There has been a significant increase in the number of landlords and homeowners switching from short-term lets to longer rentals.
Across the UK there has been a 20% drop in people looking for rooms over the last week due primarily to the COVID-19 outbreak, according to SpareRoom.
With a possible countrywide lock down rapidly approaching, the flatsharing website reports that people with rooms to rent are understandably keen to find tenants.
SpareRoom has seen a 15% increase in adverts from agents and a 12% uplift from landlords, just in the past two days. This is driven, in part, by landlords and homeowners switching from using short-term rental sites like Airbnb as tourism tanks and looking for longer term rents for their rooms.
With supply in some parts of the country currently outstripping demand, 18% of agents have reduced their asking rents in the past two weeks, while 11% of landlords have done the same, with some directly mentioning COVID-19 as the reason for this reduction.
With the growing concern about face to face contact SpareRoom has also seen a real trend over the last week of people moving towards video calls – getting to know each other and having a first view of the property this way.
Matt Hutchinson, SpareRoom director, said: “Whenever there’s uncertainty people put off making big decisions, like moving house. We saw it during the confusion over Brexit and we’re seeing it in a much more marked way now. In contrast, people with rooms to fill are desperately hoping to get new tenants in before the country goes into lockdown.
“Although it’s still early days, we’re also seeing some interesting shifts in behaviour on both sides. Following widespread cancellations, we’re seeing both landlords and homeowners moving from short term rents to looking for longer term security.
“Tenants are getting creative by using video calls to hold virtual viewings and interviews. The people you live with make a far bigger difference to you than the property itself, and video calls are a great way to get that all important first impression before deciding to go and see a property. It also minimises the need for travel and social contact so it’s a win-win.”
Estate Agent Today understands that the Knight Frank agency has been hit by a large number of branch office heads quitting in a short period.
Over the past six months it’s understood the office heads of the Kensington, Richmond, Victoria, Clapham, Islington, South Kensington, Battersea and Wimbledon branches have departed. All have pedigrees on the sales side of the industry.
The company has denied a suggestion that the departures included senior women.
One source has told EAT that the exodus was down to what they called “the Foxtonisation” of Knight Frank in recent times, suggesting that both its structure and culture had changed markedly.
Earlier this month EAT revealed three senior figures had quit the agency’s Kensington office in what a source called “unhappy circumstances” – one of the departures had worked in the industry for 35 years. Earlier this year Knight Frank lost high profile central London agent Daniel Daggers – known in the industry as Mr Super Prime – who had been the subject of media speculation with regard to his social media posts.
In response to the large number of senior departures in London in recent months, Estate Agent Today has been told by Tim Hyatt, Knight Frank’s head of London: ”It is unfortunate that we have seen a selection of individual departures from our London business, however, they were by mutual consent. We understand that people’s circumstances can change and, if that is the case, they absolutely go with our blessing.
“In addition, bar one, all of these positions were replaced internally, despite strong interest from external candidates, showing our dedication to nurturing and retaining the best people and career development.
“As you saw from our announcement last week, we remain incredibly positive about our fantastic London business.
“Our best in class team has had a strong start to the year, responding well and capitalising on the positive market sentiment post-election.
“As one example, James Pace, Proprietary Partner and Head of the Chelsea office, will move 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. In Chelsea, Charles Olver has been 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.”
Countrywide’s share price has dived over 50 per cent during the course of the day, following news of LSL pulling out of takeover talks.
The share price dropped by around a third within minutes of the LSL move; during the morning it worsened further and by lunchtime it was down over 51 per cent at 84.10p.
Almost all property sector share prices have dropped significantly today, as a result of another day of Coronavirus panic on stock markets, but those falls have been far less than that of Countrywide.
After LSL pulled the plug on a possible takeover, Countrywide issued a statement saying: “As announced by Countrywide on the 11th March, the Company has been seeing the benefits from its ‘Back to basics’ turnaround plan, with continuing operations having returned to growth in profitability. The board of Countrywide remains confident in the strength of the underlying business as an independent company.”
And it added: “The company has seen a positive mood swing in public sentiment through the early part of 2020 which we have seen reflected in a strong start in agreed sales which are ahead of the board’s expectations through February 2020. Whilst we have seen some softening in recent days as a result of Covid-19, it is too early to assess that impact.”
The company is to issue its 2019 full year figures by the end of this month.
Entrance Hallway –
Guest Cloakroom –
Study – 3.81m x 2.72m (12’6 x 8’11) –
Reception Room – 5.61m x 3.86m (18’5 x 12’8) –
Dining Room – 3.86m x 3.81m (12’8 x 12’6) –
Kitchen/Breakfast Room – 10.01m x 6.73m (32’10 x 22’1) –
Sun/Sitting Room –
Utility Room – 2.57m x 2.39m (8’5 x 7’10) –
Double Bedroom – 3.56m x 3.43m (11’8 x 11’3) –
En-Suite Shower Room –
Master Bedroom Suite – 7.32m x 5.51m ( max ) (24′ x 18’1 ( max )) –
Dressing Room –
En-Suite Bathroom –
Bedroom – 3.81m x 2.92m (12’6 x 9’7) –
Double Bedroom – 3.33m x 2.87m (10’11 x 9’5) –
Bedroom – 4.11m x 3.53m (13’6 x 11’7) –
Bedroom – 4.42m x 2.97m (14’6 x 9’9) –
Double Garage – 5.74m x 5.56m (18’10 x 18’3) –
Full Details Here
The three leading portals have rejected an appeal to give the industry a payment holiday to help firms through the Coronavirus crisis.
Estate Agent Today was approached yesterday morning by three independent agents exasperated about the prospect of sharply reduced revenue as a result of Coronavirus, which may well stretch over several months.
Ami Dixon, chief executive of online agency iMoveHome, contacted EAT on behalf of her firm and the High Street agency James Du Pavey – based in Nantwich and Eccleshall – and the Staffordshire High Street agency Dourish and Day.
Dixon told EAT: “As agents, we have had the most incredibly difficult 18 months, if we have survived Brexit, we are now to cope with Coronavirus. The market is suffering again and lenders are clamming up.
“The portals, being agents’ largest company bill, have done nothing to help agents keep going. Surely now is the time. Mortgage lenders are offering three months payment holiday to anyone affected, interest rates dropped, the government are taking the damage to our economy seriously but the portals again offer nothing.
“Isn’t it time the portals offered agents some ease and recognise they need to help too!
“If they do not react the only survivors will be the corporates – independents may not make it through another tough year of turmoil. James and Steve both run seriously good, award winning independent high street agencies, I am an online as you know – we are all going to suffer as the market spirals into decline.”
Yesterday morning EAT asked all three portals if they would consider a payment holiday, and we passed Ami’s note to them to show the strength of feeling.
However, the request for help has been been dismissed out of hand.
Rightmove told us last evening: “We’re working with industry experts to run webinars over the next couple of weeks with practical advice to help support agents. We’ll be announcing details of these webinars on the Rightmove hub. The first one is live at 3pm on Monday March 16 with Peter Knight on how to prepare for and make the most of working from home. We’re also sending information to agents to help them prepare if they do need to run their business from home for a temporary period of time.
“We’ll be closely monitoring the situation in the coming weeks and will add more relevant topics to help agents. We’re closely following government guidance at Rightmove and we have plans in place for all employees to work from home if necessary which have been tested to ensure they’re fit for purpose.”
Andy Marshall, chief commercial officer for Zoopla, told us: “Naturally we are mindful of the impact of Coronavirus on our agent partners. We welcome moves made by the government to help the industry, which include a business rates holiday and promises to refund sick pay costs for employees off work due to the illness. While it is too early to say for certain, we hope that the steps taken by the government, combined with the strong start the market has enjoyed this year and the recent reduction in the Base Rate, making borrowing cheaper, will mean the Coronavirus only has a short-term impact on the housing market.”
A spokesperson for OnTheMarket told us: “The situation regarding the COVID-19 virus is clearly evolving rapidly and we are monitoring developments accordingly. OnTheMarket recognised last year the challenging market conditions which agents were facing and decided the right thing to do was to support our agent base with our 2020 Pricing Pledge. This determined not to increase listing fees in 2020 for any agents on full standard tariff contracts who signed five-year agreements at IPO, rather than being charged an increase of up to five per cent as allowed for within the agreement.
“Following the election in December and at the beginning of this year, the UK housing market saw a marked increase in transactions and a ‘bounce’ in sentiment. While it is too early to tell the wider impacts of the COVID-19 virus on the housing market, we will naturally continue to monitor the situation very closely. In the current environment, and as the agent-backed portal, OnTheMarket is as committed as ever to delivering high volumes of quality leads and a first-class support service at a sustainably fair price.”
Just this week OnTheMarket – in the same announcement as it revealed chief executive Ian Springett had been sacked – boasted that its revenues for the year to the end of January were above the £18m figure it had previously suggested: it declined to comment on any pay-off being made to Springett.
Zoopla is not listed on the London Stock Exchange but its owner – Silver Lake Partners, a US private equity firm specialising in technology investments – bought the ZPG company for £2.2 billion in 2018, and has since then invested heavily in its agency services.
Almost all quoted agencies and portals have suffered as a result of stock market investors being spooked by Coronavirus, with some of the more controversial players – especially Countrywide and Purplebricks – leading the falls.
At close of business yesterday late afternoon, this was the picture:
Countrywide, 175.0p, down 24.05%
Purplebricks, 53.5p, down 15.08%
Savills, 882.0p, down 11.67%
OnTheMarket, 61.03p, down 10.91%
Rightmove, 515.8p, down 7.83%
LSL Property Services, 265.0p, down 7.67%
Foxtons, 59.5p, down 5.71%
The Property Franchise Group, 188.0p, down 3.09%
Winkworth, 135.55p, den 1.42%
Hunters, 55.0p, up 0.92%
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.
The Guild of Property Professionals is calling on the new chancellor, Rishi Sunak, to use his Budget speech, which will take place tomorrow, to support investment in the private rented sector, as research shows that buy-to-let landlords are exiting the market in droves.
Tax and regulation changes continue to have a negative impact on the buy-to-let market, with a significant number of landlords selling buy-to-let properties with a view reducing their portfolio, or exiting the market altogether.
Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.
The government’s draconian tax changes have not just pushed a number of BTL landlords out of the PRS, but also left many prospective tenants with little alternative but to bid against each other, pushing rents up in the process, as a result of falling housing supply.
Iain McKenzie, CEO of the Guild of Property Professionals, said: “If we wish to sustain a thriving private rented sector there must be no further taxation on landlords. Tenants want more choice not less.
“The government should do more to support landlords to remain in the sector, not drive them out, which will ultimately cut the supply of rental properties and put upward pressure on rents.”
The housing market has had a strong start to the year, with improved activity levels and property price growth across every region in the UK, and McKenzie hopes that this trend will continue for the foreseeable future.
He continued: “Ideally, the housing market needs 12 months of a stable environment to enable it to bear the fruit of pent up frustration. It would be pertinent for the government to avoid anything that could hamper consumer confidence, which is already at risk with the threat of tough measures to prevent the spread of Coronavirus.
“It is likely there will be further support for first-time buyers by way of discount through a ‘First Home’ scheme, which could see new homes discounted by up to 30%. Whilst it is fair to say that first-time buyers are the lifeblood of the property market, getting the balance right between new buyer incentives and support for second-hand house buyers is the key to a fluid market.
“With that in mind, like many, we would welcome any positive news on Stamp Duty. Boris Johnson had previously pledged to implement changes to current stamp duty legislation by raising the threshold to £500,000. Although mentions of this have been more subdued in recent months, it would relieve large sections of the country from the burden of stamp duty and go a long way to bolstering consumer confidence.”