How does easyProperty plan to compete in the very crowded space of property agents?
The Zooplas and Rightmoves pretty much dictate the online property sales market.
So do we really need a new online estate agent? Turns out, we do.
easyProperty, the online estate agent co-founded by budget airline billionaire Sir Stelios Haji-Ioannou, is already valued at £66m. The portal is planning raise money through a share placement or an initial public offering by the end of the year.
How does easyProperty plan to compete in the very crowded space of property agents? We speak to CEO Robert Ellice:
Q. You’ve been in the property business since the age of 16. Tell us more about your background and how you ended up at easyProperty.
I founded easyProperty following 20 years’ as a traditional estate agent in London and Essex.
When I opened my first high street agency office, it used be full of landlords, tenants, vendors and buyers. We probably had about eight desks that seated two customers each, and it would be standing room only in the waiting area on a Saturday. But things changed, and now, we would be lucky if even one of those seats was utilised.
The world had changed, but estate agency hadn’t, so I saw an opportunity to make a difference; to modernise the sector and our offering, putting value at its core. What is the point in paying for high street office space, furniture etc that isn’t even used? And why should customers take on the burden of these unnecessary costs in their fees?
I was working with Stelios through my other property business and approached him about the easyProperty model. He was on board with the idea and so little more than two years later, we launched at the National History Museum.
Q. There are already a lot of online estate agents in the market – how is easyProperty different?
easyProperty doesn’t charge a fixed fee for set packages with different service levels, instead it allows landlords to choose and pay for only the services they require. In addition, adding properties to easyProperty is completely free, whereas direct competitors charge an instruction fee.
easyProperty is also set to embark on a growth plan which will see us enter the short term and commercial lettings sector – something not really touched on by other online agents.
We are also set apart by our brand. ‘easy’ has brand recognition in the UK of 99% (this also extends into Europe). No other online agent has such an established identity and the consumer trust that stems from this recognition makes our impact in the development of online agents’ market share that much greater.
Q. How much money have you raised so far and what do you plan to do with it?
On our first external institutional funding round in early 2014, we secured £4.75m of private investment within two weeks. This was followed by a property industry first in October 2014, where we raised £9.75m through a mix of private fundraising and crowdfunding. £1.4m was raised via Crowdcube, while the private investment process was driven by Chrystal Capital, who secured £8.35m from a mix of family offices, companies and high net worth individuals.
Q. Why did you choose to use Crowdcube to raise money? How has your experience been?
Funding is key to further development of our platform and expansion of our business, so we wanted to offer the opportunity to as many potential investors as possible. Additionally, as a pioneer in the tech investment sector, we felt Crowdcube was a great fit as a partner.
The level of interest on Crowdcube was incredibly high, allowing us to oversubscribe by 42%. It just shows how many members of the public are interested in the sector, in having a say and acquiring some form of ownership of the industry.
Q. What’s the business model of the venture?
We offer a pick ‘n’ mix, pay as you go service that offers flexibility and choice.
easyProperty doesn’t charge a fixed fee for set packages with different service levels, instead it allows landlords to choose and pay for only the services they require. Listings on easyproperty.com only are free for instance, while a week’s marketing on Rightmove, Zoopla will cost under £10.
Q. How has the response been so far?
Feedback has been extremely positive. We are currently taking on the equivalent of two months’ of a local high street agents rental listings each day. We’ve also been able to expand our offering to cover room rentals and a dedicated property management service.
Q. How’s it working with Sir Stelios? How involved is he with the brand? What kind of advice does he give?
Sir Stelios provides great business and branding guidance. I regularly meet up with him to discuss business progress and future plans.
Q. What are the future plans of easyProperty?
We have just launched room rentals and a property management service and will be introducing a commercial property lettings offering shortly. Towards the summer, we will launch a short term lettings service followed by our sales offering in Q3, 2015.
Q. Where are you based and how many employees do you have?
The central office is based in Canary Wharf. We currently have 40 staff and a network of contractors around the country.
Q. What are the biggest challenges for the business?
Being a start-up, in a relatively new sector is undoubtedly challenging. Our aim is to bring trust and a recognisable name to the world of online estate agency.
Q. What are your thoughts about Onthemarket and their tirade against online agents? Give us 3 problems with the website.
Every consumer-facing industry has been faced with the challenge of how to react to a growing online marketplace. Most have done so by providing their customers with more choice, flexibility and freedom; even if that means facing greater competition. Why should the estate agency world be any different?
The reality is that for the end user it is not about online versus offline, it is about being able to utilise as many tools as possible to get their property to market.
Onthemarket limits consumer choice, through agents being banned from using both Zoopla and Rightmove. It restricts the potential market reach of the hardworking individuals trying to find buyers or tenants for their properties.
Onthemarket promotes this strategy to its member agents, and many consumers will, most likely, not be told about it, yet it could potentially damage their chances of a sale or let.
Our industry is seen by many as one that will use every dirty trick in the book to make as much money as possible from sellers, buyers, landlords and tenants. What we need is to be demonstrating a greater level of transparency in the way we deal with consumers, not reinforcing these stereotypes.
Q. What’s your ultimate vision for easyProperty?
From a business perspective, we are looking to expand into sales and eventually into European markets, particularly where the easy brand is well recognised.
But our industry vision is to free up the property sector, making estate agency run much more efficiently and passing on the cost and time savings to the consumer.
Q. What are your thoughts about mansion tax?
A mansion tax in its current form would be imbalanced and fit for no purpose: it is naïve to believe that everyone with a £2m+ property is also cash rich and can afford the tax.
Why should a grandmother who has lived in her family home in a prosperous London suburb for thirty years be penalised because the property market h
as risen? She shouldn’t be, and in any case, would be unlikely to be able to afford the additional tax on her small pension.
The high net worth individuals that this tax is designed to penalise, invest in property at much higher sums than £2m. These individuals won’t be particularly fazed by an additional tax payment either.
As it stands, the proposed mansion tax is a London tax in disguise. Proposals lack transparency or fairness of any sort. If mansion tax is to work fairly, it can’t be a blanket tax. It must take into consideration individual circumstances.
Q. What do you think about London’s property market? Is there a bubble?
A bubble? There can only be a bubble if it bursts. And it’s unlikely that will happen in London. Yes, property values have increased to unprecedented levels, but that doesn’t mean we are about to experience a complete downturn.
What is likely is that we will be unable to sustain this kind of growth and the market will top out. But it won’t burst. There is too much interest and investment in London and this interest is not likely to wane. While demand exists, the market will remain successful.
Q. According to you, what impact did Osborne’s stamp duty reforms have on property owners and estate agents?
I was pleased with the Chancellor’s Stamp Duty Land Tax reforms in December, for the sheer fact that a complicated tax had been broken down into brackets that make it more transparent. And for the stimulation of the UK property market as a whole, the changes were beneficial, as those buying property under £1m, the majority of the British population, are now better off.
Those most adversely affected were owners of property valued between £1.5 and £2.5m and their agents. Buyers are now faced with an increased levy at the lower end of that bracket, creating some reluctance to buy. As a result, many property owners and estate agents have been forced to list properties for a lower asking price in order to secure the sale. This means less profit for owners and consequently, a lower commission for agents.
Q. What can the government do to help us have a sustainable property market?
We don’t need more restrictive rules and regulations that can be confusing and as a result, penalise good landlords. More of a focus should be placed on hitting down on rogue landlords, the rogue landlords who make properties unsafe to live in, rather than making the administration of property portfolios more difficult and time consuming for good landlords.
From a PRS [private rented sector] perspective, the government should be looking to introduce anything that fosters a culture of fairness and transparency. Continuing to introduce complicated laws will deter the very investment into the PRS sector that we need to support generations of renters.