Traditional high street estate agencies are waging war on two fronts as they face higher staff costs and increased competition from the growing number of ‘personal’ agents, according to Sean Newman, founder of the Property Experts.
Newman said recent legislation like the Budget and The Employment Rights Bill were paving the way for a tougher year on the high street.
“The 2% increase in employer national insurance contributions, the rise in the national minimum wage and the threat of additional workers’ rights will combine to put more financial pressure on traditional agencies,” he commented.
“Some may think twice about taking on staff while others might even be considering job cuts in order to balance the books.
“Rents and business rates are also going up as are property portal subscriptions. This is bound to lead to cost-cutting which means less marketing, less training, cheaper, less-experienced staff and a higher chance of redundancies than wage increases.
“I believe that many agents will see the writing on the wall and decide to move to self-employment sooner, when it suits them, rather than wait until they are forced into it.”
Newman said his self-employed agency network has reported a record season of sign-ups.
“Inflation has steadied and interest rates are down – both of which have resulted in an improvement in affordability.
“In the short-term, buyers will be keen to complete before the stamp duty changes at the end of March, by which time there will probably be a further Base Rate cut. This is an excellent time for those who have been thinking about it to take the plunge and go solo.
“If you work for an agency and you’re a high performer, you must be considering what it would be like to build a business of your own. If you aren’t happy with your current earnings, it will have more than crossed your mind that you could earn more by selling fewer properties working for yourself.
“But if you run an agency and your best lister becomes a competitor, it will make things even more difficult than they already are.
“I believe it is just a matter of time before we see agents on the high street go the same way as travel agents.”
According to TwentyEA figures released last month, market share of exchanges through self-employed agents grew 8.1% in Quarter 3 and year-on-year growth was 22.8%.
“The benefits of being self-employed are becoming attractive to more and more agents,” said Newman.
“The world is changing and if estate agency businesses don’t change with it, they will find themselves perfectly equipped for a world that no longer exists.”
Newman said “The 2% increase in employer national insurance contributions, the rise in the national minimum wage and the threat of additional workers’ rights will combine to put more financial pressure on traditional agencies,”
He doesn’t understand the recent changes in the budget. It is a 1.2% increase and a lowering of the threshold. Employment rights always change when there is a change of Government.
Any business that is bigger than a one-man car-booter, will have staff, and staff costs rise over time.
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I agree with your overall analysis Sean. The self employed model is definitely on the increase as are the costs for the traditional High Street agents.
There really is room for both models (and others) but I anticipate that highly motivated and successful individually employed agents will increasingly move to being self-employed. Apart from having the potential of offering higher earnings to individuals, greater control over the working day and a MUCH lower cost base…
It’s MUCH more fun!
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We have some excellent travel agents in Exeter as do all major cities and most provincial towns. The number of High Street estate agents are almost bound to reduce (we’ve always had too many it can be argued) but many will still remain to carry on the unique service only they (and travel agents) can provide.
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Chap who runs self-employed agent model says self-employed agent model will outperform traditional model.
In other news, Tesla owner says EV’s will take over the world, Fullers CEO says beer sales will climb and squirrels say that dogs will still be unable to catch them.
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Two other factors here- not everyone wants to be their own boss. Many like to turn up at 9am and walk out the door at 6.
Also, anyone wanting to scale their personal model, faces those exact same consequences regarding NIC, minimum wage & enhanced rights.
It’s a great model, but only for the right people.
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Spot on KByfield04 !
Nobody, as far as I am aware, is talking about the “death of High Street estate agents” as referenced in other posts in this thread. I for one believe that the High Street agents will remain as the predominant business model.
However, there is room (as there should be) for ALL models – even so called online agents! Ultimately it’s up to our clients and customers – they will be the ultimate judge.
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I agree with you Kristjan.
I employ some of the best agents locally – a really, really good team of people, and very skilled agents to boot.
Yet, none of them want to be self employed because it means them losing too many of the non-monetary benefits they currently enjoy, not to mention the camaraderie with their colleagues.
Is earning another 10 or 20k a year, after having earned nothing for 12 months whilst you build your pipeline, REALLY worth losing your employee benefits and security for?
For a few, yes. And those people should absolutely go for it.
For the vast majority, however, absolutely not.
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It wasn’t long ago, the same thing was said about on-line agents destroying the High Street. That went well.
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The writing is on the wall for high street agents…………how many times have I heard this since 1997.
When PC’s were on every desk and the internet kicked off, “the writing was on the wall for high street agents”, as portals became common place “the writing was on the wall for high street agents” as digital media advanced “the writing was on the wall for high street agents”, when Purple Bricks (and many others like them) came into the space “the writing was on the wall for high street agents”, as the “sell you home for free” agents came into the market “the writing was on the wall for the high street agents” AI enters the arena “the writing is on the wall for high street agents” and although i understand this is an advertising piece, best displayed by the inaccuracies of the economic results of the recent budget , now we have a growing number of mainly franchised self employed………..”the writing is on the wall for high street agents”.
Our market town has been dominated by independent high street agents for 40 years. Right now the top grossing agents are, yes you guessed, high street agents. The newest entry, a hybrid, has………opened a town centre office!!
The town centre literally crumbles around us with shops closing weekly but the top 2/3 agents thrive. I agree that we will see the landscape change, but please don’t forget where nearly all of the self employed agents started and were trained…………..yes, the good old high street agents ! The next set of youngsters are out there, and no matter how much this or any other government try to quash their ambitions , they are going to come. Those that choose to employ, grow a business and train great people get the satisfaction of seeing their experience transferred to others. Good luck to all and long live our high streets !
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I’ve just been off work with a nasty case of flu. Proper flu, like what puts you on your back for a few days.
During that time I was thanking my lucky stars that I have built a team of people around me who can carry on the show in my absence. In fact I’ve structured my team and given them enough autonomy so that my clients won’t actually notice if I’m in or not, in the main.
Imagine the carnage if I was a self-employed agent carrying literally everything.
Now imagine yourself in those shoes.
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I fully understand the challenge that you are outlining – it is a real one. However, to assume that an agent operating within the self employed model can’t meet that challenge is erroneous in my view. I speak from personal experience and from observation of how others operate.
A number of self employed agents do in fact have a team of colleagues that were for them or with them to cope with times of high demand or when there are holidays or bouts of illness. I have personally witnessed how effective this is with various self employed agents that I have personally assisted.
Secondly, (and I can only speak personally with my experience at eXp though I’m sure it is the same with other self employed brands) we have a very active local support group in Cambridgeshire who regularly meet, share ideas and offer active support by way of conducting viewings etc, should that be needed. We do this in the spirit of cooperation and support for no charge or fee share – though we also do have a separate lucrative referral system should we spot such an opportunity. I personally have had a few health issues in the last 9 months which has undoubtedly impaired my ability to personally act at optimum efficiency. However, I have been BRILLIANTLY supported by my five local eXper’s who have carried out numerous viewings, delivered paperwork and LOTS of other stuff. I will (and already have ) returned the favour – all for fun and for free!
So whilst you have correctly identified a potential and legitimate challenge it is incorrect to assume that the challenge is unsurmountable.
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I didn’t say you can’t meet the challenge or that it is insurmountable, and clearly eXp’s new teams model is effectively a way to deal with that.
However you need time – a lot of time – to build that. And you need to implicitly trust the people you are teaming with, all of whom are presumably busy building their own businesses too.
The point I’m making is that many people see it as too big a risk, and are therefore happy to stay in an employed environment.
Which makes statements like Sean Newman’s, and other statements that suggest the high street model is doomed just as erroneous as you claim my statement to be.
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That is a fair (and courteous) reply Neil – thank you!
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