparts diminish over the coming months.
“It’s likely to have the biggest effect in the capital, where the government estimates that one in eight new London homes were bought by non-UK residents between 2014 and 2016. The surcharge was previously mooted at one per cent but its increase to three per cent will certainly act as a deterrent” he says.
But Cobbold warns: “Tenants in large English cities could suffer in the long-term if the additional tax burden leads to a fall in overseas investors and subsequently the number of rental properties available” says Cobbold.”
He adds that while there has in the recent past been much speculation surrounding wider stamp duty changes, the government appears to have put those on ice.
“Stamp duty is a hot button for consumers and property professionals, so the calls to reform the system are always plentiful in the lead up to a Budget. Boris Johnson has previously said that stamp duty rates are ‘absurdly high’ so there could be changes later in his tenure.”
“In the meantime, property professionals and consumer groups will continue to lobby politicians to reduce the pressure. Reconsidering the three per cent surcharge on additional homes and the tax rates which affect the very top end of the market would be a good first step” he explains.
Richard Donnell, director of research and insight at Zoopla, also wantsa to see SDLT reform in next week’s Budget.
“It’s time for the Chancellor to turn his attention to the core housing market and review the price bands and five per cent stamp duty rate that covers averaged priced homes across large parts of London and the commuter belt. No government wants to cut taxes indiscriminately, particularly when losses could be high. However, any cut to the rate of stamp duty could stimulate much-needed marketed activity in southern England in particular” says Donnell.
Any bid by Zoopla and OnTheMarket to displace Rightmove as the number one portal in the UK is at best expensive and at worst futile according to a leading analyst.
Mike DelPrete – former head of strategy at a New Zealand portal and a long-standing analyst of estate agencies in the UK and the US – says Rightmove is an example of a company with what he calls ‘network effects’
By this he means dominant online forces such as Rightmove, Facebook, eBay, and Craigslist are enjoy network effects – being ‘the’ place that people want to be seen, or want their products advertised.
“Even if a new entrant’s product is objectively better, a smaller audience of potential buyers and sellers means an inferior consumer proposition. Sellers want to advertise to the biggest audience possible, and buyers want the largest selection possible” he says in his latest report on the state of portals worldwide.
Specifically referring to the UK landscape he says: “For all the cyclical uproar aimed at Rightmove over its ever-increasing fees, its traffic dominance shows no signs of waning. It remains the undisputed best place to advertise properties for sale, with Millions More Buyers than its closest competition.”
DelPrete says all three major UK portals reported higher January traffic than the two previous years but while Zoopla’s and OTM’s percentage gains may sound impressive, they are from smaller bases than Rightmove’s.
“Rightmove’s traffic lead over its next closest rival remains strong and fundamentally unchanged over a number of years, despite several companies attempting to challenge its dominance” he says.
And he adds that even after Zoopla’s $3 billion acquisition by private equity firm Silver Lake in 2018, and OnTheMarket raising and spending tens of millions of pounds to compete, Rightmove’s traffic dominance remains intact.
And DelPrete writes: “The evidence suggests that it is nearly impossible for a runner-up portal to overtake the leader. In fact, there is no evidence that the all-important traffic leadership metric between the top two portals can be budged even a small amount.
“Which begs the question: Why are upstart portals attempting to displace leading portals? OnTheMarket launched in 2015 to challenge the duopoly of Rightmove and Zoopla in the UK. It was founded by a broad consortium of traditional real estate agencies who didn’t appreciate the market and pricing power enjoyed by the existing portals.”
The analyst says there are similar scenarios in Australia and the United States.
He sums up his analysis this way: “Attempting to compete directly with a leading portal is at best expensive, and at worst futile.”
Purplebricks banked more than £18m in fees for thousands of homes it did not sell last year according to this morning’s Daily Telegraph.
It says the agency withdrew 21,380 listings in 2019 as market jitters forced many buyers and sellers to stay put.
The paper cites housing market data firm TwentyCi as the source of the figures.
Purplebricks is quoted in the article saying: “We are very confident our customers understand our upfront fee model and know it gives them a much higher chance of selling, for a much lower cost.”
The agency is also quoted as suggesting that it had saved its successful customers over £150m in fees they would otherwise have paid to traditional agents
An estate agent who swindled a 69 year old woman out of £5,000 has escaped jail – and has been ordered to repay the sum to the pensioner.
Claire Ainsworth’s UK Online agency was instructed by elderly owner Jennifer Scott to sell her house; Ainsworth brokered a sale to a local builder but told the vendor that the purchaser was unwilling to pay over £80,000.
In reality, the builder had said the highest price he would pay was £85,000.
Local media in Burnley report that prosecutor Stephen Parker told a court case: “She told Ms Scott that [the builder] Mr Walker wasn’t prepared to go any higher than £80,000 and Ms Scott reluctantly agreed to sell the property for that price.
However she told Mr Walker that the bottom price was £85,000, but that £80,000 would go through the books and £5,000 was to be paid in cash. Mr Walker paid that £5,000 in cash to the defendant believing that it was going to be given to Ms Scott.”
In reality the vendor knew nothing of the £5,000 until she was talking with the buyer, later.
The matter was reported to the police and now Ainsworth, from Oswaldtwistle – who denied a charge of fraud by false representation – was convicted in her absence when she failed to turn up on the day of the trial.
She had failed in a bid to have the case re-opened.
Defending, Christopher Hudson said his client was a woman of previous good character who was an “intrinsically decent and talented young woman” who bought her own first house at 20 and set up her own agency at 30.
She added: “This was a mean offence and the impact on your victim has been considerable. It isn’t just the money for her. She trusted you. You betrayed that trust.”
Ainsworth was ordered to pay the vendor £5,000 compensation within six months and complete 200 hours’ unpaid work.