The self-employed agency models is helping to drive growth in the estate agency sector, new research from eXp UK appears to show.

eXp UK has analysed the changing number of VAT and/or PAYE-registered estate agency enterprises in the UK between 2017 – 2022, segmenting those businesses by their employee count ranging from firms with 0-5 employees to those with 500-plus.

The data reveals that small agencies of between 0-5 employees have recorded by far the strongest growth when it comes to the number of businesses in operation.

One significant reason for this is the growth of self-employed estate agency firms which have been attracting more and more agents their way. When an agent makes this move, their self-employed status means they became a VAT-registered business in their own right, albeit operating under the brand of the umbrella company.

This has resulted in a big rise in the number of registered agencies operating with between 0-5 employees in the UK.

Since 2017, such businesses have increased in number every year, rising by 2.9% in 2018, 3% in 2019, 1% in 2020 – despite the problematic landscape caused by the pandemic – and 5.1% in 2021.

But it is in 2022 that the number of small agencies took the biggest leap, rising by 12.7% as the self-employed model really started to embed itself in the UK agency market.

As a result, the number of small estate agency businesses in 2022 stood at 19,650. When the figures for 2023 are published, it’s likely that this number will be significantly higher still.

Over the same time period of 2017 – 2022, larger agencies have been unable to match the performance of their smaller rivals.

Across the five years in question, the number of agencies with 500+ employees has remained entirely unchanged, sitting at a total of 25.

Agencies of between 250 – 499 employees have recorded just one annual increase. In 2019, the number rose by 50% to go from 10 to 15 businesses and it has remained there ever since.

Agencies number 50 – 249 employees have fluctuated up and down over the five years, most recently recording a -5% drop in 2022 to sit at a current total of 190.

It is a similar picture for agencies of 10 – 49 employees, but five years of ups and downs have paved the way to a slight increase of 2.7% in 2022 and the total number of firms is now 1,925.

As for firms of 6 – 9 employees, they now total 2,695 having seen an increase of 3.7% in 2022.

The head of eXp UK, Adam Day, commented: “The recent and ongoing rise of self-employed agency in the UK is by no means the result of happenstance – it’s not a fluke. It is, on one hand, a natural moment of industry evolution and, on the other, a byproduct of wider economic conditions.

“Good estate agency has always been centred around building reputation and relationships with your clients and within your local community. It’s also a creative pursuit, one that often requires improvisation and ingenuity in decision making. When you work as one small part of a large organisation, the weight of that brand can often stifle an agent’s ability to do all these things and the best agents are starting to realise this.

“As for the impact of wider economic issues: a self-employed agent has agility and, if you’ll excuse the pun, agency. When times are difficult, the agility that comes from being self-employed, and the agency to be able to make your own decisions around mitigating negative market outlook and, in many cases, even benefit from the opportunities that arise from it, means you have a much greater chance of thriving and succeeding. That’s the power of entrepreneurship and that’s why self-employed agency is on the rise.”

Number of estate agents on the rise despite cooling market conditions