Traditional high street estate agencies are waging war on two fronts as they face higher staff costs and increased competition from the growing number of ‘personal’ agents, according to Sean Newman, founder of the Property Experts.
Newman said recent legislation like the Budget and The Employment Rights Bill were paving the way for a tougher year on the high street.
“The 2% increase in employer national insurance contributions, the rise in the national minimum wage and the threat of additional workers’ rights will combine to put more financial pressure on traditional agencies,” he commented.
“Some may think twice about taking on staff while others might even be considering job cuts in order to balance the books.
“Rents and business rates are also going up as are property portal subscriptions. This is bound to lead to cost-cutting which means less marketing, less training, cheaper, less-experienced staff and a higher chance of redundancies than wage increases.
“I believe that many agents will see the writing on the wall and decide to move to self-employment sooner, when it suits them, rather than wait until they are forced into it.”
Newman said his self-employed agency network has reported a record season of sign-ups.
“Inflation has steadied and interest rates are down – both of which have resulted in an improvement in affordability.
“In the short-term, buyers will be keen to complete before the stamp duty changes at the end of March, by which time there will probably be a further Base Rate cut. This is an excellent time for those who have been thinking about it to take the plunge and go solo.
“If you work for an agency and you’re a high performer, you must be considering what it would be like to build a business of your own. If you aren’t happy with your current earnings, it will have more than crossed your mind that you could earn more by selling fewer properties working for yourself.
“But if you run an agency and your best lister becomes a competitor, it will make things even more difficult than they already are.
“I believe it is just a matter of time before we see agents on the high street go the same way as travel agents.”
According to TwentyEA figures released last month, market share of exchanges through self-employed agents grew 8.1% in Quarter 3 and year-on-year growth was 22.8%.
“The benefits of being self-employed are becoming attractive to more and more agents,” said Newman.
“The world is changing and if estate agency businesses don’t change with it, they will find themselves perfectly equipped for a world that no longer exists.”
