Last week’s results from Britain’s largest estate agent, Countrywide, showed a 22.5% fall in core annual earnings and led to it scrapping its dividend, sending its shares to record lows.
Its pledge to go “back to basics” and return its sales and lettings business to profitable growth after a “disappointing year” sparked some in the industry to question if the conventional model is outdated.
With Brexit making tenants and buyers nervous about committing to long-term tenancies, it is not surprising to see traditional estate agents struggling. Conventional estate agents such as Countrywide have been slow to adjust to major trends in the rental market. Increases in the number of people freelancing, working flexibly and remotely has led to many people needing flexible, short-term tenancy agreements.
The old real estate market cannot cope with these modern demands, as its service offering is limited to long-term rental properties.
Fully furnished properties are becoming increasingly popular, as they allow people to move in immediately. For many who do not want to sign up to long-term tenancies, a managed apartment service like Hostmaker’s makes these properties much more attractive to customers.
As they do not take responsibility for furnishing homes, conventional estate agents such as Countrywide are falling into decline, as they are not meeting the changing needs of the renter.
We have also seen an excess of supply. For many sellers, it has become increasingly difficult to find a buyer and conventional estate agents appear not to be helping solve the problem. Therefore well-appointed homes stand out and are far more attractive to renters as well as buyers. On our platform, landlord rental yields have grown year on year – by up to 30% in many areas – showing that more landlords are looking for alternative options. We’ve also seen an increase in homeowners using these services while awaiting the right buyers.
Estate agents need to adapt their models to this new trend in demand for flexible, short-term lets. Changing their model to offer people more flexibility may well see people beginning to go back to traditional estate agents for short-term, well-furnished homes.
Nakul Sharma, chief executive and founder, Hostmaker