Posts with tag: Foxtons fees

HouseSimple Changes Advert Following Complaint

Published On: August 27, 2015 at 8:50 am

Author:

Categories: Landlord News

Tags: ,,,

An advertisement on London Tube trains for an online estate agent featuring a savings claim has led to a complaint to the advertising regulator.

The HouseSimple advert states: “Save £15,665 versus average Foxtons fee of 2.4%.”1 

The complainant went to the Advertising Standards Authority (ASA) saying that they believed the advert to be misleading because it did not make the basis of the savings claim clear.

HouseSimple Changes Advert Following Complaint

HouseSimple Changes Advert Following Complaint

It has now emerged that the complaint has been informally resolved.

An ASA spokesperson says: “We approached HouseSimple with the concerns that had been raised.

“It agreed to amend the ad to make clear that the savings claim is based on selling a property at their current average London asking price.

“On that basis, we considered the matter had been resolved and closed the case.”1

HouseSimple comments: “The complaint was relating to clarifying on an advert we are running on London Tubes and how we came to the savings figure of £15,665 versus average Foxtons fee of 2.4%.”1

HouseSimple reveals that its average London property costs £561,373 and its average vendor fee is £502.80. Foxtons’ fee on a home of the same value would be £16,167.51, based on its 2.4% + VAT fee.

HouseSimple used Foxtons’ current average asking price of £885,553 to calculate the potential savings that clients could make, a huge £25,001.

The agent also used Rightmove’s average listed asking price for a London house, £615,115, to calculate an average saving of £17,213.

Head of HouseSimple, Alex Gosling, adds that the London Evening Standard has banned a similar advert, as it mentioned Foxtons.

He says: “The Evening Standard disallowed a similar advert due to the fact Foxtons is a long standing advertiser with them.

“Whilst this may seem anti-competitive to some, we understood the position the Evening Standard were in and so agreed to suggested amendments without taking further action. Interestingly, when the advert was amended and subsequently published, guess who had an advert on the next-door page to HouseSimple… Foxtons!

“We have existed for over eight years now and the levels of anti-competitive behaviour have always been high in this industry. We have fought through numerous issues such as adverts being disallowed in numerous publications or websites, to being thrown off well-known portals and even more recently banned from portals such as OnTheMarket. It is all symptomatic of an industry fighting change and desperately trying to hang on to its high fees.

“We are proud to have started this industry renaissance and to still be spearheading the revolution.”1

Earlier this year, Carphone Warehouse founder, Sir Charles Dunstone and his business partner Roger Taylor, invested £5m into HouseSimple. They plan to invest in the firm further.

Recently, HouseSimple hired creative agency Wordley Production to create its first TV advert.

1 http://www.propertyindustryeye.com/online-agent-agrees-to-amend-money-saving-advert-after-complaint-to-watchdog/

Bank Says Online Agents are a Threat Within the Industry

Published On: August 7, 2015 at 11:58 am

Author:

Categories: Landlord News

Tags: ,,,

Barclays has warned that cheap online estate agents, such as Purplebricks, are credible competitors within the industry.

On Wednesday, shares in Foxtons estate agents dropped for the second consecutive day.

Barclays questions whether Foxtons can justify charging fees and believes that online agents “will drive commission rates down in time.”

On Tuesday, shares in Foxtons declined by 4% and on Wednesday by a further 2.07%, ending at 236.80p.

Barclays is concerned about sales volumes, fee levels and the fiercely competitive London market in which Foxtons is mostly based.

Bank Says Online Agents are a Threat Within the Industry

Bank Says Online Agents are a Threat Within the Industry

Jon Bell, of Barclays, says that although the general election result removed the fear of a mansion tax, “the extent to which volumes have rebounded since then is unclear.”1

The bank’s analysis states: “Ahead of the important month of September, we believe that the company’s post-election recovery is likely to be patchy, particularly for estate agency, for four reasons.

“First, there is a lack of available stock in the market.

“Second, last December’s Stamp Duty changes raised the tax on expensive properties, although some way above Foxtons’ average price point, and there could be a spillover effect on overall volumes.

“Third, the normal level of annual transactions in the capital is likely to have fallen over time: we stay longer, we move less, we dig more basements.

“And finally, we believe there is some pressure on fees.”

Barclays doesn’t know whether Foxtons can continue justifying its high fees, as online agents charge much less.

It continues: “Online agents, such as Purplebricks, operate with little or no high street presence and charge much lower fees than traditional players. Growing quickly from a low base – we understand that online market share is around 3.5% – they are disruptors; new entrants changing long-established norms.

“Foxtons has an unstinting belief that its fees – likely to be the highest in the market – are supported by a premium service that delivers superior net returns for its customers.

“Our view is that in a commoditised London market, where visibility over prices (expressed in £ per square feet) is high, online agents could start to demonstrate that they can deliver equivalent returns. Should they do this, then operators’ ability to charge more is compromised.

“We believe that new entrants will drive commission rates down in time, and that this will have repercussions for Foxtons, given that they underpin its very high (around 30% EBITDA) margins.

“This underlying attrition is in addition to that arising from a mix change: a greater proportion of new build sales (15% of its current pipeline, higher than 10-12% previously) on which commission rates are relatively low.”1

Foxtons is currently opening five to seven branches per year, but several other agents are making their presence felt in London.

The Foxtons share price is currently down from a peak of 295p last August, but up from its 52-week low of 142.70p in November 2014.

But other agents have continued to perform well, despite negative activity in the first half of this year. All agents reported a fall in transactions.

Shares in Countrywide fell by 1.46% on Wednesday and LSL shares dropped by 0.28%.

1 http://www.propertyindustryeye.com/barclays-says-online-agents-could-represent-credible-challenge-in-industry/