UK online agency to sell homes for free

Online agency adopts new business model to become the first UK estate agent to sell homes for free. It will be rolled out across the country in the coming months having already been trialled in selected areas.

Housesimple, the UK’s fifth largest single brand estate agency, has already trialled the model in Yorkshire and the North West of England and it will be rolled out across the nation.

It says that based on the average property price in the UK of £226,798, sellers could save over £3,000 in commission. Chief executive Sam Mitchell believes it will become the most popular way to sell homes.

Sellers will continue to receive local expert valuations, photos and floorplan, ads on Rightmove, Zoopla and others, a ‘for sale’ board, negotiations and sales progression, and the support of a dedicated team from valuation through to completion.

Rather than charging commission or fees for selling homes, Housesimple will earn referral fees from no-obligation selected services provided to sellers and buyers such as mortgage, conveyancing and insurance advice.

“It’s time for change in estate agency. We believe selling a property should be a great experience and that’s why we are making it simple, transparent and free. The ability to sell a home through advertised listings and professional support, without paying any estate agent fees, is unique in the UK,” Mitchell said in Propertywire.

“Housesimple is the only company to offer this service and we expect it will quickly become the most popular way to sell a property. This is a bold move but one that has been tested,’ he explained. Within just six months of trialling this offer the agency increased property listings fivefold and it says it is now one of the leading agents by listings in cities like Leeds, Sheffield and Manchester.

“Like most estate agents, we are generating revenue from ancillary services, but as we don’t have expensive branches and we use technology to make us more efficient, we can pass on these savings to our customers by not charging fees to sellers or buyers,” Mitchell pointed out.

‘Our goal is to offer our free service nationwide, but we’re not extending our service to the whole of the UK in one go because we think demand will initially exceed our ability to service all our customers. We are therefore building up our coverage in Yorkshire and the North West and will start to roll out to other towns and cities in the coming months,’ he added.

The ambitious target to deliver 300,000 new homes per year in England by the mid-2020s will need a huge boost if it is to be reached and currently there are no detailed projections or plans on how it will be achieved, according to a hard hitting new report.

Current levels of home building are not promising, says the report from the House of Commons Public Accounts Committee. It points out that while the number of new homes has increased every year since 2012/2013, with 222,000 new homes in 2017/2018, the average number in the period 2005/2006 to 2017/2018 was still only 177,000 a year.

It says that while the Ministry of Housing, Communities and Local Government (MHCLG) has made some recent reforms to the planning system, much more needs to be done and it still does not have a detailed implementation plan for how it will scale-up house building.

“The Department stresses that it wants a plan-led system with local authorities determining the shape of development in their areas through their own local plans. We welcome this outlook, which has the potential to engender a housing system which is both efficient and able to be tailored to local communities,” the report also says.

But it adds that the reality is that local authorities are struggling to produce local plans showing how many, where and what types of new homes are needed in their areas, and fewer than half of authorities have an up to date local plan, and the Department is reluctant to take decisive action.

It says that new housing developments also need supporting infrastructure in place and the Department estimates that £12 billion a year towards the cost of this infrastructure should come from public sources. The rest must come from developers, but local authorities find it difficult to navigate complex negotiations with developers who are too often able to negotiate lower contributions to infrastructure.

The Committee is also concerned that the Department and local authorities are not doing enough to prevent poor build quality of new homes. ‘The system to get contributions from developers to the cost of infrastructure is not working effectively, and too often favours developers at the expense of local communities,’ it points out.

‘Despite having introduced some projects to help, including encouraging small builders through the small builders guarantee scheme and reforming the planning system, the Department simply does not have the mechanisms in place to achieve the 300,000 target,’ the report says.

‘This is compounded by lack of detailed rationale as to why this target was chosen in the first place. It also lacks year on year projections on how it will ramp up house building, only illustrative projections which are not in the public domain. To make this even more concerning, the target does not align with the Department’s new method for calculating the need for new homes which shows that just 265,000 new homes a year are needed,’ it continues.

The Committee recommends that by October 2019, the MHCLG should set out, in a single publicly available document, the full set of actions it is taking to achieve the target of 300,000 new homes and include year on year projections for the number of new homes it expects to be built.

The MHCLG is also criticised for not doing much about local authorities who do not have a local plan despite them being required by legislation to do so. As of December 2018, only 143 or 42% of local authorities had an up to date local plan, some 149 or 44% had a plan that was more than five years old, and 46 or 14% had no plan at all.

‘Despite these significant gaps, the Department has made limited use of its powers to intervene in local authorities who have not produced a local plan. In November 2017, the Secretary of State wrote to 15 of the local authorities who did not have a local plan and in January 2019, made more direct interventions in two local authorities. But these figures barely scratch the surface of the significant number of local authorities which either have no plan at all or a very old one. The Department is avoiding decisive action,’ it says.

It recommends that by the end of 2019, the Department should write to it detailing what additional interventions it will make when local authorities fail to produce local plans. ‘These interventions should include a range of ‘carrot and stick’ measures of support and penalties,’ it adds.

The Federation of Master Builders (FMB), reacting to the report, said that the Government needs to do more to remove the barriers to small to medium-sized (SME) house builders if its housing targets are to be met.

‘SME house builders are continuing to face numerous barriers to increasing their capacity to build the homes that are needed. The recommendations in the Public Accounts Committee’s report highlight that the planning system is delaying progress,’ said Brian Berry, FMB chief executive.

‘It is completely unacceptable that sites are being stalled because planning departments are not dealing with applications quickly enough. Our members aren’t seeing any improvements in service since fees were increased in January last year, a policy the FMB supported,’ he explained.

‘By allocating small sites for housing delivery in their local plan, local authorities will be reducing the burden of uncertainty for the nation’s small house builders, and therefore speeding up housing supply through better diversifying the sector. Furthermore, we must not forget the highly positive impact that these local businesses have on their areas, offering employment and training opportunities to local people,’ he pointed out.

Berry also called for the Government to work with smaller house builders in terms of financing. ‘Access to finance for SME house builders has undoubtedly improved over the last few years but the loan to cost ratio from most lenders is simply unviable for SMEs, especially the micro firms, building fewer than five units a year,’ he said.

A recent FMB survey found respondents estimated that they could increase their output by 38% if they could achieve a loan to value/cost ratio of 80%. ‘Government must work with the finance sector to understand how lending to small house builders can be increased and improved. The time is now for the Government to heed to warnings of the Public Accounts Committee,’ Berry added.