Britain’s second largest estate agency has outlined radical new plans to shift direction, making financial services and not sales or rentals its future primary activity.
LSL Property Services’ well known agency brands are Your Move and Reeds Rains across the country and the London-focussed Marsh & Parsons. But these are no longer going to be the primary activity of the company.
Instead, in what it calls a “strategic update” delivered to its shareholders, the company says “financial services is at the heart of LSL’s strategy”.
The agency side of the business will be modified to bolster the financial services offer, with the statement saying: “The group will continue to grow its surveying and valuation and estate agency divisions and implement a new target operating model, including a specific focus on leveraging their capabilities to grow the Financial Services Division.”
The company already operates some of the most successful financial services businesses in the UK, providing £32.6 billion of mortgage completions in 2020, equating to just over nine per cent of the total purchase and remortgage markets. LSL is also a specialist in providing mortgage and protection advice to estate agency customers and owns two of the UK's largest new homes mortgage advice businesses, and a number of related FinTech platforms in Toolbox, Mortgage Gym, and Direct Life & Pension Services.
The company says its target now is to remain the leading mortgage network in the UK, further growing market share, while also implementing a buy and build strategy through its new Pivotal Growth joint venture.
Pivotal Growth was announced last week - it’s a mortgage brokerage which aims to grow in size through acquisitions, thus bolstering LSL’s position in the financial services sector. It’s to be led by LSL's Simon Embley, who steps down as non-executive chair of the LSL board tomorrow.
On Tuesday of this week LSL announced it was linking some of its mortgage and other financial services activities with rival agency operation The Property Franchise Group. This agreement means that LSL will be providing digital and face-to-face mortgage and protection advice to the customers of TPFG and TPFG's franchisees - they sell some 23,000 properties annually, so have plenty of scope for mortgage sales too.
In its latest statement outlining its future strategy, LSL says it believes that the financial services market will remain extremely attractive, due to continued significant customer demand for mortgages and similar services, its resilient performance through different housing market cycles, the synergies with the group’s agency activities, and an opportunity to forge new strategic partnerships such as that with TPFG.
Some analysts say this is a canny move by LSL.
Anthony Codling, now a PropTech entrepreneur running Twindig and previously an industry analyst, says: “LSL, the UK’s second-largest estate agent announced today that its future will be focused more on financing homes than the buying and selling of them.
“New CEO David Stewart (a former chief executive of Coventry Building Society) has indicated that financial services is expected to be the biggest profit centre of the Group by 2023.
“This is a smart move, the way we buy and sell homes is changing as is the frequency of how often we transact, but whether buying selling or staying put, most purchases are financed by a mortgage. Add in the related insurance and protection policies and the lifetime fee pool is larger and less volatile than the sometimes messy business of buying and selling houses.”