Monthly Archives: March 2020

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Agency cartel scandal – watchdog wants agent directors disqualified

Agency cartel scandal - watchdog wants agent directors disqualified

The Competitions and Markets Authority has started court proceedings seeking the disqualification of two estate agency directors over a price fixing scandal.

The CMA has this afternoon announced that it has issued proceedings in the High Court of Justice, Business and Property Courts seeking the disqualification of:

– Stephen Jones, a director of Richard Worth Holdings Limited and Richard Worth Limited (in administration); and

– Neal Mackenzie, a director of Michael Hardy & Company (Wokingham) Limited, Michael Hardy & Company (Lettings) Limited and Geocharbert UK Limited.

The Richard Worth and Michael Hardy firms, together with two other estate agencies, entered into an anti-competitive agreement to fix a minimum level of commission fees for the provision of residential sales services in the Berkshire area.

Shortly before Christmas the news broke of the CMA’s fines – totalling over £605,000 – on three of the firms involved in the scandal. This followed a year-long investigation.

The CMA also revealed emails sent between people working at Michael Hardy, Prospect, Richard Worth and a branch of Romans; the discussions took place between September 2008 and May 2015 and were part of what the CMA claims were a “concerted effort” to maintain a minimum commission fee for sales in the Wokingham, Winnersh, Crowthorne, Bracknell and Warfield areas of Berkshire.

This afternoon’s announcement says the CMA issued proceedings under section 9A of the Company Directors Disqualification Act 1986 following an investigation into the directors’ conduct in relation to the breach of competition law.

“It is now for the court to decide whether to make a disqualification order against each director” says the authority.

The CMA continues: “Provided they continue to comply with the terms of their leniency agreement, the CMA will not seek the disqualification of the co-operating directors of the two other estate agencies, which qualified for leniency under the CMA’s leniency policy.”

Under the Company Directors Disqualification Act 1986, the CMA may seek the disqualification of an individual from holding a company directorship or performing certain roles in relation to a company for a specified period where that individual was a director of a company which has breached competition law and their conduct makes them unfit to be a director. The CMA may seek disqualification by court order or may accept a legally binding undertaking.

Conquering Corona – portal offer, live events, mental health help

Conquering Corona - portal offer, live events, mental health help

Hello and welcome to the latest edition of Conquering Corona, our daily update helping the industry cope with the current crisis.

If you have appropriate advice to share with the industry, please email us on press@estateagenttoday.co.uk and we’ll let other agents and suppliers see it too.

Firstly today there’s an offer by high-profile free to list portal Residential People, which is allowing agents to enjoy all its premium features and advertising for free whilst the pandemic is ongoing – additionally, existing customers will have their contracts extended.

Residential People’s ‘featured property’ listing offers agents the ability to exclusively advertise within a desired location, and gives them access to an online marketing suite. You can see more here.

“The Coronavirus has had a drastic impact on the livelihood of estate agents and businesses across the UK” says Residential People sales and managing director, Roy Bartolo.

Now news of a survey by the lettings trade body the Residential Landlords Association; it’s asking members a series of question on the impact of Coronavirus.

There’s been a strong response so far, so if other RLA members want to participate – and it’ll take just a few minutes – you can click here.

Now an idea put forward by London agent Kristjan Byfield, who is urging agents to undertake regular live events online where they can share their knowledge and experience.

He’s called in the #AgentsHereToHelp initiative and hopes the idea will lift agents’ spirits during the crisis as well as share ideas.

Some 20 agents have already signed up including David Lee, Keller Williams, Fine & Country*, Roseberry Newhouse, Danelaw Real Estate, Maurice Kilbride, NestledIn, Normie & Co, Jackie Oliver & Co, McDowalls, Mr Green, Ferndown, Robinson Michael & Jackson, Logic Estates, GoView, Dreamview, Stones and Belvoir, as aeell as Kristjan’s own agency base property specialists.

He wants to launch this campaign in the next week and has set up a registration form for agents to complete – you can see it here.

Auction success shows property sector can still thrive – claim

Auction success shows property sector can still thrive - claim

Two auctions held behind closed doors have been deemed a success, and evidence that the property market can still function despite the lockdown.

Savills has held its first ever remote-bidding-only auction, run by a single auctioneer supported by almost 30 staff working remotely connected using technology.

Over the course of the day it raised over £18m and successfully sold 67 per cent of the lots – taking 3,000 remote bids.

The company – which has its next auction on Wednesday May 6 – will supply an increased number of photographs alongside a virtual tour and floorplan for all lots.

Meanwhile SDL Graham Penny’s 100th Derby auction, and the first in its history to be held behind closed doors, was a success according to auctioneer Andrew Parker.

The firm says that for the 500 viewers watching on the internet, very little looked different – and the bids came in as thick and fast.

With over 120 pre-registered remote bidders, buyers placed their bids on the telephone, by proxy and over the internet, and more than £2.6m was raised for sellers.

“It was not the 100th auction celebration we had planned but we were delighted to have such great support from our remote bidders. I missed seeing everyone at the auction but it was wonderful to know they were out there, watching from the safety of their own homes” says Parker.

“We have proved that, despite the current social distancing rules, it is possible to keep the property industry moving – and that buyers are showing just as much interest in our properties as before.”

Big surge in distress sales even before virus – top agent

Big surge in distress sales even before virus - top agent

One of London’s most experienced estate agents says there has been a very significant surge in foreclosure sales in part of the capital’s housing market – even before the Coronavirus outbreak began.

Marc Schneiderman is the director of Arlington Residential, an independent agency that offers sales and lettings at the middle to top end of the market in central and north west London.

He says that clearly during the lockdown period that will be almost no new business, although he notes that predatory buyers are already on the prowl for casualties of the crisis – forced to sell at significant discounts.

However, Schneiderman believes there have been significant weaknesses in the market even before the Covid-19 calamity.

“Notwithstanding this current crisis, never before in my 35 years as an agent can I recall so many sales on behalf of banks and mortgagees in possession” he says.

“The property market has always been a barometer of the business world and reflected how well industry and retail is performing. For some time now bank foreclosures and mortgagee possession sales have been prevalent at the top end of the market.

“At the end of 2019 my firm acted on behalf of receivers on the sale of one of London’s largest flats. This penthouse apartment had an impressive 8,342 square feet of space and a further 4,125 square feet of terraces. It overlooked Regent’s Park, had underground parking for seven cars and an asking price of circa £10m.

“This is one of many receivership sales that have taken place in recent months at the top end of the London property market and it is no longer unusual for us to be contacted by a bank who are foreclosing on a £10m, £20m or even £30m property.

“Sadly it is just indicative of the wider depressed economic environment in which we find ourselves as a country”.

Separately, Savills has issued its routine quarterly figures for Prime London – unusually ending them not at the end of the quarter, but at mid-March to reflect the situation before the Coronavirus outbreak.

Nonetheless, in an introduction to the figures, the agency admits that the virus has impacted the market and Lucian Cook – the agency’s head of residential research – says: “It seems inevitable that there will be a period of low transactional activity over the spring and summer months, so it will probably be autumn before we can understand what this will mean for future price growth.”

Two new portals set to launch despite Coronavirus chaos

Two new portals set to launch despite Coronavirus chaos

Two property portals insist they’re going to launch this spring despite the Coronavirus chaos effectively closing down much of the housing market.

OpenBrix has been 18 months in the making and says it’s finally launching at an unspecified date in early April.

It says it’s seeking to address what it describes as agents’ frustrations with the current leading portals – lack of control, price hikes and “the uncomfortable feeling that the agents hard acquired and costly data is being sold without benefit to the agent.”

It says its structure is reliant on a database shared across a Blockchain network of agents, rather than located at one central point.

Its structure is similarly devolved – it says each agency brand, irrespective of size, will have one vote in determining strategy and policy. It describes this as “community control” and pledges that “all price increases will have to agreed and voted on by the community.”

And it adds: “If the UK agents want control of a portal for the first time, then this is the solution.”

Meanwhile Homesearch, a relatively new supplier to the industry that has until now specialised in data for agents, says it too is to launch a portal – this time on May 25.

The company says it has information on Britain’s entire 29m housing stock and pledges to be not just another portal but “the future of the industry”.

Creators Giles Ellwood and Sam Hunter say on their website: “We have self-funded the business since 2017 and have reinvested over £3m in data and engineering. Last year alone our software delivered over a billion pounds worth of market appraisals to the agents using our services. Over the past few days, with help and honest truths from agents closest to us, we believe we have engineered a long term solution. Not just another portal, but the future of the industry. A platform that networks you, the agent, with every home and client in the country.”

Calling itself a truly agent-first platform it describes itself as: “A network where consumers can interact with your agency and your instructions, as well as placing your agency in front of them for every other property they search for in your market. Everything will lead back to your website and the phone numbers and links will be yours, not ours.”

It promises agents will “not ever pay to list instructions” but property developers and house builders will; half of those charges will go to homeless and social housing projects.

Coronavirus outbreak could cost the buy to let sector £14.9bn in three short months

Market: Brexit Bounce giving way to Corona Crippling, says agent

The latest research by Deposit Replacement Scheme, Ome, has found that the impact of the Coronavirus could cost buy to let landlords nearly £14.9bn should tenants be unable to pay rent during the three month support period announced by the government yesterday.

Last night the government announced that they would suspend new evictions and halt new possessions proceedings to the court while the Coronavirus crisis persists. They have also protected landlords as well as tenants with a three-month mortgage payment holiday on buy to let mortgages.

However, if tenants simply can’t pay, this holiday will do little to help landlords who will still have to pay once the three months is up, with or without the rental income from their tenants.

Ome’s research shows that there are 5.2m households currently within the private rental sector alone and without the ability to work and pay their rent, the buy to let sector could see a loss of £4.97bn every month based on the average monthly rent of £955 alone. Over three months this climbs to a huge £14.9bn.

Nationally, this lost income is highest in England with potentially £11.6bn lost in rental income, while London is home to the biggest sum regionally with a potential £4.9bn lost in three months alone.

What does this mean for the average landlord?

There are some 2.6m landlords operating within the UK buy to let sector meaning the average landlord has a portfolio of two rental properties. With an average rent of £955 and a loss of three months’ rental revenue across both properties, they could be facing an individual £5,730 shortfall in rental income.

With a ratio of 2.1 properties per landlord in Scotland, the loss is at its greatest at £6,146 over three months with Northern Ireland also high at £6,083.

Not only does this huge sum have implications on a sector that has already seen its financial return stretched by the government, but it could see tenants out of pocket even further should landlords look to keep their tenancy deposit to account for lost rental income.

Co-founder of Ome, Matthew Hooker, commented: 

“It’s great news that the government are providing some financial respite for the nation’s landlords, however, it’s more of a weekend away than a holiday and once expired, UK landlords are still facing the cost of a buy to let mortgage without the rental income to pay it.

It’s by no means the fault of the tenant if they are unable to pay but there is a very real chance that landlords will turn to the rental deposits at the end of a tenancy in order to recoup this lost rent. While this would be unfair on a tenant who has otherwise kept the property in good order, it may well be the case that landlords are simply left with no choice.

The silver lining at least is that hopefully, not all tenants will be unable to pay their rent and so this sum of lost rental income should reduce, but whichever way you look at it, the UK rental sector is in for a tough few months.”

 

Location
Private renters
Average rent
1 month B2L lost revenue
3 months B2L lost revenue
Number of landlords
Average number of B2L properties
Cost per landlord
England
4,552,000
£852
£3,878,304,000
£11,634,912,000
2,266,770
2.0
£5,753
Wales
176,000
£515
£90,675,200
£272,025,600
104,450
1.7
£4,828
Scotland
340,000
£748
£254,481,840
£763,445,520
158,505
2.1
£6,146
Northern Ireland
138,000
£627
£86,526,000
£259,578,000
64,995
2.1
£6,083
UK
5,206,000
£955
£4,971,730,000
£14,915,190,000
2,594,720
2.0
£5,748
Location
Private renters
Average rent (2019)
1 month B2L lost revenue
3 months B2L lost revenue
London
964,000
£1,697
£1,635,908,000
£4,907,724,000
South East
713,000
£998
£711,574,000
£2,134,722,000
South West
474,000
£816
£386,784,000
£1,160,352,000
East of England
437,000
£869
£379,753,000
£1,139,259,000
North West
571,000
£621
£354,591,000
£1,063,773,000
West Midlands
405,000
£662
£268,110,000
£804,330,000
Yorkshire and the Humber
427,000
£617
£263,459,000
£790,377,000
East Midlands
359,000
£628
£225,452,000
£676,356,000
North East
202,000
£533
£107,666,000
£322,998,000

House price gap between sellers and buyers reduces

Unmanaged vacant properties may invalidate insurance - claim

Leading lettings and sales agent, Benham and Reeves, has released the latest of its very own quarterly house price index based on data from the top four existing indices, looking at where the average house price sits and how the gap between buyer and seller expectation and actual sales has changed.

The Benham and Reeves House Price Index combines data from the four leading industry indices to give a singular figure of how the UK market is moving based on both buyer and seller sentiment, as well as looking at the difference in these indices and what they reveal about the state of the current market.

Current property values

The latest index from Benham and Reeves for Q4 2019 shows that the current overall average UK house price is sitting at £251,912 having dropped marginally by -0.2% on the previous quarter, although prices were up by 1.4% on an annual basis.

In London, the average property value also dropped marginally to £511,166, down -0.4% on the previous quarter, down -0.7% on an annual basis.

Seller and buyer expectations show signs of alignment 

The latest quarterly data from Nationwide and Halifax shows that the amount UK buyers are committing to borrowing has increased slightly by 0.31% to £225,188. At the same time, the average asking price has fallen by -1.02%, while sold prices are up 0.4% to £234,167.

Despite a market bounce following the election, it’s clear that months of Brexit uncertainty have seen the expectation gap between buyers and sellers close. The gap between buyer expectation and asking prices dropped -1% in Q4 to 35%, while there was also a -1% decrease between asking price and sold price, down to -23%.

However, in London, this gap remained consistent with a 33% increase between the price at which buyers were being approved for a mortgage and the asking price expectations of UK sellers, while there was a -22% drop between this asking price and the average sold price.

Director of Benham and Reeves, Marc von Grundherr, commented: 

“It’s only natural that asking prices will remain at a higher level than the average mortgage approval or sold price, but it’s interesting to see that months of Brexit uncertainty had started to bring this difference in buyer and seller expectations closer together.

As buyers committed to slightly more in the way of a mortgage approval price to take advantage of lower market values and lower interest rates, sellers realised they had to lower asking expectations to secure a deal in tough market conditions. This also translated to a smaller gap between asking price and the sold price accepted.

However, with a huge spike in activity following December’s election, we will no doubt see asking prices start to lift once again, as UK sellers look to take advantage of returning buyer demand.

While this asking price expectation will always be higher than the reality of the average sold price, an optimistic increase in a stronger market places sellers in a better position to negotiate a stronger sale price before accepting an offer.”

Benham and Reeves House Price Index
UK
Year
Quarter
Average House Price
Quarterly Change
Annual Change
2018
Q1
£245,074
Q2
£248,245
1.3%
Q3
£250,244
0.8%
Q4
£248,513
-0.7%
2019
Q1
£247,463
-0.4%
1.0%
Q2
£251,682
1.7%
1.4%
Q3
£252,487
0.3%
0.9%
Q4
£251,912
-0.2%
1.4%
London
Year
Quarter
Average House Price
Quarterly Change
Annual Change
2018
Q1
£519,238
Q2
£520,412
0.2%
Q3
£517,059
-0.6%
Q4
£514,976
-0.4%
2019
Q1
£504,731
-2.0%
-2.8%
Q2
£512,193
1.5%
-1.6%
Q3
£513,180
0.2%
-0.8%
Q4
£511,166
-0.4%
-0.7%
UK
Year
Quarter
Mortgage Approvals Price
< Difference >
Asking Price
< Difference >
Sold Price
2018
Q1
£218,231
37.8%
£300,684
-25.4%
£224,319
2018
Q2
£219,116
40.4%
£307,745
-26.3%
£226,869
2018
Q3
£221,959
37.4%
£305,060
-24.1%
£231,438
2018
Q4
£220,522
37.1%
£302,239
-23.8%
£230,274
2019
Q1
£221,578
35.6%
£300,481
-24.3%
£227,608
2019
Q2
£225,987
36.2%
£307,691
-25.5%
£229,276
2019
Q3
£224,490
36.5%
£306,321
-23.6%
£234,074
2019
Q4
£225,188
34.6%
£303,182
-22.8%
£234,167
London
Year
Quarter
Mortgage Approvals Price
< Difference >
Asking Price
< Difference >
Sold Price
2018
Q1
£473,776
30.8%
£619,905
-23.1%
£476,653
2018
Q2
£468,845
34.0%
£628,174
-23.8%
£478,555
2018
Q3
£468,544
31.2%
£614,537
-21.9%
£480,090
2018
Q4
£466,988
31.5%
£614,044
-22.4%
£476,273
2019
Q1
£455,594
32.8%
£605,178
-22.9%
£466,356
2019
Q2
£465,722
32.7%
£618,232
-24.5%
£466,683
2019
Q3
£460,686
33.1%
£612,967
-21.9%
£478,594
2019
Q4
£458,363
32.9%
£609,315
-21.5%
£478,227

Say No To Rightmove – the fight goes on says campaign leader

Say No To Rightmove - the fight goes on says campaign leader

The key figure behind the Say No To Rightmove campaign says the fight for more realistic fees goes on – and agents are still joining the campaign hour by hour.

The portal caved in to pressure from agents a week ago and agreed a short-term 75 per cent fees reduction to help the industry through the Coronavirus crisis.

However Robert Sargent, chief executive of the Acorn Group, has today told industry analyst Chris Watkin in a video interview that the campaign now has 900 business owners with more still joining “on an hourly basis.”

Sargent’s company has 36 branches across London and the south east and spends close to £500,000 on fees to the portal.

He says the short term fees reduction was a sign that Rightmove realised the importance of agents who provided its content, but it was simply the portal realising what it had to do for an industry going into lockdown – it was not a solution to a longer term problem.

The core of the issue, says Sargent, is that independent agents pay top dollar – up to £3,000 per branch per month – whereas corporates can negotiate substantial economies of scale and thus smaller fees.

The interview is just under 10 minutes long and provides a fascinating insight into the campaign which has caught the imagination of much of the industry, and what it plans next.

Housing market could be ‘frozen’ to avoid Coronavirus crash

Housing market could be ‘frozen’ to avoid Coronavirus crash

It’s been reported that the government is talking with banks and building societies about putting the housing market ‘on ice’ during the virus crisis to avoid a crash and to allow financial institutions to offer mortgages.

Today’s Financial Times says UK Finance – the trade body representing mortgage lenders – has told members: “UK Finance has been seeking urgent clarification from the government about whether home purchases should continue at the current time, particularly as physical property valuations are no longer possible.”

One suggestion is that offers of mortgages in principle could extend to six months rather than three.

The FT story follows growing concern yesterday that many mortgage lenders were withdrawing their products or severely restricting access to them; this was thought to be because valuations were not possible ‘in person’, and because of uncertainty that homes would retain their value over the coming months.

Lloyds Banking Group and Barclays, two of the UK’s biggest lenders, are temporarily pulling many of their mortgages. Lloyds has stopped offering mortgages or remortgages through brokers unless the customer has a deposit of at least 40 per cent of the value of the property.

Barclays told brokers it would no longer offer mortgages for customers that did not have a deposit of at least 40 per cent, but it will continue to offer remortgaging deals.

Last evening the Housing Secretary, Robert Jenrick, took to Twitter to say: “I know that many people across the country are due to move house tomorrow. Whilst emergency measures are in place, all parties should do all they can to agree a new move date. If you’re socially isolating or being shielded, it’s especially important to try and delay.”

And this was followed up by tweets from the MHCLG saying: “People should delay moving where possible … Estate agents must work remotely to support their clients … If your home is on the market, you shouldn’t let buyers visit your home.”

Earlier this week the Ministry of Housing, Communities and Local Government had advised buyers and renters to, if at all possible, delay moving home until the Coronavirus crisis has subsided.

The same guidance also allows tradespeople to continue repairs and maintenance work, “provided that the tradesperson is well and has no symptoms.”

“No work should be carried out in any household which is isolating or where an individual is being shielded, unless it is to remedy a direct risk to the safety of the household, such as emergency plumbing or repairs, and where the tradesperson is willing to do so.”

Rightmove “taking appropriate measures” to shore up company

Rightmove "taking appropriate measures" to shore up company

Rightmove has this morning told its shareholders it is “taking appropriate measures” to shore up the company.

It gives no indication of what those measures are but it says in a trading statement released at 7am today: “In this period of unprecedented uncertainty, we are unable to quantify the impact of COVID-19 on our financial and trading performance at this stage. Accordingly, the group is suspending all existing financial guidance for 2020. The board is confident that the company has the financial capacity to withstand this challenging period.”

It has scrapped a dividend to shareholders and suspended financial guidance on how the firm will perform this year.

Shareholders were to have received a final dividend payment of 4.4p per share for the year ending December 31 but in the light of the Coronavirus crisis, that has been stopped.

In a bid to pacify those with a stake in the company, Rightmove has told them: “The board recognises the importance of the dividend to our shareholders and will consider the timing of the reinstatement of the share buyback programme and the quantum of any interim dividend for 2020 in due course.”

It goes on to say: “The strength of our balance sheet and business model has enabled the board to act quickly to support our customers [the offer to agents] as announced on 20 March.”

A week ago today Rightmove revealed it would slash its charges to agents by 75 per cent for four months.

The portal also apologised for getting it so badly wrong with its deferred payment scheme, which was derided by customers – many of which left the portal in disgust.

A statement from Rightmove to agents at the time said: “I don’t think many of us would have predicted sitting in our offices last week that we’d be where we are today, with the possibility of more restrictive measures approaching. Earlier this week we offered our independent estate and lettings agents a deferred payment scheme to help them through the next few months. The situation in the UK has changed rapidly and we’re sorry that it was too little and now inappropriate for the challenges we all face.”

The portal went on to say a week ago: “Instead of offering the deferred payment scheme to independent estate and lettings agents, we’re going to reduce your Rightmove bill by 75% for four months, starting from 1st April whether you advertise residential properties, new homes or commercial premises. You don’t need to apply for this discount, your invoice will automatically come through reduced by 75%. To be clear, this is not a deferred payment, this is a discount that you don’t need to pay back.

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