OnTheMarket chief executive Ian Springett says rival portals may want to “interfere” with his aim of converting agency members from free or discounted deals to market-rate contracts.
Last week OTM’s latest report to shareholders and the City said that around 1,000 of its existing members on free deals had converted to to paying contracts an average revenue per agency of £337 per month.
Now, in an interview with the Directors Talk financial website, Springett says a key target for the portal over the rest of this year is to get more existing member agents to convert - and it is at this point that he makes an allegation about rival portals.
He says: “Clearly we need to continue the process of moving to paying contracts for the agents who are on the portal. We won’t be announcing that on a frequent or regular basis because we can’t conduct that activity in public.
“It’s a negotiation within the industry with individual agent firms, and obviously competitors have a vested interest in trying to interfere with the process as well. So we probably won’t be making particularly big announcements about it [converting agents] until we get to our interim report in October.”
He says that instead investors should look out for more information on the traffic to OTM and the value it delivered to agents.
Elsewhere in the interview Springett spoke of the year to the end of January 2019 - the first year of OnTheMarket being listed on the London Stock Exchange - as being “great”.
He also claimed that by May this year OnTheMarket was delivering 33 per cent of the leads sent to agents by what he called “the big portals.”
Meanwhile a report by broker Edison - commissioned by and funded by OnTheMarket - forecasts that the portal will be in profit around 2021.
In OTM’s 12-months figures released last week, losses for the company widened as administrative expenses more than doubled, with advertising expenditure six times higher than the year before. It also had a near-doubling of its staff costs.
However, Edison says that these losses allowed OTM to build an underlying base of participating agents and gain traction with the property-buying public in the UK. “Both these objectives have been achieved” it says.
The report then goes on to say: “We previously indicated that we expected the group to return a profit as the [average revenue per agency] grows and for it to turn cash-flow positive in FY21. We have now formalised this by publishing our forecasts for that year.”
Edison believes the current difficult housing market provides what it calls “a useful backdrop” to OTM attempting to build market share, for two reasons:
“The ‘new and exclusive’ listing option works well for agents and their customers. Listing new-to-market properties on OTM’s portal for 24 hours in advance of any other portal means people with high purchase intent are more likely to visit the website (and hence the listing agent’s website) and subscribe to property alerts, so the quality of the leads is higher; [and] If agency branches are transacting less business, they will inevitably be examining closely each line of their expenditure. The high price of a Rightmove subscription and the regular increases in cost make it a key line item. If an agent can achieve a significant proportion of market reach for a much smaller fee, the decision to switch should become easier.”