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.
Rightmove’s growth rate is at an all-time low, despite what some consider to be an unbeatable lead amongst portals in the UK.
That’s the view of 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.
In a new analysis he says the primary driver for Rightmove – accounting for 72 per cent of its revenue – is its core agency listing service. “The growth rate of this business has dipped to four per cent, less than half of last year, and the lowest rate in years” says DelPrete.
He continues: “Rightmove has saturated the UK market. Every estate agent that could possibly be a customer, generally is. Therefore, the only way to increase revenues in the agency listing business is by raising prices.”
However, the analyst warns that Rightmove’s ability to raise prices is diminishing, and the key performance indicator for portals – average revenue per advertiser growth or ARPA – is falling annually.
DelPrete, an expert in US portals and agents as well as those in the UK, says the American site Zillow underwent a similar slowdown in its core lead generation business.
The analyst says the logical next move for such a business is to find new revenue streams, and in Zillow’s case it launched an iBuyer operation, home loans and other initiatives. “In the face of growth headwinds, Zillow acted decisively to diversify.”
However, he insists Rightmove has not done this – perhaps because it is in such a dominant position with a huge profit margin of 74 per cent on revenues and may be beyond the reach of other portals in the UK.
“But as a public company, it naturally faces pressure to grow — and that growth has steadily slowed over a number of years” says DelPrete.