Posted by: housingdabble | March 17, 2010

Will high street letting agents be put out of business?

Ask a travel agent if he needs a high street branch to run his business these days and he will probably tell you that he can’t talk because he’s got burgers to flip.  

Over the last 5 years the travel agency business has taken a significant hit on the high street, with the majority of high street businesses not being able to compete with national online services which feed on the view that online is quicker, cheaper and you don’t need to worry about where to park your car.

Many hold the view that a similar fate is going to hit high street letting agents, whereas agents with high street offices claim that landlords still prefer to use an agent with an established high street presence because of personal service, an improved profile and the tangible reassurance that a physical high street branch can provide.

One thing is for sure, the benefits of using a high street agency are slowly eroding and the internet is offering a range of alternative models that have different benefits. There are some very good online agents starting up in business and offering what seems to the general public like a fresh approach.

Letting a property is in most cases a decision made with margins in mind and any fees paid to a third party eat into profit and so need to deliver demonstrable benefit. This is reflected by a recent survey by Specialist lender CHL Mortgages showing that the majority of residential landlords manage their portfolio’s themselves, with only 34% who rely on the services of a Letting agent to manage their properties.

This 34%, that are probably looking to save time and reduce hassle, have a growing choice of options for marketing and managing their property. These range from the traditional high street agent offering a complete ‘hands on’ experience including face to face valuation, viewings, inspections, inventories and so on, through to the online agencies offering little more than a marketing route for owners to sell privately with the added benefit of access to estate agent only portals such as Rightmove. It is important to note though that many high street agents offer marketing only options and equally online agents commonly will provide ‘hands on’.

So what will be the deciding factor as to whether these landlords decide to take this business online?

My view is that rather than landlords deciding to take their service away from the high street they will just continue to go with good service at the best possible price. Gradually more and more letting agents will acknowledge that they can still offer a personal, high standard of service whilst significantly reducing their overheads and so we will naturally see a shift as more agents move away from expensive high street locations.

Letting agencies with associated sales operations (roughly 70% of estate agents also have a lettings business) may be the last to leave, closing their costly offices and switching to central locations, but they will do so eventually and with it they are likely to make their traditional service available on a more ‘a la carte’ basis.

So rather than ‘traditional’ estate agents being cut out, they will simply change their model to take advantage of changing habits and improved technology, a change which has already begun.

If agents don’t change, which inevitably some will fail to do, they may find themselves asking “do you want fries with that”.


Responses

  1. Indeed letting agents can run their operation from offices and not shops and many do. My point of view is that I need an office so why not have a shop. As long as the rental price is comparable.

    Agents can really cut their costs if they work from home. Maybe someone should set up a network of letting agents who work from home. Actually I might just do that!!

    Simon
    http://www.destinations-london.com

  2. Fair comment Simon in terms of costs – if you can get a well located and easily accessible high street shop at the same price as an office then it has to be the right option.

    Good luck with the letting agent network!


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