The Future for Independent Letting Agents
In this month’s edition of Property Drum, Adam J Walker a long-time property industry specialist has written a commentary on the recent phenomena of the big national and regional letting agents buying up their smaller brethren. He comes to the conclusion that, “the smallest and weakest independent agents don’t have a long term future” and explains why is this happening. We thought it might be of interest if we shared this with you and put our own local Norwich/Norfolk slant on it.
It is certainly true the major lettings firms are on the acquisition trail in this part of the world; Bush Management, probably Norwich’s oldest lettings company sold out to JSM who in turn were bought out by Leeders who subsequently recently acquired Temples in Norwich. Sequence, the owners of William H Brown have just bought out Temples in Diss.
The big corporate agents in Norwich are, W H Brown (part of the Sequence Group), Haart (part of Spicerhaart) and JSM (part of the Leeders Group) in terms of numbers of tenanted properties under their management. Abbots (part of Countrywide plc) although a large corporate agent has only recently started its lettings arm in Norwich, so big in sales but small in lettings. Mr Walker says these major firms have a number of key competitive advantages over their smaller rivals which include;
Economies of Scale – nearly all of the corporate agencies have specialist staff to cover each of the different functions. A valuer takes the property to market, a negotiator arranges the viewing, a tenancy administrator prepares the contracts and chases the references, a property manager deals with management, a maintenance manager organises the repairs, the collection & payment of rent is dealt with by a specialist accounts team and renewals are dealt with by a separate team. Well, we don’t know about you but we would disagree with Mr Walker, to us that all sounds like a recipe for errors and delays with no-one department taking ownership, particularly if the various departments are located in different buildings from one another. In each of the Norwich firms noted above, not only are some departments located in different buildings but those buildings are not even in Norwich. By way of contrast, at Martin & Co in Norwich, all functions are kept in-house and all members of our 6 strong staff are fully accountable. We have a philosophy of “its better to overlap than underlap”.
Automation – large firms have invested heavily in sophisticated software which smaller firms cannot afford. This is certainly true and if used properly can be very beneficial to the landlord client. Having just upgraded our own systems, we can see benefits accruing to our clients but we want to be sure we avoid the mistakes of the corporates by always having our staff know what is going on.
Security – almost every week a letting agent somewhere in the UK goes bankrupt after stealing their client account. Major firms use their financial security as a key tool to persuade landlords to instruct them over their smaller unregulated rivals. And, this is where we agree 100% with Mr Walker; if you’re with an unregulated agent, back away now, pick up your business and high tail out of there. You’ve only got to look at the victims of Castle Estates and D & G Residential, two agents who went bust in Norwich in 2013 and the man from Belvoir who went to prison c.2010. If you’re unsure who is regulated with whom, look out for the Safe Agent sticker, this in a nutshell shows the registered agent can prove their bona fides. We were the founding member of the Safe Agent Scheme in Norwich and ensure not only are we fully regulated but have Client Money Protection, Professional Indemnity Cover, A Segregated Client Account and are members of the Property Ombudsman scheme.
Mr Walker concludes the smaller agents will either go bust or be swallowed up a corporate agent but that medium sized firms probably do have a future. Interestingly, he didn’t opine on the franchise model for lettings which we are well placed to comment on. Having owned and operated the Martin & Co franchise for nearly seven years and grown a successful business in the process, we know the franchise model works well. We have the ethos of a small family business and yet we’re part of the largest lettings only brand in the UK with all of the sophisticated marketing and systems of a national brand to support us.
Well this was all very interesting but where does Martin & Co sit in the league table in Norwich compared to the “big boys”? Inevitably, there are a number of different measures by which we can compare ourselves but we reckon by most of these, for 2013, we sat at number 5 or 6 behind the corporates. That may surprise many of our clients who perhaps think of us as a smaller bespoke agent. In truth, that’s exactly how we want you to regard us, i.e. as your business partner who are financially secure and put your interests on an equal footing with our own.