There has been a trend set over the past twenty years or so, where the high street has slowly morphed from an area of diverse shopability, to, well, basically a long line of charity shops, coffee shops and estate agents. Well, I think this is not going to be depleted by a third, and here’s why.
Firstly, rents and business rates have increased steadily, and so has the amount of work an estate agent has to do. The roles and administration have increased, and alongside that, the penalties for failure to comply have increased. So, in short, it means that its costing estate agents more to complete the roles. True, technology has developed to such a stage that a lot of the processes are automated, but in truth, this has benefitted the landlord and the tenant more as they no longer need to visit the office at all, but the work still needs to be done, and the penalties for anything not being done properly are so high, that the agent still needs to action, and double check every bit an application and tenancy agreement before it can be finalised. I have not noticed a lessening of work in my office, more that we can get through the workload in less time, but the work still needs to be done. So this means it’s costing us more than ever to get the work done, and if rents are going up for businesses as well as the regular rise in business rates, then why stick around. Surely it makes sense to look for an alternative solution. We are entering a period of change in this industry, and as such, cost-cutting will be at the front of our minds, rather than simply raising tariffs that will inevitably find their way onto the rents.
Secondly, you have to ask the question “Does anybody really use them anymore?”. We’ve often thought about this. Twenty years ago, yes, would have been the answer, however, it’s a very different world now, and the habits of the consumer have changed entirely. We live in a world where everything is demanded now, a swipe left should deliver a date, and a couple of taps on an app and my dinner is on its way. Housing is the same, and that goes for both buying and renting. Five years ago, when I moved last, I did not visit the estate agency even once, and similarly, a lot of our tenants do not come to the office until the day they collect the keys at the start of the tenancy. They find the property on one of the major property portals, or our website, or perhaps on ever-expanding social media sites, they contact us via email, meet us at the property, pay a deposit via online banking, complete the application forms online, we then use an e-signature platform to complete the process, and hey presto, and whole service has been provided from start to finish without the need to come to our office at all. So, the question needs to be asked, if they cost so much, could there be a saving on the office that might prevent further rent increases? We’ve often, as most decent agencies do, tried to quantify where our business comes from, in the hope we can refine our approach as often as possible. We have found a trend that “walk-in” viewings are at best speculative, and at worst, something to pass the time for the applicant. I would say that less than five per cent of any actual business we do comes from a walk in, and quite often they really don’t know what they want to see, and annoyingly, once we’ve booked them in, don’t even show up!!! The best applicants we see are those who have looked online and found exactly what they are after, emailed in correctly and used the technology on offer as it should be. These are the most informed and organised applicants. I’m not saying this is for everyone, the elderly especially need help quite often when dealing with state-of-the-art technology, but they are becoming the exception to the rule rather than the rule itself.
Lastly, it can be about getting the right space. I have read a multitude of articles and reports in my industry press over the past year that deals with major high street chains shutting down multiple offices on the high street and moving to a centralised “hub”. The idea being that for viewings, if you had a location situated more to the centre of your area with better access to trains and public transport, you and your applicants can get to the viewings with much less hassle. In a less high street location, you can get more space for your money. You can add meeting rooms, an actual kitchen to cook in so you don’t have to eat at your desk, more storage for more key duplicates, more desk space, a relaxed seating area and other such luxuries not normally associated with a high street office, where desks are quite close together and space is at a premium. Not to get all Feng Shui on you, but having a nice workspace can really help productivity and that can only help the long-term health of the business as well.
So, there are a few different reasons why I think property agents will be leaving the high street. The agency fee ban is going to cause an almighty shake-up, and if costs have to be cut then why not in an area of the business that is more or less not needed. We will go the same way as a lot of retail outlets and for a lot of the same reasons. People love to see a nice shiny office, but no one wants to pay any money. It’s the reason most local shops have gone online, and instead of fighting this quite natural progression, we should get on board. I firmly believe that if we not already in one, then we are on our way to a hard recession. A lot of businesses are going to the wall, and although it's always very sad to see job losses of any kind, it can spark an evolution within certain sectors, and create a new way of working that is perhaps better than the old one. As my Dad is so very fond of say, “there are no problems, just opportunities!!!”.
I’d be very interested to know if you would rather see an agent with an expensive flagship office or one that is off the high street but has the best technologies on hand to help with the letting and management of your properties.
If you’ve got any thoughts on the matter, please get in touch or pop a comment, the discussion is fascinating!