The chairman of franchise giant Hunters says his company’s purchasing power is such that it secures 60 per cent discounts from major portals.
Portal costs have been in the limelight for years but have gained momentum in recent months as sluggish transaction volumes matched with reduced fees charged by many firms have led smaller companies in particular to examine their costs.
Rightmove recently revealed that its Average Revenue Per Advertiser - a key measure for portals, as it is the average amount agents pay - had gone through the £1,000 per month figure for the first time.
But Kevin Hollinrake, chairman of franchise giant Hunters, suggests his company pays far less than that.
“Independent agents that converted to the Hunters brand during the four years to December 2017 have grown their revenue by 21 per cent” he says, claiming this is confirmation of Hunters’ ability to improve revenue for franchise partners even in a challenging market.
He goes on to says: “Our economies of scale and purchasing power, particularly network deals with Rightmove, Zoopla and OnTheMarket with discounts of around 60 per cent from list prices, can also significantly reduce key operating costs.”
Glynis Frew, Hunters’ chief executive, says in a parallel statement: “We offer the ability to market on all three major portals at a significant discount to independent market rates. This arrangement enhances the services branches can offer to vendors and landlords with the branch being able to market properties to the widest possible audience for buyers and tenants. The scale of the discount means, as is increasingly important, branches receive help to keep on top of their costs.”
As a result of independent agents in particular having to become far more cost-conscious in the current sluggish market, Hollinrake suggests giants like Hunters may expand further as smaller companies seek the ‘shelter’ of larger ones.
In addition, he says government reforms of the agency industry may accelerate the trend of smaller agencies moving into larger ones.
Hollinrake - who is also a Conservative MP and is a member of the government as parliamentary private secretary to Environment Secretary Michael Gove - says in the same statement: “Newly-implemented regulatory changes and the government plans to effectively license all sales and letting agencies to provide us with even more opportunities to expand our branch network further and strengthen our brand.
“We’re seeing an improved level of enquiries from high quality independent businesses. Our robust balance sheet and relatively low level of gearing will enable us to both expand our network and look to reward shareholders with an attractive dividend.”
Earlier this week Heather Wheeler, another MP an a minister at the Ministry of Housing, Communities and Local Government, told an industry conference that recent measures in the lettings sector - compulsory Client Money Protection and the imminent Fees Ban - were part of a new regulatory framework currently being devised by the Regulation of Property Agents working party.
This working party is currently sitting under the leadership of Lord Best, a cross-bench peer. Wheeler said this would report back to her in July with recommendations which, she believes, will include “a powerful industry regulator.”
The comments by Hollinrake and Frew come with the company’s figures for 2018.
Its income rise by 1.4 per cent to £39.4m, while adjusted profit rose 5.0 per cent to £2.01m; average network income per branch rose by 10 per cent to £200,000.