It’s not the best time to be self-employed
Being self-employed is challenging at the best of times – but right now, during the coronavirus pandemic, I can’t imagine anything more worrying for those in estate agency.
New figures just released from the Government show that 9,000 people working in real estate claimed the first wave of money on the Self-Employment Income Support Scheme.
This covered up to 80% of their average monthly trading profits, capped at £7,500 in total, for March to May.
But this was only for those who submitted a tax return for the 2018-19 tax year, can show they have been adversely impacted and have no more than £50,000 in trading profits.
It wasn’t available to those who had gone it alone more recently.
Self -employed people will be eligible to apply for a second tranche of money in August, capped at 70% of trading profits up to a maximum of £6,570, covering June to August.
Recipients will also have to pay income tax on this when they submit their next tax returns.
We have to be grateful, as a country, for the incredible financial support given by the Government, including the furlough scheme, and the speed at which HMRC made this money available.
A total of £7 billion had been claimed by self-employed people by 31st May.
Of this, 9,000 claims were made in the real estate category, totalling £29 million.
It seems high but there’s no definition of what constitutes ‘real estate’, it’s what people fill in on their tax return, and this could include other property professionals such as surveyors.
The average amount claimed for the three months was £3,300 (compared to the overall average of all categories of £2,900) with a take-up rate of those eligible of 57% – which was one of the lowest, compared to 75% in construction and 81% listed as ‘other service activities’.
It would be interesting to know why the other 43% who were eligible didn’t take the money being offered.It must therefore be a very daunting prospect for those thinking of leaving employment and setting up on their own, or even working as a franchisee or with a US-style model, where you can pay over 30% of your commission to the parent brand.
Look at Keller Williams, eXp Realty, Century 21 and RE/MAX in this country, find out how many agents they’ve got and see how few properties they have for sale; it’s hard to fathom how such a model is sustainable.
It also takes people with incredible motivation and vision to run their own business – and not everyone possesses the wide range of skills needed.
You’ll need to know everything about budgeting, marketing, listing, selling, compliance and you’ll be under incredible pressure to win new business.
Doing your accounts is a real headache and many people are concerned about the changes to IR35 being introduced in April next year.
You need to be good at building relationships, have discipline – and be willing to work all the hours under the sun to make things work.
You may even need to use considerable savings or a loan to get started – and not earn anything for the first six months.
As someone who has set up and run many businesses, I totally understand the hard graft that’s needed to get started – and the excitement you feel at being your own boss.
Yes, the market is coming back – and it’s great to see.
I’d just question whether the time is right to go it alone.
If a second wave of the virus hits and there is another lockdown, there will be no Government money to fall back on, and those who are self-employed will be left high and dry again.
Talk the market up – and tell it as it is
Gloomy headlines predicting prices ‘crashing, slumping, tumbling and plummeting’ could not be wider off the mark, if the current surge in interest is anything to go by.
As soon as the coronavirus restrictions were lifted, prospective buyers came flying out of the stalls, if not through the door, with the coronavirus pandemic forcing people to confront the suitability of their current housing situations.
Those in rentals want to buy, those in flats want gardens, those who hate their partners want separate properties and there are those who want to downsize to release desperately needed cash to tide them through the crisis.
Where there’s high demand but low levels of stock, there’s no sign of prices coming down.
Yet the media would have you think otherwise.
I’ve spoken to lots of people in the industry and it’s not the doom and gloom that’s being portrayed. It’s quite the opposite.
Many agencies are seeing pre-coronavirus levels of interest, back to the days of the Brexit bounce.
Where people have pulled out of sales due to uncertainty, others have quickly snapped up those properties. Buyers are definitely out there.
It’s interesting to see the correlation between the death rate coming down and confidence rising.
So where are our industry associations talking up the market?
Why are the portals dominating discussions and very few agencies out there telling it as it is?
It’s so easy for journalists to write with their poison pens – but we mustn’t allow them to talk the market into recession when it doesn’t exist.
I’m not making light of the financial challenges we are all facing.
Or the prospect of increased redundancies once HMRC’s furlough and self-employed cash comes to an end in October, along with the end of mortgage payment holidays for home-owners.
We all know it can take many weeks for house sales to go through – that’s a long time for an agency to go without cash if you’re not buoyed by the rental market or re-mortgages.
However, my plea to the industry is to get out there at every opportunity and talk the market up.
Having been through a number of industry recessions, it’s not a great place to be.
Don’t allow others to pull us down.
Paul is right to encourage the industry to talk the market up and I look forward to him joining some of us on the airwaves and in the press doing exactly that. He is less encouraging about agents that fear for their jobs and who wonder if furloughed branches will ever open again, and that may be thinking about starting their own businesses under the supportive structure of a Keller Williams type infrastructure… then keeping up to 90% of the fee, not just 10% of it.
Paul devotes an unusually large chunk of this article to persuading you to ‘stay put’, a considerable effort and one that seems to represent an ‘urgent plea’ for Spicerhaart staff in particular not to bale.
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Very difficult to talk the market up. The public will far more appreciate truthful reports with less agent speak, just straightforward facts.
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Correct. So many skewed stats talking up the market just dont stand up to closer scrutiny. Effectively discrediting the objective.
In this era of mis-information, qualitative data which is honestly represented has never been more important.
People have neither the time nor the patience to swallow rubbish any longer. Things just got real!!
Be the Pro you’re supposed to be. Actors and chancers step aside!
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Russell can you please correct your inaccurate statement – KW agents don’t receive 90% of the fee – they pay an initial 10% to Keller William’s and then take a sliding scale after that. So you can never earn ‘up to’
As someone who is directly involved in the company I would expect you to know this. I’m basing my assertion on speaking to people who have gone there and wanted to come back into traditional agency.
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Now is most definitely the time to be self-employed.
Being in control of your own career and destiny, rather than be at the disposal, or otherwise of an employer, is a great advantage right now. EweMove franchisees have remained largely operational throughout lock-down, and as a result were ready to go with gusto on 13th May and have grown their local market share substantially since then, while other corporate, less fleet of foot competitors have taken too long to recommission their branches and teams, and have given smaller independent, personal agents a great advantage.
And keeping 100% of your own commission, in your own franchised business, can’t be sniffed at.
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Impossible to keep 100% commission – don’t insult our intelligence
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“Now is most definitely the time to be self-employed”
So you think heading into a recession giving up a guaranteed basic salary to go self employed with no stock, no wage is the best time to go self employed? Jesus Wept!
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As a small single office agency in Essex, we have been open for 3 weeks and have 17 sales agreed. Heaps of enquiries every day, so many that we are no longer booking viewings without having I.D. & AIP emailed to us first. All our FB posts are very positive, just ordered more boards and a 15000 booklet delivery. Hope it stays this busy.
To be positive, perhaps Mr Smith should open his branches and not lay off all those staff we read about prior to lockdown.
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Food for thought
why did he close some of his branches?
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