Estate Agents 2011

Market Report 2011

18th Edition February 2011Edited by Katie Hughes

ISBN 978-1-84729-691-7

Estate Agents

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Estate Agents Foreword

© Key Note Ltd 2011

Contents

Executive Summary 1

1. Market Definition 2

REPORT COVERAGE....................................................................................................................2

Table 1.1: Number of Estate Agency Branches in the UK, 2003-2010.................................2

MARKET SECTORS.......................................................................................................................3

Sole-Agency Agreements.............................................................................................................3

Joint Sole-Agency Agreements...................................................................................................4

Multiple-Agency Agreements.....................................................................................................4

Table 1.2: Estimated Breakdown of Total Estate Agency Revenue from ResidentialSales (%), 2009................................................................................................................................4

MARKET TRENDS.........................................................................................................................5

The Good Times..............................................................................................................................5

Housing Market in Turmoil..........................................................................................................5Mortgage Funding Down.............................................................................................................6

Table 1.3: Gross Mortgage Lending in the UK (£m), 2001-2009...........................................6

Downward Pressure on Prices.....................................................................................................7

Seasonality.......................................................................................................................................7

Table 1.4: Seasonality of Estate Agency Business in Englandand Wales (000 transactions and %), 2008-2010.....................................................................7

ECONOMIC TRENDS....................................................................................................................8

Population.......................................................................................................................................8

Table 1.5: UK Resident Population Estimates by Sex (000), Mid-Years 2005-2009...........8

Gross Domestic Product................................................................................................................8

Table 1.6: UK Gross Domestic Product at Currentand Annual Chain-Linked Prices (£m), 2005-2009...................................................................9

Inflation...........................................................................................................................................9

Table 1.7: UK Rate of Inflation (%), 2005-2009.......................................................................9

Unemployment.............................................................................................................................10

Table 8: Actual Number of Unemployed Persons in the UK (million), 2005-2009..........10

MARKET POSITION....................................................................................................................10

The UK............................................................................................................................................10

Estate Agents Contents


2. Market Size 12

THE TOTAL MARKET................................................................................................................12

By Volume.....................................................................................................................................12

Property Transactions..................................................................................................................12

Table 2.1: Number of Residential Property Transactions in the UKby Region (000 [non-seasonally adjusted]), 2006-2010........................................................13

By Value.........................................................................................................................................14

Estate Agency Revenue...............................................................................................................14

Table 2.2: Estate Agency Revenue from Residential Property Transactions in the UK(£m), 2003-2010............................................................................................................................15

NEW HOUSING...........................................................................................................................16

By Volume.....................................................................................................................................17

Table 2.3: Number of Permanent Dwellings Completedin the UK by Country, 2005/2006-2009/2010..........................................................................17

By Value.........................................................................................................................................17

Table 2.4: Value of New Housing in Great Britain (£m), 2005-2009..................................18

3. Industry Background 19

RECENT HISTORY.......................................................................................................................19

NUMBER OF COMPANIES.......................................................................................................20

Franchise and Affiliated Operations........................................................................................20

Table 3.1: The Largest Affinity Groups and Franchise Operations in the UKby Number of Branches, January 2005-2009..........................................................................20

Estate Agencies.............................................................................................................................21

Table 3.2: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as RealEstate Agencies by Turnover Sizeband (number and %), 2009 and 2010........................22

EMPLOYMENT............................................................................................................................23

Table 3.3: Number of UK VAT- and/or PAYE-Based Enterprises Engaged as RealEstate Agencies by Employment Sizeband (number and %), 2009 and 2010.................23

REGIONAL VARIATIONS IN THE MARKETPLACE.............................................................23

Regional House Prices.................................................................................................................24

Table 3.4: Average House Price in the UK by Region(£), Quarter 3 2009 and 2010.....................................................................................................24

DISTRIBUTION.............................................................................................................................25

HOW ROBUST IS THE MARKET?...........................................................................................25

LEGISLATION ..............................................................................................................................26

Estate Agents and Property.......................................................................................................26

Renting...........................................................................................................................................27

Insurance........................................................................................................................................27



Money Laundering......................................................................................................................27

KEY TRADE ASSOCIATIONS....................................................................................................28

Association of Residential Lettings Agents.............................................................................28

Institution of Commercial & Business Agents .......................................................................28

National Association of Estate Agents....................................................................................28

National Association of Valuers & Auctioneers.....................................................................28

National Federation of Property Professionals......................................................................28

The Property Ombudsman ........................................................................................................29

Royal Institution of Chartered Surveyors................................................................................29

4. Competitor Analysis 30

THE MARKETPLACE..................................................................................................................30

Table 4.1: The Leading 30 Estate Agencies in the UK by Number of ResidentialBranches, January 2006-2009.....................................................................................................30

MARKET LEADERS.....................................................................................................................31

Countrywide Estate Agents.......................................................................................................31

Connells Residential....................................................................................................................32

LSL Property Services PLC ..........................................................................................................33

Spicerhaart Group Ltd.................................................................................................................33

Arun Estate Agencies Ltd...........................................................................................................34

Savills PLC .....................................................................................................................................34

Hamptons Group Ltd...................................................................................................................35

Kinleigh Folkard & Hayward Ltd...............................................................................................36

Chesterton Humberts..................................................................................................................36

MARKETING ACTIVITY.............................................................................................................37

Main Media Advertising Expenditure......................................................................................37

Table 4.2: Main Media Advertising Expenditure by Residential Estate Agents(£000), Years Ending September 2009 and 2010...................................................................37

Table 4.3: Main Media Advertising Expenditure by Online Estate Agents (£000),Years Ending September 2009 and 2010................................................................................39

5. Strengths, Weaknesses, Opportunities and Threats 40

STRENGTHS..................................................................................................................................40

WEAKNESSES..............................................................................................................................40

OPPORTUNITIES.........................................................................................................................40

THREATS.......................................................................................................................................41



6. Buying Behaviour 42

CONSUMER PENETRATION ...................................................................................................42

Table 6.1: Summary of Results (% of adults), 2010...............................................................42

Adults Who Have Engaged an Estate Agent to Sell a Property in the Past 3 Years.......43

Table 6.2: Adults Who Have Engaged an Estate Agent to Sell a Property in the Past3 Years by Sex, Age, Social Grade and Region (%), 2010....................................................43

Adults Who Have Bought a Property Through an Estate Agent at Least Oncein the Past 3 Years ......................................................................................................................45

Table 6.3: Adults Who Have Bought a Property Through an Estate Agent at LeastOnce in the Past 3 Years by Sex, Age, Social Grade and Region (%), 2010.....................45

Adults Who Have Moved Home at Least Once in the Past 3 Years...................................46

Table 6.4: Adults Who Have Moved Home at Least Once in the Past 3 Years by Sex,Age, Social Grade and Region (%), 2010................................................................................47

Adults Who Would Search the Internet for Properties if They Wanted to Move .........48

Table 6.5: Adults Who Would Search the Internet for Propertiesif They Wanted to Move Home by Sex, Age, Social Grade and Region (%), 2010.........49

Adults Who Would Visit an Estate Agent’s Office if They Wanted to Move Home.......50

Table 6.6: Adults Who Would Visit an Estate Agent’s Office if They Wanted to MoveHome by Sex, Age, Social Grade and Region (%), 2010.......................................................51

Adults Who Think Estate Agents Give Good Value for Money..........................................52

Table 6.7: Adults Who Think Estate Agents Give Good Value for Money by Sex, Age,Social Grade and Region (%), 2010..........................................................................................52

Adults Who Thinks Property is a Safe Investment for the Future......................................54

Table 6.8: Adults Who Thinks Property is a Safe Investment for the Future by Sex,Age, Social Grade and Region (%), 2010................................................................................54

Adults Who Intend to Buy a Property Within the Next 2 Years.........................................55

Table 6.9: Adults Who Intend to Buy a Property Within the Next 2 Years by Sex, Age,Social Grade and Region (%), 2010..........................................................................................56

7. Current Issues 58

CURRENT MARKET CONDITIONS..........................................................................................58

A BOOMING LETTINGS MARKET..........................................................................................58

COMPREHENSIVE SPENDING REVIEW.................................................................................59

HOME INFORMATION PACKS SUSPENDED.......................................................................59

ONLINE TRENDS.........................................................................................................................60

8. The Global Market 61

RECENT GLOBAL TRENDS.......................................................................................................61



9. Forecasts 63

INTRODUCTION..........................................................................................................................63

The Economy.................................................................................................................................63

Table 9.1: Economic Forecasts (000, % and million), 2010-2014........................................64

FORECASTS 2011 TO 2015......................................................................................................64

By Volume.....................................................................................................................................64

Property Transactions..................................................................................................................64

Table 9.2: Forecast Number of Residential Property Market Transactions in the UK(000), 2011-2015...........................................................................................................................65

By Value.........................................................................................................................................65

Estate Agency Revenue...............................................................................................................65

Table 9.3: Forecast Estate Agency Revenue from Residential Property Transactionsin the UK (£m), 2011-2015..........................................................................................................66

MARKET GROWTH....................................................................................................................67

Figure 9.4: Growth in the Total Number of Residential Property Transactionsin the UK (000), 2006-2015.........................................................................................................67

FUTURE TRENDS.........................................................................................................................67

Focus on Letting Business...........................................................................................................67

Dominance of Online Portals ...................................................................................................68

Mobile Devices March On..........................................................................................................68

10. Company Profiles 69

ARUN ESTATE AGENTIES LTD................................................................................................70

CHESTERTON GLOBAL LIMITED............................................................................................72

CONNELLS RESIDENTIAL..........................................................................................................74

COUNTRYWIDE ESTATE AGENTS.........................................................................................76

HAMPTONS GROUP LTD.........................................................................................................78

KINLEIGH FOLKARD & HAYWARD LTD..............................................................................80

LSL PROPERTY SERVICES PLC.................................................................................................82

SAVILLS PLC.................................................................................................................................84

SPICERHAART GROUP LTD.....................................................................................................86

11. Further Sources 88

Associations.................................................................................................................................88

Publications.................................................................................................................................89

General Sources.........................................................................................................................89

Government Publications ......................................................................................................90



Other Sources.............................................................................................................................90

Key Note Sources ......................................................................................................................92

Understanding TGI Data 95

Number, Profile, Penetration................................................................................................95

Social Grade.................................................................................................................................96

Standard Region........................................................................................................................96

Key Note Research 97

The Key Note Range of Reports 98



Executive Summary

This Key Note Market Report examines estate agents in the UK and theirprincipal market, which is the sale and renting of residential property. Excludedfrom its scope are: estate managers, surveyors, valuers, auctioneers, propertycompanies, property consultants, and other professionals or organisations thatprovide specialist property services. Estate agency revenue is predominantlyderived from the sales of residential property, which typically amount toapproximately three quarters of total revenue, while the remainder isaccounted for by financial services (e.g. mortgage and insurance sales), lettingsand property management, auctions, valuations, and surveys.

Over the 20-year period to April 2008, the average house price rose to a peakof £201,081 in August of that year, roughly a factor of four compared with1987, and in 2007, the UK estate agency market was valued at £9.1bn.Approximately 1.6 million property transactions contributed to that figure.Following the global economic downturn in 2008, however, the UK propertymarket slumped.

Data from Halifax show house prices are currently down by nearly 40%compared with 2007, and the number of residential property transactions inthe UK amounted to 858,000 in 2009, according to HM Revenue & Customsdata — nearly half the number recorded in 2007. National Statistics’ figuresput estate agency revenue from residential sales in the UK at £7.51bn in 2009,down by 17.4% compared with 2007. After a brief recovery in the first half of2010, house prices started sliding again and continued to do so into the fourthquarter.

The findings from a consumer survey conducted by Key Note in November 2010indicate that the perceived value for money of real estate agents has declinedslightly compared with results from a similar survey conducted 2 years earlier,with a change in perception mainly in the minds of young adults. Encouragingfor the industry was the conviction held among the majority of respondentsthat property represents a safe investment for the future, whereas a significantproportion of respondents plan to buy a property within the next 2 years.

Countrywide remains the largest estate agency, followed by ConnellsResidential and LSL Property Services PLC, respectively. In recent years, the UKproperty market — and the London market, in particular — has started toattract foreign investment, in part due to estate agencies, such as ChesteronHumbers, opening operational branches in places such as Hong Kong andSingapore. Other international estate agents such as Savills and Knight Frankare also expected to continue to benefit from the globalisation of the marketfor prime property.

Home-grown demand for property remains subdued, as many UK buyerscontinue to struggle to obtain mortgage financing and the country awaits thefull impact of the public spending cuts in 2011. Key Note forecasts that boththe number of transactions and estate agency revenue will experience a furtherfall in 2011. A real recovery in property transaction levels and revenues is notexpected until the second half of 2012, coinciding with wider economic revival,rising employment levels and a recovery in real disposable household income.

Estate Agents Executive Summary

© Key Note Ltd 2011 1

1. Market Definition

REPORT COVERAGE

Estate agents play a central role in the property market, with their corebusiness being to introduce buyers and sellers of property to each other. Morethan nine out of ten people buying and selling a home in England and Walesuse an estate agent. Agents may also liaise on behalf of clients with thirdparties involved in the sale of a property, such as lawyers or surveyors, or offerother services, such as financial products, conveyancing, valuations andappraisals.

This Key Note Market Report analyses estate agents and their principal market,which is the sale and renting of residential property. Estate managers,surveyors, valuers, auctioneers, property companies, property consultants andother professionals or organisations that provide specialist property servicesare not covered in this report. Its geographic focus primarily covers England,Wales and Northern Ireland, where estate agents handle the selling ofproperty. In Scotland, by contrast, most property sales are handled by solicitors.

During the 1980s and 1990s, the number of estate agency branches rosegradually, a trend which continued up until the end of 2007. At the beginningof 2008, however, this trend began to reverse. As the property marketexperienced a downturn, agencies began to reduce their costs and closebranches. According to National Statistics’ data, 2,564 estate agency branchesclosed between 2007 and 2008, and a further 288 closed in 2009. This decliningtrend is a reflection of the continuing economic uncertainty prevalent in theUK since 2008.

Table 1.1: Number of Estate Agency Branches in the UK,2003-2010

2003 13,082

2004 14,576

2005 16,216

2006 17,292

Table continues...

Estate Agents Market Definition


Table 1.1: Number of Estate Agency Branches in the UK,2003-2010

...table continued

2007 18,555

2008 15,991

2009 15,703

2010e 15,400

e — Key Note estimate as at January 2011

Source: Annual Business Inquiry, National Statistics website © Crown copyrightmaterial is reproduced with the permission of the Controller of HMSO (and theQueen’s Printer for Scotland)/Key Note

MARKET SECTORS

There are three types of agreement for property vendors:

• sole agency

• joint agency

• multiple agency.

Sole-Agency Agreements

Under a sole-agency agreement, the vendor entrusts the sale of his or herproperty to only one agency, with the benefit for the vendor being lowerestate agency fees than would be the case if the property was in the hands ofmore than one agent. As far as the estate agent is concerned, there is nocompetition for the sale of this property from other agents. When the propertymarket is buoyant, using a sole agent can work well for the vendor. However,during a downturn it is not necessarily the best route to a sale, as there arefewer prospective purchasers. Sole-agency agreements appear to be morecommon in the Midlands and the North than in the South of England.



Joint Sole-Agency Agreements

In a joint sole-agency agreement, two agents together have the exclusive rightto sell the property. The commission charged to the vendor is slightly higherthan that for a sole-agency agreement, but the vendor can choose two verydifferent, although complementary, agencies, in the expectation that at leastone of them will secure a sale. On the sale of the property, the fee is splitbetween the two agents, with the agent that secured the sale earning the lion’sshare. The agent that did not secure the sale receives some of the fee inrecognition of its marketing and printing expenses.

Multiple-Agency Agreements

A multiple-agency agreement allows the vendor to sell the property througha number of agencies, usually three or four. The commission charged to thevendor is higher than that for either sole-agency or joint sole-agencyagreements, but this type of arrangement can be very attractive when themarket is weak or if the vendor needs a quick sale. Most agents charge on apercentage basis, although some charge a set fee for the sale of a property.The fee may vary depending on the type of property or the scale of marketingthat the property owner expects.

Estate agents’ main source of income derives from the sale of properties,although the percentage of total income that such sales account for is stronglydependent on the state of the property market. The remainder of the incomestems from the sale of mortgages and insurance, lettings and propertymanagement, auctions, conveyancing and valuations, as well as surveys. In2007, when the market was at its peak, income from the sale of properties wasestimated to account for 73.7% of total revenue. In the current market, thisnumber is likely to be closer to 65%, as shown in Table 1.2.

Table 1.2: Estimated Breakdown of Total Estate AgencyRevenue from Residential Sales (%), 2009

Fees from property sales† 65

Fees from mortgage and insurance sales 25

Lettings and property management‡ 5

Valuation and surveys 5

Table continues...



Table 1.2: Estimated Breakdown of Total Estate AgencyRevenue from Residential Sales (%), 2009

...table continued

Total 100

† — assumes an average commission of 1.5% on 858,000 residential property transactionsat an average house price in the UK of £161,780 (which was the average house price for2009, according to Halifax PLC)

‡ — estimate for high-street agencies only, excluding specialist surveyors, propertymanagement companies and the public sector

Source: Key Note

MARKET TRENDS

The Good Times

Between 1998 and 2002, there was a sharp increase in the number ofresidential property transactions in England and Wales. Owing to the fact thatproperty prices rose sharply over the same period, the increase in the value oftransactions was proportionately greater. In 2002, the sum of propertytransactions amounted to around £185bn, nearly 80% higher in real terms thana mere 4 years earlier. In August 2007, the average price of a property in theUK peaked at £201,081, nearly triple that recorded in 1997. According toNational Statistics’ data, estate agents’ total turnover for that year was £9.1bn,compared with £4.3bn in the year 2000.

Housing Market in Turmoil

Starting from the last quarter of 2007, however, the housing market began towitness a dramatic downturn. The number of property transactions plunged,and, despite a slight upturn in the spring of 2010, remains low to date. Propertyprices plummeted accordingly, as a result of an increase in the number ofproperties available for sale, combined with a decline in demand, and in 2008many home owners found themselves saddled with negative equity.

Figures from Halifax (non-seasonally adjusted) show that, in January 2010, theaverage house price stood at £165,514, down by nearly a fifth compared withits peak in 2007. By April, the figure had risen to £170,772, but subsequentlydeclined again by 1.2% during the course of the third quarter. BetweenSeptember and October, however, the average house price dropped by afurther 3.2%, down to £165,275 in October 2010.



House prices fell not only in the UK but across Europe, particularly in theRepublic of Ireland and Spain. For UK citizens who bought holiday homesoverseas, the problem was compounded by a weakening in the value ofsterling, sending repayment and maintenance costs soaring.

Mortgage Funding Down

From 2008 onwards, mortgage funding became increasingly difficult to source.First-time buyers were required to produce larger deposits, typically between20% and 25% of the purchase price, compared with 10% or less in 2007. Arecent report revealed that, on average, first-time buyers in their twentieswould have to save 45% of their net income every month for up to 5 years inorder to afford a deposit for the average starter home. As a result, more andmore people in their twenties to early thirties remain in the family home orare renting properties instead of purchasing. Indeed, demand for rentalaccommodation is fiercer than ever, and rents continue to rise. Accordingly,some estate agents that had previously concentrated on the sales side of themarket are diversifying into lettings.

Table 1.3 shows the value of gross mortgage lending for the first 9 years of thenew millennium. Gross mortgage lending saw an upward trend between 2001and 2007. Between 2007 and 2008, it dropped abruptly by 30%, followed by afurther 43.5% the year after.

Table 1.3: Gross Mortgage Lending in the UK (£m), 2001-2009

Total

Year

2001 160,123

2002 220,737

2003 277,342

2004 291,249

2005 288,280

2006 345,355

2007 362,758

2008 254,022

2009 143,633

Source: Council of Mortgage Lenders, November 2010



Downward Pressure on Prices

Despite the fact that house price inflation has stagnated and even turnednegative, the number of property sales remained low throughout the periodfrom 2008 to 2010. Other than limited mortgage availability, growinguncertainty over the economic outlook and, more recently, concernssurrounding the impact of the Comprehensive Spending Review have resultedin an increase in the supply of new housing coming to the market. Together,these factors have combined to exacerbate the downward pressure on prices.

Seasonality

Spring is traditionally the busiest season in the property market for both buyersand sellers. However, this trend was broken in 2009 and 2010. The data in Table1.4 show that 60.5% of the residential property transactions made in 2009 weredone in the second half of 2009, compared with 39.5% in the first half.Furthermore, around 425,000 transactions were made in the second half of2010, compared with 366,000 in the first half. This trend reversal is amanifestation of unusual economic circumstances and an unsettled housingmarket.

Table 1.4: Seasonality of Estate Agency Business in Englandand Wales (000 transactions and %), 2008-2010

Residential PropertyTransactions (000) % of Total

2008 2009 2010 2008 2009 2010

January to March 216 128 163 27.5 16.6 20.6

April to June 227 176 203 28.9 22.9 25.7

July to September 179 219 225 22.8 28.4 28.4

October toDecember 163 247 e200 20.8 32.1 25.3

Total 785 770 791 100.0 100.0 100.0

e — Key Note estimate

Note: data are for sales completions.

Source: Key Note, based on property registrations recordedby HM Revenue & Customs



ECONOMIC TRENDS

Population

The data in Table 1.5 show that the UK population is growing at an averagerate of 0.6% to 0.7% a year. At this rate, it is expected that, by 2017, the 65million barrier will be broken. A growing population benefits the estate agencyindustry by providing an increasing number of potential buyers. The numberof single-person households has also steadily increased, putting furtherpressure on the availability of properties.

Table 1.5: UK Resident Population Estimates by Sex (000),Mid-Years 2005-2009

2005 2006 2007 2008 2009

Female 30,742 30,895 31,068 31,244 31,418

Male 29,493 29,689 29,918 30,154 30,374

Total 60,235 60,584 60,986 61,398 61,792

% changeyear-on-year - 0.6 0.7 0.7 0.6

Source: Population Projections Database (2008-based projections), NationalStatistics website © Crown copyright material is reproduced with the permissionof the Controller of HMSO (and the Queen’s Printer for Scotland)

Gross Domestic Product

Between 2003 and 2008, the UK’s gross domestic product (GDP) grew strongly,at an average year-on-year rate of approximately 5%. Growth slowedmarkedly in 2008, to 2.9% at current prices, and in 2009 GDP growth turnednegative by some 3.7%.



Table 1.6: UK Gross Domestic Product at Current andAnnual Chain-Linked Prices (£m), 2005-2009

2005 2006 2007 2008 2009

Current prices 1,254,058 1,328,363 1,404,845 1,445,580 1,392,634

% changeyear-on-year - 5.9 5.8 2.9 -3.7

Annualchain-linked GDP 1,292,335 1,328,363 1,364,029 1,363,139 1,295,159

% changeyear-on-year - 2.8 2.7 -0.1 -5.0

GDP — gross domestic product

Source: Economic & Labour Market Review, November 2010, National Statisticswebsite © Crown copyright material is reproduced with the permission of theController of HMSO (and the Queen’s Printer for Scotland)

Inflation

Inflation rose gradually in the years leading up to 2007, but fell by 0.3percentage points in 2008. The inflation rate dropped further to -0.5% by theend of 2009, when, despite higher prices for a number of commodities, suchas fuel, clothing and certain categories of food, inflation turned negative. InMarch 2009, in an attempt to stave off a recession, the Bank of Englandlowered its base interest rate to 0.5%, and many mortgage companiesfollowed suit. This came as a boon to many mortgage holders.

Table 1.7: UK Rate of Inflation (%), 2005-2009

2005 2006 2007 2008 2009

Inflation (%) 2.8 3.2 4.3 4.0 -0.5

Percentage point changeyear-on-year - 0.4 1.1 -0.3 -4.5

Note: inflation is at retail price index (RPI); data shown are annual average changes.

Source: Focus on Consumer Price Indices — Data for October 2010, publishedNovember 2010, National Statistics website © Crown copyright material isreproduced with the permission of the Controller of HMSO (and the Queen’sPrinter for Scotland)



Unemployment

In 2005, the number of unemployment benefit claimants in the UK stood at amere 860,000, its lowest point during the last decade. This number remainedat comparable levels up until 2007. Starting in March 2008, however, theeconomic downturn began affecting the labour market, sending UKunemployment figures rising. The actual number of unemployed reached 1million in October 2008, and rose to a 13-year high of 1.5 million in April 2009.After peaking at 1.6 million in late 2009, the number of claimants started todecrease again in 2010. It is worth noting that, despite these startling figures,compared with the recession of the early 1990s the rise in unemployment seenduring this recession has been relatively subdued.

Table 8: Actual Number of Unemployed Personsin the UK (million), 2005-2009

2005 2006 2007 2008 2009

Actual number of claimants(million) 0.86 0.95 0.86 0.91 1.53

% change year-on-year - 10.5 -9.5 5.8 68.1

Source: Monthly Digest of Statistics, November 2010, National Statistics website© Crown copyright material is reproduced with the permission of the Controllerof HMSO (and the Queen’s Printer for Scotland)

MARKET POSITION

The UK

Real estate agents are involved in the sale and/or rental of property. MostUK-based agents operate exclusively within the domestic market. Some,however, specialise in overseas properties, notably in Spain, Portugal or France.Only a few agencies, mostly the upmarket ones, sell property in the UK as wellas abroad.

The UK estate agency market focuses primarily on the residential market. Insome city centres, where businesses have moved out to the suburbs or on togreenfield sites, there is a degree of overlap with commercial property, as someformer commercial buildings have been converted for residential use.

The market for property buyers consists broadly of two categories ofcustomers: those who buy property for their own (or family) use, and thosewho buy property as an investment — the so-called buy-to-let propertyinvestors. The latter have had a major influence on the market since 2000,when buy-to-let purchasers were able to obtain relatively cheap mortgages.



The growth in the number of buy-to-let investors was a key factor behind therise in house prices between 2002 and 2007. However, as rental incomes havefailed to keep up with the rising costs of servicing and borrowing, thebuy-to-let part of the market has become less attractive. In addition, theGovernment’s recently announced increase in Capital Gain Tax from 18% to28% for higher rate tax payers will make this type of investment less attractiveto many.



2. Market Size

THE TOTAL MARKET

By Volume

Property Transactions

The size of the estate agency market can be calculated by using severalstatistical sources. The Government’s Land Registry office collects statistics onthe number of properties that are sold each month. National Statistics collectsfigures for estate agency’s total turnover and number of enterprises; usingthese figures, it is possible to work out total turnover per enterprise, then, bydividing this figure by the average annual house price, it is possible to calculatethe approximate number of property transactions. However, 25% should bededucted to account for properties that are bought without a mortgage.

In this Market Report, Key Note has based its measure of market volume onHM Revenue & Customs’ (HMRC’s) record of property transactions, which arebased on the completion of the sale of properties for the purpose of StampDuty. Published quarterly, these figures are recorded 1 to 2 months after a salehas been completed.

The data in Table 2.1 show the total number of residential propertytransactions in the UK (not seasonally adjusted), excluding commercialtransactions. The total number of residential properties sold in the UK fell by44.2% in 2008 and dropped further by 4.7% in 2009. Between Januaryand October 2010, according to the latest available data at the time of writing,a total of 655,000 residential property transactions were completed. This figureis up from 584,000 over the same period during the previous year, butapproximately half of the 1,237,000 recorded over the same period in 2007.Key Note estimates that the number of residential property transactions in theUK for the whole year of 2010 will amount to approximately 783,000, oraround 9% fewer than in 2009.

Estate Agents Market Size


Table 2.1: Number of Residential Property Transactions in theUK by Region (000 [non-seasonally adjusted]), 2006-2010

England, Walesand Northern

Ireland Scotland Total

2006 1,528 145 1,673

2007 1,466 148 1,614

2008 801 99 900

2009 784 74 858

2010e 707 76 783

e — Key Note estimates

Source: HM Revenue & Customs © Crown copyright material is reproduced withthe permission of the Controller of HMSO (and the Queen’s Printer for Scotland)/Key Note

Figure 2.1: Number of Residential Property Transactions in theUK (000 [non-seasonally adjusted]), 2006-2010

2006 2007 2008 2009 2010

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Note: 2010 figure is a Key Note estimate.

Source: HM Revenue & Customs © Crown copyright material is reproduced withthe permission of the Controller of HMSO (and the Queen’s Printer forScotland)/Key Note



The latest housing market survey from the Royal Institution of CharteredSurveyors (RICS), published in December 2010, reported a continued decreasein new buyer enquiries. Despite a slight increase (of 2.6%) in transactionactivity, transaction levels remain well below their long-run average of 27 salesper month. In addition, the average number of properties on surveyors’ booksincreased by 1.8% on November, to 70.8. Due to the increase in both sales andstocks, the ratio between the two remained largely unchanged. Nevertheless,surveyors expect transaction levels to rise in the coming months, albeit at amodest pace.

As reported in an article entitled Falling house prices are ‘inevitable’ onthisismoney.co.uk on 1st November 2010, a recent report published by housingintelligence company Hometrack states that homes in the East Midlands andWales are taking longest to sell, on the market for an average of more than3 months. In London, homes are selling for 92.9% of their asking price andtaking 6.5 weeks to sell.

By Value

Estate Agency Revenue

Estate agency revenues are based on fees calculated as a percentage of aproperty’s selling price, typically around 1.5%. Therefore, their income variesaccording to the volume of properties sold and their value. Although someagents charge a set fee, which may give them an advantage over other agentswhen competing for clients, most agents eventually switch to a percentage feebased on the property’s sale value.

According to National Statistics, UK real-estate agencies’ total revenue, derivedfrom residential property transactions, stood at £7.51bn in 2009, which is17.5% lower than the turnover figure in 2007. This figure is lower thanexpected given the simultaneous decrease in number of transactions andhousing prices. This is, in part, due to a corresponding increase in revenue fromlettings. Key Note estimates that, in 2010, there was a fall of 3% to £7.29bn inestate agency’s turnover derived from residential property transactions.

When considering estate agencies’ total turnover, Key Note expects that, in2010, 65% of it was accounted for by fees derived from property sales,compared with around 75% in the boom years. The proportion of totalrevenue accounted for by residential property sales varies each year, but isgenerally around 90%.



Table 2.2: Estate Agency Revenue from Residential PropertyTransactions in the UK (£m), 2003-2010

Revenue (£m)

Year

2003 5,705

2004 5,984

2005 6,149

2006 8,252

2007 9,102

2008 7,663

2009 7,511

2010e 7,286

e — Key Note estimate

Note: the most recent data were collected under a different Standard IndustrialClassification (SIC); those for 2003 to 2007 inclusive were collected under SIC (2003), whilethose for 2008 and 2009 were collected under SIC (2007). Data for 2003 to 2007 inclusiveare from section K, subsection 70.31, ‘real-estate agencies’ (Annual Business Inquiry,release date 16th June 2009); data for 2008 and 2009 are from section L, sub-section 68.31,‘real-estate agencies’ (Annual Business Inquiry, release date 17th November 2010).


Figure 2.2 illustrates fluctuations in estate agency revenue between 2003 and2010.



Figure 2.2: Estate Agency Revenue from Residential PropertyTransactions in the UK (£m), 2003-2010

2003 2004 2005 2006 2007 2008 2009 2010

5,750

6,000

6,250

6,500

6,750

7,000

7,250

7,500

7,750

8,000

8,250

8,500

8,750

9,000

Note: 2010 figure is a Key Note estimate. The most recent data were collected under adifferent Standard Industrial Classification (SIC); those for 2003 to 2007 inclusive werecollected under SIC (2003), while those for 2008 and 2009 were collected under SIC(2007). Data for 2003 to 2007 inclusive are from section K, subsection 70.31, ‘real-estateagencies’ (Annual Business Inquiry, release date 16th June 2009); data for 2008 and 2009are from section L, sub-section 68.31, ‘real-estate agencies’ (Annual Business Inquiry,release date 17th November 2010).


NEW HOUSING

New housing is an important aspect of the residential property market, andthis section provides information on trends in the volume and value of newhousing over the review period.



By Volume

Table 2.3 shows the number of permanent dwellings completed in the UKbetween 2005/2006 and 2009/2010. The total number rose year-on-yearbetween 2001/2002 and 2006/2007, but has been dropping since. The numberof permanent dwellings completed in England dropped by 20.4% in 2008/2009compared with 2007/2008, and a further 15.2% since then. It has been said thatEngland alone needs around 200,000 new homes a year to take account of therise in population. Currently, only slightly more than half this number is beingbuilt.

Table 2.3: Number of Permanent Dwellings Completedin the UK by Country, 2005/2006-2009/2010

England ScotlandNorthern

Ireland Wales Total

2005/2006 163,398 25,959 17,410 8,257 215,024

2006/2007 167,577 23,684 17,948 9,334 218,543

2007/2008 168,140 25,800 13,470 8,670 216,080

2008/2009 133,830 21,020 9,720 7,110 171,680

2009/2010 113,430 n.a n.a n.a n.a

n.a. — not available

Source: Monthly Digest of Statistics, September 2010, National Statistics website© Crown copyright material is reproduced with the permission of the Controllerof HMSO (and the Queen’s Printer for Scotland)

By Value

The total value of new housing in Great Britain rose by 30.7% between 2005and 2007, reaching £19.77bn. By 2009, this figure dropped to £9.5bn, a declineof 51.9%. Key Note estimates that a 15.7% rise in value will be seen in 2010,to £10.99bn.

According to National Statistics, the value of total construction orders was 14%lower in the third quarter of 2010 compared with the previous year. However,one positive sign was that orders for private housing were up in the thirdquarter of 2010, by £860m to £2.56bn, the largest total for private housing inat least 2 years. Nevertheless, these figures show that the construction industryto date continues to feel the effects of the recession, in spite of a recentrecovery.



Table 2.4: Value of New Housing in Great Britain(£m), 2005-2009

Public andHousing

Association Private Total

2005 1,951 13,171 15,122

2006 2,653 13,568 16,121

2007 3,733 16,037 19,769

2008 3,082 9,201 12,283

2009 3,107 6,393 9,500

2010e 3,336 7,656 10,992

e — Key Note estimates based on National Statistics’ data for Q1and Q2 2010

Source: Monthly Digest of Statistics, September 2010, National Statistics website© Crown copyright material is reproduced with the permission of the Controllerof HMSO (and the Queen’s Printer for Scotland)/Key Note



3. Industry Background

RECENT HISTORY

Although many small and medium-sized estate agents remain, the estateagents market has seen considerable consolidation taking place over the past20 years. From the mid-1980s to the mid-1990s, insurance companies andbuilding societies became the dominant owners. They included: PrudentialAssurance Company, Royal & Sun Alliance, Bradford & Bingley Building Society,Cheltenham & Gloucester Building Society, Abbey National, Alliance &Leicester Building Society, Nationwide Building Society, Halifax BuildingSociety (which became Halifax PLC and which is now part of Halifax Bank ofScotland [HBOS]), Bristol Building Society, and CGNU, which was rebrandedAviva.

Almost all of these subsequently withdrew from the sector in the wake of thehousing-market recession of the early nineties. Only two major corporateowners remained: Skipton Building Society, which owns Connells; and HBOS,which owns Halifax Estate Agency. One estate agency — Spicerhaart — isowned by a foreign financial institution, Winterthur, the Swiss insurer, whichin turn is owned by the Swiss bank Credit Suisse.

Another wave of restructuring took place starting around 2005. Your Movewas sold by Aviva PLC in a management buyout (MBO), and was later boughtby Lending Solutions. The latter also bought the agency Reeds Rains.Countrywide Assured bought the estate agency chain of Bradford & Bingleyand was subsequently acquired by a private-equity firm, Apollo ManagementLLP. In 2006, Humberts was bought by Farley Group, another private company.In 2007, John Hunt surprised the estate agency industry by selling Foxtons foran estimated £360m to BC Partners, a pan-European private-equity firm. In thesummer of 2007, Strutt & Parker merged with Lane Fox; both are upmarketestate agents.

In 2008, as an early casualty of the credit crunch, Humberts went intoadministration and was bought up by a private joint-venture company. One ofthe owners of the joint venture already had shares in Humberts, as well as inChesterton. In January 2009, these two venerable estate agencies merged andwere rebranded as Chesterton Humberts. Halifax Estate Agency remained partof HBOS even when the latter merged with Lloyd TSB in January 2009 to formthe Lloyds Banking Group. In January 2010, however, the estate agencies weresold to LSL Property Services.

The other major development of the past 5 years has been the growth ofproperty Internet portals. These sites have become as important as localnewspapers, if not more so, as a medium for property advertising. Almost everyestate agent now advertises through one or more property portals. This trendis now being taken further with the establishment of online estate agencies.Much like virtual organisations or fables factories, these are becomingincreasingly popular and are welcomed by property buyers and sellers by virtueof their lower fees and increased convenience.

Estate Agents Industry Background


NUMBER OF COMPANIES

Franchise and Affiliated Operations

Franchises and affinity groups play an important role in the estate agencyindustry. The principal affinity groups include Movewithus, Home SaleNetwork, NAEA HomeLink Network and the Guild of Professional EstateAgents. As can be seen in Table 3.1, while many of the affinity groups andfranchise operations increased their number of brances in the years between2006 and 2008, the majority experienced a decline in membership in 2009.

Despite a significant decrease in membership between 2008 and 2009,Movewithus remains the largest group with over 1,000 branches in the UK.Both the Guild of Professional Estate Agents and the TEAM Associationrecorded the most significant falls in branch numbers over the review period,at 21.5% and 42.9%, respectively. Fine & Country is the only agency group tohave achieved consistent growth throughout this 4-year period, with itsnetwork size having increased by 81% between 2005 and 2009.

Table 3.1: The Largest Affinity Groups and Franchise Operationsin the UK by Number of Branches, January 2005-2009

Number of Branches

2005 2006 2007 2008 2009

Estate Agency Group

Movewithus 738 1,006 1,062 1,118 1,045

Home Sale Network 757 750 750 1,014 939

NAEA HomeLink Network 843 751 649 534 720

Guild of Professional EstateAgents 675 666 633 627 530

Mayfair Office 351 351 357 359 318

Table continues...



Table 3.1: The Largest Affinity Groups and Franchise Operationsin the UK by Number of Branches, January 2005-2009

...table continued

Number of Branches

2005 2006 2007 2008 2009

Estate Agency Group (cont.)

The TEAM Association 546 498 414 407 312

Fine & Country 158 160 268 277 286

National Homes Network 220 230 250 260 220

The London Office 181 183 194 167 176

NAEA — National Association of Estate Agencies

Note: the total number of branches for the Home Sale Network now includes ’referralmembers’ as well as ’selected members’, whereas in previous years the total hasincluded ’selected members’ only. In 2008, in addition to the 754 selected members (aspublished in the previous edition of this Key Note Market Report), there were 260 referralmembers; in 2009, the total number of 939 branches includes 296 referral members, withthe selected membership now at 643.

Source: Estate Agency News, February 2005-2009

Other smaller networks and franchises include Xperience, Winkworth and theIndependent Network of Estate Agents. Xperience is an umbrella organisationfor a number of regional fascias, such as Whitegates in the North and theMidlands, and Parkers in central Southern England. The fascias include morethan 80 offices, all of which are franchised. Winkworth is a London-basedagency and a franchise operation with some 80 offices in the chain to date,while the Independent Network of Estate Agents is a Kent-based group ofagents which has successfully expanded its number of branches from 150 in2008 to 430 in 2010.

Estate Agencies

According to National Statistics’ data, the total annual turnover for the estateagency industry has declined by 1.9% between 2008 and 2009, dropping fromslightly under £7.7m to a little more than £7.5m. The average annual turnoverper agency, however, has remained unchanged at £480,000, indicating thatthe reduction in market size was accompanied by a corresponding reductionin the number of agencies.



The data in Table 3.2 show the number of UK VAT- and/or PAYE-basedenterprises engaged in real estate activities segmented by turnover sizeband,as in the UK Business: Activity, Size and Location report published by NationalStatistics. Between 2009 and 2010, the total number of agencies has declinedby 5.3%, down from 16,945 to 16,050. Within all sizebands apart from thesmallest two, the number of enterprises has declined. The number ofcompanies turning over in excess of £250,000 has dropped most significantly,down from 5,115 agencies (30.2% of the total) to 3,950 agencies (24.6% of thetotal). In 2006 and 2007, these percentages were recorded at 34.6% and 33.6%,respectively. By contrast, between 2009 and 2010, a big increase in the numberof enterprises occurred in the £0 to £49,999 turnover sizeband, with numbersup from 1,795 to 2,265, or 14.1% of the total.

Table 3.2: Number of UK VAT- and/or PAYE-Based EnterprisesEngaged as Real Estate Agencies by Turnover Sizeband

(number and %), 2009 and 2010

2009 2010

Number ofEnterprises

% ofTotal

Number ofEnterprises

% ofTotal

Turnover Sizeband (£000)

0-49 1,795 10.6 2,265 14.1

50-99 4,080 24.1 4,125 25.7

100-249 5,955 35.1 5,710 35.6

250-499 2,540 15.0 2,030 12.6

500-999 1,390 8.2 1,030 6.4

1,000-4,999 980 5.8 725 4.5

5,000+ 205 1.2 165 1.0

Total 16,945 100.0 16,050 †100.0

† — does not sum due to rounding

Source: UK Business: Activity, Size and Location, 2009 and 2010, National Statiticswebsite © Crown copyright material is reproduced with the permission of theController of HMSO (and the Queen’s Printer for Scotland)



EMPLOYMENT

In terms of employment sizeband, the overwhelming majority of estateagencies are small organisations. As can be seen from National Statistics’ data,in 2009, 88.1% of agencies had fewer than ten employees; in 2010, the numberhas crept up further still, to 88.8%. In both years, around 70% of enterpriseshad fewer than five employees, a number which hovered around 62% in both2006 and 2007. A trend towards fewer but leaner organisations is thusapparent, largely as a response to market conditions, albeit facilitated by theadvent of new technology such as online distribution channels.

Table 3.3: Number of UK VAT- and/or PAYE-Based EnterprisesEngaged as Real Estate Agencies by Employment Sizeband

(number and %), 2009 and 2010

2009 2010

Number ofEnterprises % of Total

Number ofEnterprises % of Total

Number of Employees

0-4 11,750 69.3 11,340 70.7

5-9 3,180 18.8 2,920 18.2

10-19 1,235 7.3 1,090 6.8

20-49 535 3.2 500 3.1

50-99 130 0.8 110 0.7

100-249 75 0.4 50 0.3

250+ 40 0.2 40 0.2

Total 16,945 100.0 16,050 100.0

Source: UK Business: Activity, Size and Location, 2009 and 2010, National Statisticswebsite © Crown copyright material is reproduced with the permission of theController of HMSO (and the Queen’s Printer for Scotland)

REGIONAL VARIATIONS IN THE MARKETPLACE

Although widespread across the whole of the UK, estate agency offices aremostly concentrated in urban and more prosperous areas in the UK, with alarge number based in London and the South East. Some of the larger agencieshave strong local identities. For example, Arun Estates’ main business is inSussex and Hampshire, while Connells has a strong representation in theMidlands.



Regional House Prices

UK house prices vary widely across the country, with the biggest gap beingbetween the north and the south. Average property prices are the highest inLondon and the South East. Equally, a gap exists within regions, with apremium placed on properties located centrally or near good state schools.Table 3.4 shows how average house prices were distributed across the UK inthe third quarter of 2009 and 2010. This distribution has not been affected bythe recent fall in property prices, with the average house price in GreaterLondon and the South East typically being more expensive than the North byaround 48.3% and 56%, respectively. Average house prices in most regions inEngland have increased by September 2010, with the exception of East Anglia,the North and the North West.

It should be noted that the average house price is down by 14.8% since peakingat £194,893 in the first quarter of 2008. The biggest drop occurred in NorthernIreland, by 40.3%, followed by East Anglia, the North and the North West, allof which saw house prices fall by close to 20%. The South West, by contrast,emerges almost unscathed from the recession, with a mere drop of 5.4%.House prices in London fell in line with the national average.

Table 3.4: Average House Price in the UK by Region(£), Quarter 3 2009 and 2010

Average Price (£)

2009 2010

England

Greater London 247,771 259,749

South East (excluding Greater London) 217,493 223,983

South West 176,652 195,371

East Anglia 155,961 155,391

West Midlands 150,814 153,923

East Midlands 133,901 145,701

North 127,036 125,415

North West 128,672 122,181

Yorkshire/Humberside 118,712 124,152

Northern Ireland 147,642 127,881

Table continues...



Table 3.4: Average House Price in the UK by Region(£), Quarter 3 2009 and 2010

...table continued

Average Price (£)

2009 2010

Wales 135,396 135,624

Scotland 125,715 121,165

UK average 161,780 166,035

Note: data are seasonally adjusted.

Source: Halifax House Price Index, Historical Data, Table 1

DISTRIBUTION

The Internet has become a crucial advertising and distribution channel formany estate agents. The main portals for residential properties include:primelocation.com; findaproperty.com; rightmove.co.uk; zoopla.com;globrix.com; teamprop.co.uk; fish4homes.co.uk; look4property.com;home.co.uk; and home-on-line.co.uk.

Of these, Rightmove is by far the most prominent one. Founded in 2008 as ajoint venture between Countrywide Assured, Halifax Estate Agencies, Connellsand Royal & Sun Alliance, it provides a comprehensive geographic coverage ofthe UK property market, including both sales and lettings. Its share of theproperty portal market exceeds 60%. Over 90% of the UK’s estate agentssubscribe to Rightmove, which has more than 40 million visitors every month.

HOW ROBUST IS THE MARKET?

Until 2008, the property market in the UK looked reasonably secure, areflection of more than a decade of strong national economic growth.However, the data in this report clearly demonstrate that the property andestate agency markets are not nearly as robust as they were believed to be.Instead, they are highly susceptible to key economic drivers, principal amongthese being interest rates, the availability of mortgages, and the amount ofsurplus money available to prospective homebuyers.



The market is also influenced by the way in which local economies work. Whenlocal economies decline, this is often reflected in a fall in house prices. Thistrend has been clearly observable in the North, where house prices areconsistently depressed. London and the South East, by contrast, havetraditionally benefitted the most from the strong growth of the capital’seconomy, particularly the City of London’s financial services sector, wherebonuses of £500,000 or more are not uncommon.

Another factor contributing to changes in house prices is populationmovements. In areas of the UK where the population has shrunk, propertyvalues have fallen, or, at best, risen much more slowly than elsewhere. This wasthe case for many years in Scotland and Northern Ireland, although thereappears to have been a trend reversal in these areas.

LEGISLATION

Estate Agents and Property

In the UK, residential estate agents are regulated by the Estate Agents Act1979. Under this Act, an estate agent is required to obtain instructions inwriting before offering a property for sale, and the client is required to checkand confirm the details as compiled by the estate agent. Estate agents alsohave to comply with the 1991 Property Misdescriptions Act, which makes it anoffence to make false or misleading statements about property offered forsale. Failure to comply with this Act can result in a fine of up to £5,000.

Since October 2008, all estate agents in the UK engaged in residential estateagency work are required to join an approved redress scheme dealing withcomplaints about the buying and selling of residential property. The redressscheme is designed to protect all buyers and sellers (and potential buyers andsellers) of residential property who experience problems with estate agents.

Other measures to improve the regulation of estate agents also came into forceon 1st October 2008; these included, for example, regulation requiringconsumers to be advised that they have the right to cancel a contract within 7calendar days of signing, and agents giving consumers a ‘Notice of the Rightto Cancel’ when the contract is made. These regulations also provide enforcerswith increased powers to enter estate agents’ premises and inspect documents.The Government is also planning to implement further provisions in the 2007Consumers, Estate Agents and Redress Act (CEARA 07) in 2011, with the aim ofintroducing formal record-keeping requirements for estate agents. Notably,estate agents will be required to keep records of their transactions withconsumers, including offer letters, for a period of 6 years, which will provideenforcers with audit trials and evidence to prove misconduct.



Renting

Agents involved in renting are covered by the various rent acts that have beenpassed by successive governments. These include the Landlord and Tenant Actof 1985 and the Rent Acts (Maximum Fair Rent) Order of 1999. A new piece oflegislation that came into effect on 6th April 2007 is the Tenancy DepositScheme, under which it is mandatory for landlords to pay their tenants’deposits into one of two schemes: a custodial scheme or an insurance-basedscheme. The scheme applies to assured shorthold tenancies. Under a custodialscheme, the deposit is held until it is due to be repaid at the end of the tenancy.The custodial scheme is free to use and there is only one custodial schemeprovider. Under the insurance-based schemes, the landlord keeps the depositand pays the insurance scheme, to insure against the landlord failing to repaythe tenant any money due to them.

Insurance

Estate agents that want to advise on, arrange or administer contracts ofgeneral insurance (e.g. insurance policies covering buildings or home contents)must apply to the Financial Services Authority (FSA) for authorisation. Theestate agent must fulfil certain criteria before being authorised by the FSA. Anestate agent can register with the FSA as an appointed representative of anexisting FSA-authorised product or service provider and, therefore, gainexemption from some of the FSA’s regulations. However, the estate agent stillhas to inform the FSA of the exact arrangements that exist between it and theFSA-authorised product or service provider, and those arrangements mustconform to FSA guidelines.

Money Laundering

Estate agents are also bound by the EU Money Laundering Regulations,introduced in March 2004, which require estate agents to appoint amoney-laundering officer and to ensure that clients provide evidence of theiridentity, address and the source of any funds they propose to use to purchasea property. Since 15th December 2007, Trading Standards inspectors have beenauthorised to inspect estate agents and to check whether they have a systemin place to check on their clients for money-laundering activities. Inspectorswill also expect to view estate agents’ records, showing that they have beenmaking these checks for 5 years.



KEY TRADE ASSOCIATIONS

Association of Residential Lettings Agents

The Association of Residential Lettings Agents (ARLA), formed in 1981, is theprofessional and regulatory body for letting agents in the UK. It has 3,500member offices throughout the UK, including large, multi-branch, nationalcompanies and smaller, single-office businesses. ARLA is recognised bygovernment, local authorities, consumer interest groups and the media as theleading professional body in the private rented sector. It produces policy paperson key issues affecting the lettings market and lobbies government and otherbodies within the industry to develop the appropriate legislative frameworkand initiatives.

Institution of Commercial & Business Agents

The Institution of Commercial & Business Agents (ICBA) is one of the UK’sprofessional bodies for commercial and business transfer agency. The ICBA hasdeveloped nationally recognised and accredited qualifications in commercialproperty agency.

National Association of Estate Agents

Established in 1962, the National Association of Estate Agents (NAEA) is theUK’s leading professional body for estate agencies. Its 10,000 members practiceacross all aspects of property, both in the UK and overseas, including residentialand commercial sales and letting, property management, business transfer,auctioneering and land. The key roles of the NAEA include providing help andguidance for property professionals across a broad spectrum of disciplines, andcampaigning to make the property market more efficient for house buyers andsellers.

National Association of Valuers & Auctioneers

The National Association of Valuers & Auctioneers (NAVA) was established in1988, in order to bring together auctioneers, valuers and insolvencyprofessionals in both commercial and private practice. Their aim is to achievea good industry standard in the fields of valuing auctioneering and insolvency.

National Federation of Property Professionals

The National Federation of Property Professionals (NFOPP) and its divisionshave a combined membership of just under 14,000. The organisation consistsof ARLA, the ICBA, the NAEA and the NAVA.



The Property Ombudsman

The Property Ombudsman (TPO) came into being in May 2009. It was formerlythe Ombudsman for Estate Agents (OEA) — the name change was made toreflect the broader jurisdiction in relation to the complaints it handlesconcerning property sales, lettings, commercial property and overseasproperty.

The original OEA Scheme was established in 1998. The Scheme is open to: allthose firms of estate agents with a principal, director or partner who is amember of the NAEA or the Royal Institution of Chartered Surveyors (RICS); toall corporate estate agents, defined as those who are subsidiaries of a bank,building society or insurance company, or are themselves quoted on the StockExchange; and to other estate agents which are sponsored and seconded byexisting member agents. From June 2006, the OEA extended its services tolettings and property management agents.

Royal Institution of Chartered Surveyors

RICS is the world’s leading professional body for qualifications and standardsin land, property and construction. Founded in 1868, it is the oldestprofessional body in the property sector. Its role is to represent and maintainthe standards of the surveying profession. The institution has more than 70,000members. It issues a quarterly report on the property market and works closelywith the NAEA.



4. Competitor Analysis

THE MARKETPLACE

The estate agency market has remained largely unchanged in recentyears. In the boom years leading up to 2007, almost all of the major firms eithermaintained their residential branch networks or opened additional branches.As Table 4.1 shows, a few big firms dominate the market in terms of numberof branches. Countrywide is by far the largest estate agency, with 1,104branches in January 2009 — almost as many branches as the next threecombined. Countrywide is followed by Connells and LSL Property Services PLC,with 470 and 378 branches, respectively.

Since 2008, growth in terms of branch numbers predictably slowed and evenreversed, with the majority of firms closing branches. Countrywide closed 72of its branches and LSL Property Services PLC closed 82.

Table 4.1: The Leading 30 Estate Agencies in the UKby Number of Residential Branches, January 2006-2009

2006 2007 2008 2009

Countrywide PLC 1,178 1,176 1,176 1,104

Connells 458 496 499 470

LSL Property Services PLC 401 420 460 378

Halifax Estate Agency 327 329 328 244

Spicerhaart 227 231 227 173

Arun Estates 122 123 123 113

Savills 68 73 81 78

Hamptons 58 65 82 70

Kinleigh Folkard & Hayward 67 67 67 59

Chesterton Humberts n.a n.a 102 57

Andrews Estate Agents 54 54 57 54

Knight Frank 46 50 52 54

Strutt & Parker 28 28 51 50

Chancellors Estate Agents 50 50 50 48

Jackson Stops & Staff 39 42 42 40

Badger Holdings 45 44 44 34

Table continues...

Estate Agents Competitor Analysis


Table 4.1: The Leading 30 Estate Agencies in the UKby Number of Residential Branches, January 2006-2009

...table continued

2006 2007 2008 2009

Bradley’s 43 43 40 33

Acorn Group 27 32 34 32

Keith Pattinson Ltd 30 29 29 30

Smiths Gore 18 20 20 26

Foxtons 17 20 23 24

Goadsby 19 22 26 23

Hunters n.a n.a 22 23

Peter Alan 26 25 25 23

Dacre Son & Hartley 20 20 20 20

Robinson Jackson n.a n.a 20 20

Thamesview n.a 19 22 20

Besley Hill n.a n.a 18 18

Harrison Murray n.a 19 20 18

John Francis Estate Agents n.a n.a 18 18


Note: since these data were published (2009), Halifax has been sold to LSL PropertyServices (January 2010).

Source: Estate Agency News, February 2006-2009

MARKET LEADERS

Countrywide Estate Agents

Company Structure

Countrywide Estate Agents is part of Countrywide PLC. It had 1,104 branchesas at January 2009 and trades under several names, including Bairstow Eves,Beresford Adams, Bridgfords Countrywide, Gascoigne Pees, John D Wood, King& Chasemore, Mann & Co, and Taylors. Countrywide PLC is owned by ApolloManagement LLP, a US private-equity company, and Oaktree Capital, a globalinvestment cooperation, owns a 34% stake in Countrywide’s bonds.



Current and Future Developments

In summer 2010, Countrywide became the agent for Haggs Gate developmentin Glasgow. Later in November, the company’s Surveying Services wasappointed as the sole valuation panel manager for Kent Reliance BuildingSociety. Although expansion in 2010 was on the agenda, Countrywide alsodecided to focus on the rentals market, which Oaktree believes will assumegreater importance in coming years. As a result, Countrywide is positioningitself as a leading participant in residential rentals.

Financial Results

In the year ending 31st December 2009, turnover at Countrywide Estate Agentsrose by 19.9% to £302.6m. A pre-tax loss of £41.7m was recorded in 2008, whichimproved to a pre-tax profit of £24.5m in 2009.

Connells Residential

Company Structure

The Connell group is the UK’s largest marketer of new homes, selling morethan 6,000 a year. The group had around 460 branches in 2010. The companyis owned by Connells’ senior management and Skipton Building Society.


In October 2010, Connells entered into a partnership with Mediterranean CAM,part of the Spanish savings bank CAM, with the aim of selling Spanishproperties in the UK. The company also offers lifetime leases, which is analternative to equity release that enables homeowners aged over 60 to selltheir property and buy a lifetime lease with the proceeds, or part of theproceeds. It provides buyers with access to more expensive property than theycould afford with an outright purchase. Part-exchange, which enablescustomers to buy a brand new home, is also an expanding part of Connells’sbusiness.

There is a strategic alliance with BNP Paribas Real Estate to market a stream ofnew homes in 2011 and beyond. The firm has also developed a new service toassist vendors in presenting their properties in the ways most likely to appealto buyers.

Financial Results

In the year ending 31st December 2009, turnover at Connells Residentialincreased by 32.3% to £60.7m, and pre-tax profit rose by 133.9% to £16.3mcompared with previous year’s £7m.



LSL Property Services PLC

Company Structure

LSL Property Services PLC was formerly known as Lending Solutions Ltd. It wascreated in 2004 as the management buyout (MBO) company for the purchaseof Your Move from the insurance group CGNU PLC and was listed on the stockexchange in November 2006. The company’s property services cover 4 mainareas: surveying, estate agency, corporate services, and financial services.In 2009, the company had 378 branches trading under the Your Move or ReedsRains brand names. Both businesses are a mix of franchised operations andwholly owned offices.


In January 2010, LSL bought the Halifax chain of estate agencies from LloydsBanking Group, which catapulted LSL over Connells to become the UK’ssecond-largest estate agency business by number of outlets. Halifax brought218 branches to add to LSL’s 378, creating a business with just under 600 offices.

In May 2010, LSL acquired over 450 advisers from leading financial servicesnetwork Home of Choice — these advisers now operate under the brand ofFirst Complete, making LSL one of the largest mortgage advisory businesses inthe UK. In October 2010, LSL announced that it had completed its anticipatedbuyout of Pink Home Loans, a mortgage distribution company, for £1.59m.

Financial Results

In the year ending 31st December 2009, turnover at LSL Property Services PLCdecreased by 2.5% to £157.7m, while the company reported a rise in pre-taxprofit from a loss of £6.2m to a profit of £16.6m.

Spicerhaart Group Ltd

Company Structure

Spicerhaart Group Ltd was known as TMX Corporation until July 2004. It is infavour of the ‘one-stop’ concept, providing sales, letting, surveying, legal andfinancial services. The company has a diverse group of subsidiary companiesacross the UK, which includes many well-known high-street names, such as:Mortgages Direct, Spicer McColl, Darlows, Felicity J Lord, and Haart andHaybrook.




Spicerhaart purchased Property Market from Tesco in 2008. In March 2010, ina full-scale partnership, Spicerhaart and Tesco together launched the onlineagency isold.com, which charges a total of £999 for a sale, including valuation,home consultation, advertising on the major portals, and support from abranch-based team of professionals. In August 2010, Spicerhaart acquired JUSTResidentials, an estate agency in Leicester, as part of its continuing expansionprogramme. The company is in the process of acquiring three furtherbusinesses across the country.

Financial Results

In the year ending 31st December 2009, turnover at Spicerhaart Group Ltdincreased by 16.1% to £82.8m. A pre-tax loss of £2.5m was recorded in 2009,up from a pre-tax loss of £3.9m in 2008.

Arun Estate Agencies Ltd

Company Structure

Arun Estate Agencies Ltd is an independent property company based in theSouth East of England. The company has over 110 branches located across Kent,Surrey, Sussex and Hampshire, with a few in London, and they are operatingunder few different trading brands: Cubitt & West, Douglas Allen, Pittis,Rooney & Co, Ward & Partners, and Wyatt & Son. Arun Estate Agencies Ltdspecialises in residential lettings, mortgage financing, conveyancing andinternational property investment.


The company has been expanding the services of its call centre to sellmortgages and conveyancing. It has also been developing its auction business.The company’s expertise in lettings will be valuable as the renting marketgrows.

Financial Results

In the year ending 30th September 2009, turnover at Arun Estate Agencies Ltdfell by 43.1% to £41.7m, and pre-tax profit dropped by 59.8% to £2.9m.

Savills PLC

Company Structure

Savills PLC has 200 offices and associates throughout the Americas, the UK,continental Europe, Asia Pacific, Africa and the Middle East. The companyspecialises in residential and rural upmarket houses and country properties, aswell as property management and commercial properties. It had 78 offices inthe UK by the end of 2009.




In November 2010, Savills decided to close its subsidiary Savills LendingSolutions due to difficult trading conditions. Around the same time, thecompany became the agent for One Hyde Park, the Knightsbridge apartmentblock where one home was sold for £140m. Savills has recently been appointedto handle the sale of a UK property portfolio for St Martins, Kuwait’s UKproperty investment vehicle. In 2010, Savills has seen profit surge on the backof the property boom in Asia; revenues from overseas were said to have madeup more than half of the group’s total.

Financial Results

In the year ending 31st December 2009, turnover at Savills PLC dropped slightlyby 1.4%, from £560.7m to £568.5m, but pre-tax profit rose from a loss of £7.7mto a profit of £13.5m.

Hamptons Group Ltd

Company Structure

Hamptons Group Ltd, which is marketed under the name HamptonsInternational, is owned by the Dubai-based Emaar Properties. It is the UK’seighth-largest estate agency in terms of branches, which numbered 70 inJanuary 2009, and has a strong presence in the country properties sector.


Hamptons scaled back its consumer advertising in traditional media in the yearto December 2009, reflecting the firm’s financial shortfalls. The property slumpin Dubai, where Hampton has a significant presence, is unlikely to have helpedthe business. In November 2010, the company opened an office in Hong Kongwith the purpose of introducing a range of new UK developments to the Asianmarket in the near future. The Hong Kong office will operate as a sales andlettings function for the local market and expand its operations throughoutthe Asia-Pacific region.

Financial Results

In the year ending 31st December 2009, Hamptons Group Ltd reported apre-tax profit of £4.7m on a turnover of £57.1m. In the previous year, turnoverwas recorded at £52.4m, along with a pre-tax profit loss of £16.5m.



Kinleigh Folkard & Hayward Ltd

Company Structure

Kinleigh Folkard & Hayward Ltd is owned by Kinleigh Ltd. It was founded in1977 and had 59 branches as at January 2009. The company is based in Londonand claims to be a major player in the capital’s property market. It offers acomprehensive range of services including residential sales and lettings, blockmanagement, commercial property services, financial services, surveying andvaluation.


Despite the closure of 8 branches by the end of 2009, Kinleigh Folkard &Hayward is planning to open a further 30 branches over the next 6 to 7yearsand expand its business into East London. Haywards Surveyors and Valuers iscurrently rebranding its surveying business to align its identity with KinleighFolkard & Hayward.

Financial Results

In the 39-week period ending 31st December 2009, turnover at KinleighFolkard & Hayward Ltd was reported at £2.4m, compared with the £2.7mreported for the 52-week period ending 31st March 2009 and £7.3m generatedin the 65-week period ending 31st March 2008. Pre-tax profit was recorded at£126,000 at the end of 2009, after losses of £895,000 and £623,000 wererecorded for the earlier periods ending March 2009 and March 2008,respectively.

Chesterton Humberts

Company Structure

In summer 2008, two of the UK’s oldest estate agencies, Chesterton andHumberts, merged into one company under the brand name ChestertonHumberts, which also includes the Humberts brands Farleys and Wellingtons.The newly merged firm presented itself as a multi-disciplinary propertybusiness covering residential, international, rural and commercial sales andlettings with 57 offices nationally (as at January 2009) and international officesin Europe, Asia, Australasia, Africa and the Middle East.


According to Nielsen Media Research data, in the year ending September 2009,£165,000 was spent on promoting the newly merged Chesterton Humbertsbranding in the main meidia. It seemed the merger and redevelopment of thetwo firms worked well. In early 2010, Chesterton Humberts was recognised asthe best ‘Large Letting Agency of the Year’ by the Sunday Times’ ‘Estate Agencyof the Year’ awards and the firm won ‘National Estate Agency Chain of theYear’ at the 2010 Negotiator Awards later in November.



Financial Results

In the year ending 31st December 2009, Chesterton Global Ltd reported apre-tax loss of £6.3m on a turnover of £34.6m. In the previous year, thecompany generated a turnover of £22m, along with a pre-tax loss of £4m.

MARKETING ACTIVITY

Main Media Advertising Expenditure

Advertising in the media has always been an effective way for estate agentsto establish company names and attract business. There are various methodsestate agents use to advertise themselves. While many of them are still usingthe traditional way of advertising in local newspapers and notice boards,others have adapted to using Internet communication and marketing theirservices on the web.

Table 4.2 shows that the total amount spent by residential estate agents onmain media advertising increased by 36.1% between the years endingSeptember 2009 and 2010. A peak in expenditure was recorded in the yearending March 2008, at £31.3m; the 2009 and 2010 figures did not scale thisheight. A notable rise in expenditure between 2009 and 2010 was seen for thenewly merged Chesterton Humberts, which recorded a four-fold increase.

Table 4.2: Main Media Advertising Expenditure by ResidentialEstate Agents (£000), Years Ending September 2009 and 2010

2009 2010

Savills 1,654 2,270

Knight Frank 1,393 1,909

Strutt & Parker 714 949

Chesterton Humberts 165 686

John D Wood 358 636

Douglas & Gordon 463 618

Hamptons 380 547

Marsh & Parsons 267 511

Jackson Stops & Staff 416 457

Winkworth 284 422

Harrods Estates 205 350

Kinleigh Folkard & Hayward 172 255

Table continues...



Table 4.2: Main Media Advertising Expenditure by ResidentialEstate Agents (£000), Years Ending September 2009 and 2010

...table continued

2009 2010

Knight Frank (Overseas) 188 237

Cluttons 133 232

Bective Leslie Marsh 160 222

Your Move n.a 221

Taylor Wimpey n.a 202

Reeds Rains n.a 187

William H Brown 173 187

WA Ellis 163 164

Carter Jonas 104 155

Foxtons 103 119

Jacksons n.a 118

Aston Chase 84 113

Northwood n.a 109

Chard Est 78 107

Others 7,128 8,140

Total 14,785 20,123


Source: Nielsen Media Research

Total advertising expenditure by online estate agents increased slightly by9.9% between the years ending September 2009 and 2010, but is still down by19.4% compared with data for the year ending March 2008 (not shown).The overall rise in 2010 is largely due to the considerable increase of 70.4%in the amount spent by findaproperty.com. In fact, all agencies barfindaproperty.com and s1homes have reduced their advertising expendituresince 2009, in contrast with the traditional estate agents shown in Table 4.2.



Table 4.3: Main Media Advertising Expenditure by Online EstateAgents (£000), Years Ending September 2009 and 2010

2009 2010

Rightmove 2,700 2,507

Findaproperty.com 1,260 2,147

Primelocation com 2,006 1,834

Prop Cashbuyer.co.uk - 113

s1homes 79 85

Others 305 294

Total 6,350 6,980

Source: Nielsen Media Research



5. Strengths, Weaknesses, Opportunitiesand Threats

STRENGTHS

• Estate agencies act as the dominant form of brokerage between sellers andbuyers of property. Over nine out of ten people buying and selling a homein England and Wales use an estate agent.

• The estate agency market is widely distributed across the UK, with branchesin every town and city.

• Estate agents are experienced in marketing a property in the most relevantmedia.

• Estate agents can advise on and supply additional services such as mortgages,financials, insurance and sometimes removals, which provide additionalsources of revenue.

WEAKNESSES

• Estate agents are not generally perceived to give good value for money andtend to suffer from a poor public image; improved codes of practice help todeal with these concerns.

• The actual service provided by many estate agents does not extend farbeyond advertising the property, contributing to the perception of poorvalue for money.

• Estate agencies’ income is strongly dependent on property prices, as well asdemand, which renders them vulnerable to sudden changes in the market.

• The estate agency business is relatively undiversified, with income fromproperty transactions typically accounting for up to 75% of revenues.

• The estate agency market is strongly susceptible to changes in the overallstate of the economy, including interest rates, the availability of mortgagesand unemployment rates.

OPPORTUNITIES

• The handling of lettings may provide an important income stream whenproperty transactions dwindle and house prices fall.

• Internet portals represent a major promotional opportunity for estateagencies.

Estate Agents Strengths, Weaknesses, Opportunities and Threats


• The property market may be bottoming out, and a lot of pent-up demandappears to exist on the sidelines. Findings from a Key Note consumer surveyconducted in November 2010 (see Chapter 6 — Buying Behaviour) indicatethat a considerable proportion of the population (16.7%) intends to buy aproperty within the next 2 years, while over 70% of respondents maintainthat property is a safe investment for the future.

THREATS

• Lack of mortgage finance for first-time buyers is a major threat to estateagents.

• Ongoing weakness in the economy has a negative impact on consumerconfidence.

• The continued decline in house prices and the spectre of negative equitycould have a significant impact on buyers and lender confidence.

• Pending job losses in the public sector in the wake of the ComprehensiveSpending Review prevent people from making mortgage commitments.

• Increased competition from the large franchise-based agencies poses a threatto small independent agencies.

• Traditional high-street agencies will also face increased competition fromonline estate agencies, which are able to offer lower fees and may be moreconvenient for both buyers and sellers.

Estate Agents Strengths, Weaknesses, Opportunities and Threats


6. Buying Behaviour

CONSUMER PENETRATION

In November 2010, Key Note commissioned NEMS Market Research to conducta survey among a representative sample of 1,000 adults, aged 16 and over,across Great Britain to explore consumer attitudes towards estate agencies andvarious aspects of the current property market.

Respondents were given a list of statements and asked the following question:

“Thinking about estate agents, with which of the followingstatements do you agree?”

A summary of the findings is shown in Table 6.1, revealing levels of agreementwith each statement.

Table 6.1: Summary of Results (% of adults), 2010

I have engaged an estate agent to sell aproperty at least once in the past 3 years 8.7

I have bought a property through an estateagent at least once in the past 3 years 4.3

I have moved home at least once in the past3 years 9.2

I would search the internet for properties ifI wanted to move home 66.7

I would visit an estate agents office if Iwanted to move home 78.5

Estate agents give good value for money 33.4

Property is a safe investment for the future 71.6

I intend to buy a property within the next2 years 16.7

Weighted sample: 1,000

Base: all adults aged 16+

Source: Key Note

Estate Agents Buying Behaviour


Adults Who Have Engaged an Estate Agent to Sell a Propertyin the Past 3 Years

As Table 6.2 shows, 8.7% of the survey respondents stated that they hadengaged an estate agent to sell a property in the previous 3 years. This numberis significantly lower than the 18.1% of respondents who agreed with a similarstatement in a comparable survey conducted in July 2008 (not shown),although this discrepancy can be attributed to the fact that the earlier surveyreferred to a period of 7 years, as opposed to 3.

Among those who claimed to have sold a property through an estate agent,men were more likely to agree than women. In terms of age, 25 to 34 year-oldswere the most likely to have used an estate agent to sell a property in the past3 years, with penetration falling with age thereafter. By social grade, the Dswere most likely to agree with this statement, followed by C1s and, in thirdplace, the As. This is in marked contrast with the findings from the 2008 survey,where those in the A social grade were most likely to sell a property throughan estate agent, and those in the D grade appeared in fifth place. This seemsto indicate that there is additional pressure on people with lower incomes tosell their property.

By region, those in the West Midlands and Yorkshire and Humberside provedthe least likely to use estate agents for selling a property in the past 3 years.This result remains unchanged compared with the 2008 survey findings.However, the regions in which people were more likely to use an estate agentto sell a property have changed, with the South West and East Midlands nowshowing higher levels of penetration than the South East and East Anglia.

Table 6.2: Adults Who Have Engaged an Estate Agentto Sell a Property in the Past 3 Years by Sex, Age,

Social Grade and Region (%), 2010

All adults 8.7

Sex

Men 10.4

Women 7.1

Age

15-19 0.0

20-24 2.3

25-34 18.0

35-44 12.0

45-54 9.9

55-64 6.8

Table continues...



Table 6.2: Adults Who Have Engaged an Estate Agentto Sell a Property in the Past 3 Years by Sex, Age,


...table continued

Age (cont.)

65+ 3.5

Social Grade

A 8.2

B 6.6

C1 12.6

C2 7.2

D 15.5

E 3.2

Region

North 6.8

Yorkshire and Humberside 4.5

East Midlands 14.6

West Midlands 1.6

East Anglia 7.7

South East 5.5

Greater London 12.5

South West 15.3

North West 8.0

Wales 8.7

Scotland 10.0



Source: Key Note



Adults Who Have Bought a Property Through an Estate Agentat Least Once in the Past 3 Years

Results from Key Note’s November 2010 survey show that 4.3% of adults havebought a property through an estate agent at least once in the past 3 years,and men were more than twice as likely to have done so than women. In termsof age, 25 to 34 year-olds recorded the highest level of penetration, at 12.3%,while percentage penetration for other age groups was at least 5% or lower.

People in the C1 and C2 social grades were most likely to have bought aproperty through an estate agent in the past 3 years, whereas As and Bs, whichpreviously recorded the highest penetration in the 2008 survey, have fallensharply behind. By region, those in Greater London were the most likely tohave bought a property through an estate agent at least once in the past3 years. In 2008, the highest levels of penetration were recorded among thosein the South East and the East Midlands, respectively.

Table 6.3: Adults Who Have Bought a Property Throughan Estate Agent at Least Once in the Past 3 Years by Sex,

Age, Social Grade and Region (%), 2010

All adults 4.3

Sex

Men 6.1

Women 2.7

Age

15-19 0.0

20-24 2.3

25-34 12.3

35-44 5.0

45-54 4.0

55-64 1.2

65+ 1.2

Social Grade

A 0.0

B 1.2

C1 6.9

C2 5.5

D 4.1

E 1.8

Table continues...



Table 6.3: Adults Who Have Bought a Property Throughan Estate Agent at Least Once in the Past 3 Years by Sex,


...table continued

Region

North 4.0


East Midlands 0.0

West Midlands 0.0

East Anglia 1.4

South East 3.4

Greater London 10.4

South West 5.0

North West 0.6

Wales 0.8

Scotland 7.6



Source: Key Note

Adults Who Have Moved Home at Least Once in the Past 3 Years

As the data in Table 6.4 show, 9.2% of the survey respondents claimed to havemoved home at least once in the past 3 years, with more men doing so thanwomen. In terms of age, those aged 25 to 34 were most likely to agree withthis statement, followed by those aged 20 to 24. Among the older age groups,the incidence of moving house appeared to diminish gradually with age.

In terms of social grade, the highest levels of agreement were recorded amongthe Ds, followed by the C1s and C2s, respectively, with penetration for othersocial grades lagging far behind. Least likely to have moved were peoplebelonging to the A grade, whereas respondents from this grade were the mostlikely to have moved at the time of the previous survey. These figures alsocorrespond with the higher incidence of property selling and buying activitiesamong the Cs and Ds in the past 3 years.

Regionally, those who had moved home at least once in the past 3 years weremore likely to live in the South West (20.7%) and the South East (13.3%), andleast likely in the north of the country.



Table 6.4: Adults Who Have Moved Home at Least Once in thePast 3 Years by Sex, Age, Social Grade and Region (%), 2010

All adults 9.2

Sex

Men 10.8

Women 7.6

Age

15-19 0.0

20-24 19.6

25-34 25.8

35-44 7.8

45-54 5.1

55-64 1.6

65+ 1.6

Social Grade

A 0.0

B 2.8

C1 13.1

C2 11.3

D 14.0

E 3.9

Region

North 4.0


East Midlands 3.9

West Midlands 10.9

East Anglia 9.7

South East 13.3

Greater London 10.4

Table continues...



Table 6.4: Adults Who Have Moved Home at Least Once in thePast 3 Years by Sex, Age, Social Grade and Region (%), 2010

...table continued

Region (cont.)

South West 20.7

North West 4.2

Wales 11.8

Scotland 6.7



Source: Key Note

Adults Who Would Search the Internet for Properties if TheyWanted to Move

The data in Table 6.5 show that, in 2010, 66.7% of the survey respondentsstated they would search the Internet if they wanted to move home, anincrease from the 57.7% who agreed in the comparable survey conducted in2008. This confirms the growing importance of the web for both potentialhomebuyers and people looking to rent. Women appear slightly more likelythan men to conduct a search on the Internet.

In terms of age groups, more than 85% of the respondents in all age groupsfrom 20 to 44 agreed that they would use the Internet to find potentialproperties if they wanted to move. Among older groups, this tendencydiminishes with age. By social grade, 79.3% of Bs claimed they would searchthe Internet to find a suitable property, after which penetration declinedthrough the grades, with the Es least likely to agree. Between 58.6% and 79.3%of those in the ABCD social grades anticipated using the Internet for propertysearching.



Table 6.5: Adults Who Would Search the Internet for Propertiesif They Wanted to Move Home by Sex,


All adults 66.7

Sex

Men 64.3

Women 68.8

Age

15-19 56.9

20-24 86.2

25-34 85.4

35-44 85.3

45-54 72.6

55-64 59.2

65+ 25.3

Social Grade

A 65.1

B 79.3

C1 74.7

C2 66.0

D 58.6

E 38.0

Region

North 65.8


East Midlands 45.3

West Midlands 50.1

East Anglia 75.6

South East 74.3

Greater London 72.1

Table continues...



Table 6.5: Adults Who Would Search the Internet for Propertiesif They Wanted to Move Home by Sex,


...table continued

Region (cont.)

South West 60.8

North West 61.3

Wales 66.6

Scotland 67.9



Source: Key Note

Adults Who Would Visit an Estate Agent’s Office if They Wantedto Move Home

Despite the growing importance of the Internet for homebuyers and renters,78.5% of adults said they would still visit an estate agent’s office if they wantedto move home, and men and women were equally likely to do so. Penetrationwas down slightly compared with the results of the previous survey (81.2%).

By age, more than two-thirds of adults in all age groups agreed with thestatement, in which 35 to 44 year-olds were the most likely to visit an agencyif they wanted to move home (86.7%), followed by 45 to 54 year-olds (85.5%)and 55 to 64 year-olds (81.9%).

In terms of social grade, more than 80% of As and Cs said they would visit anestate agent’s office, followed by 77.7% of Bs. People in social grade D and Ewere least likely to do so, possibly as they are more likely to use social housingservices rather than estate agencies.



Table 6.6: Adults Who Would Visit an Estate Agent’s Officeif They Wanted to Move Home by Sex, Age,


All adults 78.5

Sex

Men 78.6

Women 78.4

Age

15-19 65.5

20-24 81.1

25-34 78.5

35-44 86.7

45-54 85.5

55-64 81.9

65+ 66.1

Social Grade

A 81.5

B 77.7

C1 86.9

C2 80.2

D 68.9

E 62.7

Region

North 78.7


East Midlands 58.8

West Midlands 66.1

East Anglia 84.3

South East 81.6

Greater London 87.2

Table continues...



Table 6.6: Adults Who Would Visit an Estate Agent’s Officeif They Wanted to Move Home by Sex, Age,


...table continued

Region (cont.)

South West 90.5

North West 67.1

Wales 74.4

Scotland 75.7



Source: Key Note

Adults Who Think Estate Agents Give Good Value for Money

The percentage of adults who believed estate agents presented good value formoney has dropped slightly in 2010 to 33.4%, compared with 37.1% in thecomparable survey conducted in 2008. This attitude might be influenced by thegrowing number of online estate agencies which offer competitive fees andalternative services. Men (35.6%) were more likely to agree that estate agentsgive good value for money than women (31.5%).

In terms of age, 25 to 34 year-olds appeared to have the greatest confidencein estate agents, with 41% of adults agreeing with the statement comparedwith 25.2% among the 55 to 64 year-old age group. Compared with the 2008survey, the recent figures show that a far greater percentage of A-grade adultsbelieved estate agents provide good value for money (61.3% compared with24.3%). Least likely to be convinced were those in the D social grade (24.4%),as opposed to 2008, when they were the grade most likely to agree with thisstatement (42%).

Table 6.7: Adults Who Think Estate Agents Give Good Valuefor Money by Sex, Age, Social Grade and Region (%), 2010

All adults 33.4

Sex

Men 35.6

Women 31.5

Table continues...



Table 6.7: Adults Who Think Estate Agents Give Good Valuefor Money by Sex, Age, Social Grade and Region (%), 2010

...table continued

Age

15-19 36.5

20-24 27.0

25-34 41.0

35-44 38.7

45-54 33.1

55-64 25.2

65+ 29.0

Social Grade

A 61.3

B 26.0

C1 42.2

C2 31.1

D 24.4

E 29.8

Region

North 20.5


East Midlands 27.5

West Midlands 24.5

East Anglia 33.9

South East 35.4

Greater London 36.2

South West 36.8

North West 36.3

Wales 35.6

Scotland 32.7



Source: Key Note



Adults Who Thinks Property is a Safe Investment for the Future

Findings from the November 2010 survey show that 70.1% of men and 72.9%of women in Great Britain think property is a safe investment for the future.This figure is slightly surprising in view of the recent turmoil in the propertymarket, and encouraging news for estate agents. It may reflect pent-updemand from potential buyers. By age, this conviction appears fairly evenlydistributed, with more than 70% of adults aged 20 to 64 agreeing with thisstatement. Least convinced were those aged 16 to 19 (57.8%), followed bythose aged over 65 (68.2%).

Table 6.8: Adults Who Thinks Property is a SafeInvestment for the Future by Sex, Age, Social Grade

and Region (%), 2010

All adults 71.6

Sex

Men 70.1

Women 72.9

Age

15-19 57.8

20-24 75.7

25-34 71.9

35-44 77.0

45-54 73.5

55-64 70.4

65+ 68.2

Social Grade

A 83.6

B 66.3

C1 76.1

C2 73.6

D 61.9

E 67.3

Region

North 73.4


East Midlands 54.0

Table continues...



Table 6.8: Adults Who Thinks Property is a SafeInvestment for the Future by Sex, Age, Social Grade

and Region (%), 2010

...table continued

Region (cont.)

West Midlands 66.8

East Anglia 81.3

South East 75.7

Greater London 75.2

South West 77.3

North West 72.1

Wales 60.1

Scotland 67.7



Source: Key Note

Adults Who Intend to Buy a Property Within the Next 2 Years

As the data in Table 6.9 show, a considerable 16.1% of adults intend to buy aproperty within the next 2 years, with men slightly more inclined to do so thanwomen. These figures reflect a growing level of confidence among potentialbuyers that the economy will recover. It is also a reflection of considerablepent-up demand.

In terms of age, 20 to 24 year-olds appear to be most inclined to buy a property,with 31.9% of them planning to do so, followed by 21.9% of those aged 25 to34 and 21.4% of those aged 35 to 44. Regionally, the greatest percentage ofpotential buyers is located in Scotland (27.9%), followed by Greater Londonand the South West (22.8% and 21%, respectively). People in the North Westand the West Midlands seemed to have the least confidence, with less than10% of them planning to buy a property in the next 2 years.



Table 6.9: Adults Who Intend to Buy a Property Within the Next2 Years by Sex, Age, Social Grade and Region (%), 2010

All adults 16.1

Sex

Men 18.3

Women 14.2

Age

15-19 14.1

20-24 31.9

25-34 21.9

35-44 21.4

45-54 14.5

55-64 12.1

65+ 2.8

Social Grade

A 4.6

B 16.9

C1 21.2

C2 15.3

D 11.7

E 11.7

Region

North 10.7


East Midlands 13.1

West Midlands 8.0

East Anglia 17.9

South East 13.2

Greater London 22.8

Table continues...



Table 6.9: Adults Who Intend to Buy a Property Within the Next2 Years by Sex, Age, Social Grade and Region (%), 2010

...table continued

Region (cont.)

South West 21.0

North West 8.9

Wales 12.9

Scotland 27.9



Source: Key Note



7. Current Issues

CURRENT MARKET CONDITIONS

The UK economy — together with that of many other Western nations — isstill reeling from the longest recession since British records began. 2009 sawthe economy shrink by 5%, the greatest calendar-year fall since 1921. A lackof credit and shattered consumer confidence led to a severe drop in houseprices from 2008. Despite the recession having come to an end more than 1yearago, at the time of writing the property and estate agency market remainscharacterised by negative trends.

Continued uncertainty surrounding the nature of the recovery, compoundedby the prospect of massive job losses in the public sector following theGovernment’s Comprehensive Spending Review, are causing many prospectivepurchasers to adopt a wait-and-see stance. Banks, still in the process ofrebuilding their balance sheets, likewise remain cautious with lending.According to the Council of Mortgage Lenders (CML), its members lent £10.7bnto home buyers and people remortgaging in August 2010.

As a result, house prices continued to fall towards the end of 2010. Accordingto the latest figures from Nationwide, the average house price in the UK inNovember stood at £163,398, down another 0.3% since October. In line witha decline in house prices, 2010 saw a severe drop in the number of housingtransactions, which was expected to be approximately 9% below the 2009figure by the end of the year.

A BOOMING LETTINGS MARKET

Whereas the housing market appears to be faltering, the lettings market iscurrently booming. Demand for properties to rent increased at the fastest pacesince 2008 in the 3 months to the end of October 2010, while the supply of newproperty to the lettings market fell for the fifth consecutive quarter, resultingin soaring rental growth, according to the Royal Institution of CharteredSurveyors (RICS). Primelocation, the sales and letting website, reported thatrents have risen by 5.1% in London in the third quarter of 2010.

According to recent news from Spicerhaart Residential Lettings, as reported bythe Guardian on 1st December 2010, the areas seeing the largest increases inrent are London and the South East. Last November, for instance, the monthlycharge for a semi-detached, four-bedroom furnished property in Sutton,Surrey, increased from £1,475 to £1,800 in just 5 days and was let after its firstviewing. The monthly rent on a two-bedroom maisonette in Wimbledon,south-west London, advertised by the Haart Lettings Group, was seen toincrease by £200, and in Ealing, west London, a one-bedroom flat which waspreviously let for £1,200 per month recently went for £1,400.

Estate Agents Current Issues


There are concerns that this may negatively affect the market for first-timebuyers, as renting represents an increasingly large fraction of the outgoings ofpeople in their 20s and 30s. This generation, which, 10 years ago, would havebeen first-time buyers, are being forced to rent for longer and are strugglingto get on the housing ladder.

There are signs, however, that a recovery is in the making, as witnessed by astrong rebound in the UK stock market since 2008. Official figures show thatgross domestic product (GDP) grew at a rate of 0.8% between Julyand September 2010, after rising by 1.2% in the second quarter. Both figuresfar exceeded expectations, representing the fastest half-year expansion for10 years. Much of this growth was the result of the building boom, officialfigures showed, as the construction industry re-emerged from a deep slump.At the same time, the Bank of England is likely to keep interest rates at recordlows for longer to support the economy. This will continue to alleviate paymentpressures for many borrowers.

COMPREHENSIVE SPENDING REVIEW

In October 2010, the coalition Government announced its ComprehensiveSpending Review, which was designed to reduce government spending inorder to reduce the budget deficit. The cuts have been described as the biggestsince World War 2. It is expected that up to 490,000 public-sector jobs will becut in an attempt to eliminate Britain’s structural deficit by 2015. 19% ofdepartmental budgets and £7bn in additional welfare budget will be cut. Railfares will rise 3% above inflation, while the RAF and Navy will lose 5,000 jobseach, the Army will face 7,000 employment cuts and the Ministry of Defencewill axe 25,000 of its civilian staff. The Home Office faces cuts of 25%, and localcouncils will face a 7% cut in funding from central government each year until2014. Although the precise impact of these measures remains uncertain at thetime of writing, there is little doubt that they will have a negative impact onconsumer attitude towards spending and, in turn, on the property market.

HOME INFORMATION PACKS SUSPENDED

Home Information Packs (HIPs) were introduced in England and Wales inAugust 2007 and applied to all homes put on the market. Property sellers wererequired to have a HIP before putting their property on the market. HIP mustcontain: an Energy Performance Certificate (EPC); a sale statement setting outthe type of sale and any special conditions; the registered title of the property;and documents confirming a local search of the property’s records held by thelocal authority, as well as a drainage search. The aim of providing thisinformation at the beginning of the house-selling process was to reduce delaysand uncertainties experienced by both sellers and buyers.



HIPs have been criticised for adding to the complexity of property transactions.In May 2010, HIP was suspended by the new coalition Government with thereason being that the package is ineffective and costly. Current property sellersare only required to provide an EPC when they decide to put their property onthe market. It was suggested by some estate agents that the suspension of HIPhas brought speculative sellers to test the market and is resulting in moreproperties being for sale but still unable to sell.

ONLINE TRENDS

Property portals are becoming increasingly popular, a trend which predatesthe current malaise in the housing market. In spite of the slowdown in theglobal economy, the Internet continues to grow both in terms of prevalenceand contribution to the economy. Results from Key Note’s consumer surveyconducted in November 2010 strongly indicated that increasing numbers ofproperty buyers (currently 66.7%) would start their search for a property onthe Internet.

Estate agents and property businesses with a strong online presence havereaped the rewards of this trend. Even smaller businesses are nowconcentrating their efforts on gaining an on online presence and are engagedin search engine optimisation (SEO) in order to remain competitive. Businessesthat have failed to realise the importance of online marketing are losing outto those that do.

A noteworthy event in June 2010 was Google’s launch of its own propertysearch portal, which utilises Google maps. It did this in the wake of deals withlisting providers Zoopla and Countrywide. It will be interesting to see whatimpact this will have on the market, as potential buyers now haveunprecedented flexibility and can view house prices not merely across thecountry, but within communities, down to the street level. Still in its infancy,there is little doubt this has the potential to develop into a major new propertyportal.

Nevertheless, despite these developments in the online sphere and anapparent lowering of entry barriers to new entrants, according to a recentreport published by the Office of Fair Trading (OFT), until 2010 property sellingwas still dominated by traditional estate agents — through both their onlineas well as their high-street presence.



8. The Global Market

RECENT GLOBAL TRENDS

The economic crisis from which the UK appears to be only just emerging(despite the recession officially having ended more than a year ago) was notisolated to the UK alone, but instead affected many developed economiesaround the world, to the extent that it may even be called a global economiccrisis. Indeed, it originated overseas, specifically in the US housing market.America’s housing wealth is estimated to have fallen by $5.6trillion in 2009,when the market was at its worst. Some nations have managed to race out ofthe recession quicker than others, with the UK by no means being the worstperformer among the lot. Some countries are only now feeling the true impact,evident from the recent bailouts of Greece and the Republic of Ireland by theEU and the International Monetary Fund (IMF).

While housing demand is rising in the majority of countries across the globe,in the UK and eurozone countries, this does not seem to be the case. Despitethe falling house prices, tough measures to reduce deficits appear to have astronger impact on the European property market. According to a globalcommercial property survey published by the Royal Institution of CharteredSurveyors (RICS) in July 2010, Brazil has seen the highest rise in buyers’ demand,moving from 70% to 85%. Markets in Peru, Hong Kong and the People’sRepublic of China (PRC) are also performing well. By contrast, buyer demandin the UK turned negative. In western Europe, in countries such as Spain,Germany and Greece, the housing market is still in a depressed state. In easternEuropean countries, such as Poland and Russia, the rental market appears tobe booming. At the same time, surveyors in the US reported an increaseddemand across residential and commercial sales and lettings.

Asian markets, such as in Hong Kong, Singapore and the PRC, seem to be a safehaven for international real estate. Asian investors also seem to be taking anequal interest in UK-based properties. According to research by estate agentKnight Frank, as reported by the International Property Journal on13th June 2010, in the middle of 2010, properties in central London purchasedby Asian investors accounted for 20% of all new-built sales. It was suggestedthat the Asian interest is a key factor behind the recent surge in London prices.In 2009, Asian buyers represented 49% of property investments in London. Ofthese, 11% are from the PRC and Hong Kong, followed by 10% fromSingapore, with a further 3.1% from Russia and 3.5% from the Middle East.UK buyers accounted for only 36% of property acquisitions. Savills predictsthat, while much of the UK will continue to struggle, house prices in centralLondon may rise by 33% by the end of 2015, largely due to overseas wealthinflows but also to a strong private-sector economy.

Estate Agents The Global Market


It appears that Asian investors are seeking to diversify their portfolios,redistributing profits from recent price increases in their own region, whereasthe favourable exchange rate with Sterling is providing an additional driverfor international investors to take an interest in the UK housing market.Meanwhile, many large UK and US real-estate companies have also expandedtheir market and have been promoting their business overseas, particularly inAsia and Latin America.

Estate Agents The Global Market


9. Forecasts

INTRODUCTION

The Economy

Despite the challenging global conditions, the UK economy has shown a signof steady recovery in 2010 . According to the Office for Budget Responsibility(OBR), an organisation formed in May 2010 to independently assess the publicfinances, the UK economy will continue to recover from the recession, but ata slower pace than following previous recessions.

According to National Statistics, as shown in Table 9.1, the UK economy wasexpected to grow by 1.6% by the end of 2010. Growth in the second quarterof the year was recorded at 1.2%, followed by 0.8% in the third quarter. Thesefigures are lower than those predicted by forecasters a year ago, including theGovernment. The Treasury is forecasting GDP growth of 1.9% in 2011, and2.1% in 2012, then 2.3% and 2.4% in 2013 and 2014, respectively.

Inflation will remain a threat, forecast to amount to 4.4% for 2010, and rarelydropping below 3% over the course of the next 5 years. It should be noted thatfood, energy and mortgage costs are rising well above these levels and areexpected to continue to do so, and bank charges for loans are also increasing;these developments are having a negative impact on the amount of borrowingthat prospective homebuyers can manage.

As shown in Table 9.1, the UK’s resident population is expected to grow by0.7% year-on-year between 2010 and 2014. These figures may wellunderestimate the rate at which the population is increasing, as theGovernment has frequently done in the past. However, with the newlyimposed restrictions on immigration by the coalition Government, thesefigures seem perhaps more plausible.

Unemployment, currently at a 13-year high, is expected to rise further in 2011.A big contributor to this will be the impact of the spending cuts, while surveydata suggests that the private sector remains wary of hiring. The figures areexpected to remain unchanged in 2012, but are then forecast to fall belowcurrent levels in 2013 and 2014.

Estate Agents Forecasts


Table 9.1: Economic Forecasts (000, % and million), 2010-2014

2010 2011 2012 2013 2014

UK resident population (000) 62,222 62,649 63,074 63,498 63,921

GDP growth (%) 1.6 1.9 2.1 2.3 2.4

Inflation† (%) 4.4 3.6 2.7 3.0 3.2

Unemployment‡ (million) 1.52 1.54 1.54 1.50 1.43

GDP — gross domestic product

† —- at retail price index (RPI)

‡ — actual number of claimants

Source: Population Projections Database (2008-based projections), NationalStatistics website/Forecasts for the UK Economy, November 2010, TreasuryIndependent Average © Crown copyright material is reproduced with thepermission of the Controller of HMSO (and the Queen’s Printer for Scotland)

FORECASTS 2011 TO 2015

By Volume

Property Transactions

Figures released by HM Revenue & Customs (HMRC) showed that the numberof residential property transactions in the UK went up slightly by 4.7% from214,000 in the first quarter of 2010 to 224,000 in the second quarter, andsubsequently by 1.8% to 228,000 in the third quarter. Overall, Key Noteforecasts that the total number of residential property transactions fell by 8.7%between 2009 and 2010; as can be seen in Table 9.2, Key Note predicts a furtherdrop of 4% in 2011. The market may begin to pick up in the last quarter of2011 but, for the year as a whole, the number of transactions is expected to bedown.

As at January 2011, the typical first-time buyer was still required to put downan average deposit of 20%, and the Council of Mortgage Lenders (CML)suggested that mortgage lending criteria in 2011 is likely to remain the same.Therefore, it is unlikely that a large number of first-time buyers will rejoin theproperty market. A real recovery in activity levels is not expected until 2012,coinciding with wider economic revival, rising employment and a recovery inreal disposable household income.



Table 9.2: Forecast Number of Residential Property MarketTransactions in the UK (000), 2011-2015

2011 2012 2013 2014 2015

Transactions (000) 751.7 789.3 844.5 903.6 975.9

% change year-on-year -4.0 5.0 7.0 7.0 8.0

Source: Key Note

Figure 9.1: Forecast Number of Residential Property MarketTransactions in the UK (000), 2011-2015

2011 2012 2013 2014 2015

775

800

825

850

875

900

925

950

975

Source: Key Note

By Value

Estate Agency Revenue

In November 2010, Nationwide building society warned that house prices werelikely to fall further over the next few months. However, it also stated thatprice falls would not be as great as in 2008 due to low interest rates, whichwould help to restrict mortgage arrears and repossessions.

In 2011, unemployment figures and GDP will continue to serve as key indicatorsfor the housing market in many regions, side by side with property prices andsales numbers.



Key Note forecasts that estate agency revenue from residential propertytransactions will fall by 1% from an estimated £7.29bn in 2010 to £7.21bn in2011, owing to downwards trends in both GDP and employment and the factthat the contribution of lettings to estate agency revenue will grow inimportance. Revenue should begin to recover in 2012, with growth of around6%, and year-on-year increases are expected thereafter, reaching a total of£10.64bn in 2015.

Table 9.3: Forecast Estate Agency Revenue from ResidentialProperty Transactions in the UK (£m), 2011-2015

2011 2012 2013 2014 2015

Revenue (£m) 7,213 7,646 8,410 9,419 10,643

% change year-on-year -1.0 6.0 10.0 12.0 13.0

Source: Key Note

Figure 9.2: Forecast Estate Agency Revenue from ResidentialProperty Transactions in the UK (£m), 2011-2015

2011 2012 2013 2014 20157,250

7,500

7,750

8,000

8,250

8,500

8,750

9,000

9,250

9,500

9,750

10,000

10,250

10,500

Source: Key Note



MARKET GROWTH

Key Note forecasts that the number of residential property transactions in theUK will increase year-on-year from 2011 to 2015, after experiencing aconsiderable 55.1% fall between 2006 and 2011.

Figure 9.4: Growth in the Total Number of Residential PropertyTransactions in the UK (000), 2006-2015

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

800

900

1,000

1,100

1,200

1,300

1,400

1,500

1,600

Note: 2006 to 2009 data (non-seasonally adjusted) are from HM Revenue & Customs.

Source: HM Revenue & Customs © Crown copyright material is reproduced withthe permission of the Controller of HMSO (and the Queen’s Printer forScotland)/Key Note

FUTURE TRENDS

Focus on Letting Business

The number of people seeking to rent instead of buying a property will mostlikely continue to increase, a result of strict lending criteria as well peoplestruggling to hang on to their property in the wake of significant budgettightening and/or job losses. Key Note expects a growing number of estateagents will seek to increase their stake in the letting business alongside theselling of properties. Others will abandon property selling altogether andbecome letting agent specialists.



Dominance of Online Portals

Property advertising on the Internet is expected to continue to increase inimportance. Virtually all estate agents are currently using one or more propertyportals. Some of the better-known portals are becoming powerful players inthe industry with considerable pricing power over the estate agents. The mostpowerful of these currently is Rightmove, which has virtually cornered themarket, followed by Findaproperty and Propertyfinder. All charge a fee to theestate agents. A potentially disruptive force in this area is Google Property.Although it has yet to make an impact, it offers the potential of free marketingfor the agents.

Mobile Devices March On

Another trend is the increasing prevalence of mobile devices such as smartphones and tablets. It is an area relatively unexploited to date, but has thepotential to drastically alter the way in which people look for and compareproperties. An example would be Google Property as an add-on to GoogleMaps, a popular navigation tool on many mobile devices, which may greatlyfacilitate the property hunt for would-be buyers. An interesting developmentfrom the estate agents’ perspective may be the advent of tablet computers,such as the Apple iPad. These may develop into indispensable presentationtools for agents and largely obviate the need for printed material in the future.



10. Company Profiles

INTRODUCTION

The following section contains financial profiles of some of the principalcompanies identified as operating within the market sector discussed in thisreport. The financial results of some of the important names within the sectormay not be reported if:

• their principal activities are so varied that their results are not consideredapplicable to the survey

• they are no longer trading as separate companies

• their financial data are very out of date.

DEFINITIONS

A company which has a ‘Y’ consolidated value has filed consolidated accountsfor the relevant year.

† — denotes that the growth rate calculation is invalid, because the figureseither move from positive to negative or from negative to positive.

Turnover (Sales)

This includes all income derived from the principal activities of the firm, net ofVAT. It encompasses UK sales, exports and overseas and intercompany sales.

Pre-Tax Profit

The net trading profit figure after deduction of all operating expenses,including depreciation and finance charges but before deduction of tax,dividends, subventions or group relief, and other appropriations. Whereapplicable, it will include the share of profits and losses of associatedcompanies. Items described by the company as exceptional are included;extraordinary items are excluded.

Profit Margin

Pre-tax profit expressed as a percentage of sales.

Average Remuneration

Total employee remuneration divided by the number of employees.

Sales per Employee

Sales divided by the number of employees.

FURTHER INFORMATION

For more detailed financial information telephone Key Note on: 0845-5040452.

Estate Agents Company Profiles


ARUN ESTATE AGENTIES LTD

Registered Office St Leonards HouseNorth StreetHorshamWest Sussex, RH12 1RJTelephone: 01403-282 400Fax: 01403-282 440

Company Registration Number 02597969Date of Incorporation 04/04/91Holding Company NoneUltimate Holding Company None

Previous Name(s) and Date(s) of Change

Creditopen Ltd (20/05/91)

Principal Activities

A group engaged in the arrangement of the sale of properties and the provision of charteredsurveying and financial services.

SIC Code

70310, Real estate agencies.

Structure

Arun Estate Agencies Ltd is an independent property company based in the South East ofEngland. The company has over 110 branches located across Kent, Surrey, Sussex and Hampshire,with a few in London, and they are operating under few different trading brands: Cubitt &West, Douglas Allen, Pittis, Rooney & Co, Ward & Partners, and Wyatt & Son. Arun EstateAgencies Ltd specialises in residential lettings, mortgage financing, conveyancing andinternational property investment.

Recent Developments

The company has been expanding the services of its call centre to sell mortgages andconveyancing. It has also been developing its auction business. The company’s expertise inlettings will be valuable as the renting market grows.



FINANCIAL PROFILE

Year End 30/09/09 30/09/08 31/03/07 31/03/06Weeks 52 78 52 52Consolidated Y Y Y Y

Sales

Sales (£000) 41,670 73,172 59,531 49,599% change year-on-year -43.05 22.91 20.02 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profit (£000) 2,880 7,159 12,868 8,056% change year-on-year -59.77 -44.37 59.73 -Profit Margin (%) 6.91 9.78 21.62 16.24Operating Profit (£000) 2,792 6,502 12,338 7,867

Employees

Number of Employees 748 901 948 861Average Employee Remuneration (£) 27,515 28,341 28,628 27,548Sales per Employee (£) 55,709 54,141 62,796 57,606Profit per Employee (£) 3,850 5,297 13,574 9,357Capital Employed per Employee (£) 38,473 16,805 16,177 15,597

Balance Sheet/Ratios

Capital Employed (£000) 28,778 15,141 15,336 13,429Return on Capital (%) 10.01 31.52 83.91 59.99Net Worth (£000) 11,975 15,003 15,239 13,291Current Ratio 1.83 1.67 1.20 1.87Liquidity Ratio 1.79 1.61 1.18 1.82



CHESTERTON GLOBAL LIMITED

Registered Office 8 Chesterfield HillMayfairLondon, W1J 5BW

Company Registration Number 05332580Date of Incorporation 17/01/2005Holding Company Chesterton Global LtdUltimate Holding Company Chesterton Global Ltd


Intercede 2013 Ltd (15/03/05)


A group engaged in the provision of property-related services.

SIC Code


Structure

Chesterton Global Ltd (also Chesterton Humberts) includes Chesterton and the Humberts brands— Farleys and Wellingtons. The newly merged firm presented itself as a multi-disciplinaryproperty business covering residential, international, rural and commercial sales and lettingswith 60 offices in the UK and international offices in Europe, Asia, Australasia, Africa and theMiddle East.

Recent Developments

The company spent £165,000 on promoting the newly merged Chesterton Humberts brandingin the main media in the year ending September 2009.



FINANCIAL PROFILE


Sales

Sales (£000) 34,603 21,955 24,089 16,586% change year-on-year 57.61 -8.86 45.24 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) -6,293 -4,014 -1,834 2,176% change year-on-year † † † -Profit Margin (%) -18.19 -18.28 -7.61 13.12Operating Profit (£000) -5,413 -3,441 -1,646 449

Employees

Number of Employees 498 321 314 234Average Employee Remuneration (£) 41,378 38,221 39,920 34,842Sales per Employee (£) 69,484 68,396 76,717 70,880Profit per Employee (£) -12,637 -12,505 -5,841 9,299Capital Employed per Employee (£) 11,763 20,090 22,373 17,325


Capital Employed (£000) 5,858 6,449 7,025 4,054Return on Capital (%) -107.43 -62.24 -26.11 53.68Net Worth (£000) -9,759 -4,424 -3,357 2,556Current Ratio 0.90 0.89 0.94 2.06Liquidity Ratio 0.90 0.89 0.94 2.06



CONNELLS RESIDENTIAL

Registered Office Cumbria House16-20 Hockliffe StreetLeighton BuzzardBedfordshire, LU7 8GNTelephone: 01525-215 601

Company Registration Number 01489613Date of Incorporation 08/04/80Holding Company Connells LtdUltimate Holding Company Skipton Building Society


Connell Residential (10/06/02)Connells Residential (01/11/88)Connells Estate Agents (05/03/84)


The provision of residential estate agency and associated services.

SIC Code


Structure

The Connell group is the UK’s largest marketer of new homes, selling more than 6,000 a year.The group had around 460 branches in 2010. The company is owned by Connells’ seniormanagement and Skipton Building Society.

Recent Developments

In October 2010, Connells entered into a partnership with Mediterranean CAM, part of theSpanish savings bank CAM, with the aim of selling repossessed properties across Spain.



FINANCIAL PROFILE

Year End 31/12/09 31/12/08 31/12/07 31/12/06Weeks 52 52 52 52Consolidated N N N N

Sales

Sales (£000) 60,772 45,904 74,998 80,447% change year-on-year 32.39 -38.79 -6.77 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 16,256 6,950 19,111 24,782% change year-on-year 133.90 -63.63 -22.88 -Profit Margin (%) 26.77 15.14 25.48 30.81Operating Profit (£000) 16,315 6,498 17,875 23,751

Employees

Number of Employees 1,063 1,236 1,684 1,578Average Employee Remuneration (£) 25,781 22,078 21,700 21,176Sales per Employee (£) 57,123 37,139 44,536 50,980Profit per Employee (£) 15,293 5,623 11,349 15,705Capital Employed per Employee (£) 32,193 21,577 12,822 20,821


Capital Employed (£000) 34,221 26,669 21,593 32,855Return on Capital (%) 47.50 26.06 88.51 75.43Net Worth (£000) 12,930 9,462 8,716 15,807Current Ratio 2.39 2.28 1.33 1.83Liquidity Ratio 2.39 2.28 1.33 1.83



COUNTRYWIDE ESTATE AGENTS

Registered Office Countrywide House88-103 Caldecotte Lake DriveMilton KeyesBuckinghamshire, MK7 8JT

Company Registration Number 00789476Date of Incorporation 27/01/64Holding Company Balanus LtdUltimate Holding Company (Domestic) Countrywide PLC


Hambro Countrywide Estate Agents (31/12/1998)Mann & Co Estate Agents (27/11/90)


Residential estate agency and property lettings and management.

SIC Codes

70310, Real estate agencies.70320, Management of real estate on a fee or contract basis.74840, Other business activities not elsewhere classified.

Structure

Countryside Estate Agents is part of Countrywide PLC. It had 1,104 branches in 2009 and tradesunder several names, including Bairstow Eves, Beresford Adams, Bridgfords Countrywide,Gascoigne Pees, John D Wood, Man & Co, and Taylors.

Recent Developments

In November 2010, the company’s Surveying Services was appointed as the sole valuation panelmanager for Kent Reliance Building Society. Expansion in 2010 is on the agenda. Countrywidealso decided to focus on the rental market, which one of its shareholders believes will grow inimportance in coming years.



FINANCIAL PROFILE


Sales

Sales (£000) 302,565 252,251 383,876 399,514% change year-on-year 19.95 -34.29 -3.91 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 24,451 -41,741 30,181 78,794% change year-on-year † † -61.70 -Profit Margin (%) 8.08 -16.55 7.86 19.72Operating Profit (£000) 31,097 -40,485 35,004 60,823

Employees

Number of Employees 5,264 6,008 7,357 7,329Average Employee Remuneration (£) 28,512 24,478 25,706 25,656Sales per Employee (£) 57,478 41,986 52,178 54,511Profit per Employee (£) 4,645 -6,948 4,102 10,751Capital Employed per Employee (£) 26,960 20,952 20,968 17,403


Capital Employed (£000) 141,916 125,877 154,265 127,546Return on Capital (%) 17.23 -33.16 19.56 61.78Net Worth (£000) 119,216 102,102 135,697 114,239Current Ratio 2.26 0.26 2.75 2.19Liquidity Ratio 2.26 0.26 2.75 2.19



HAMPTONS GROUP LTD

Registered Office 32 Grosvenor SquareMayfairLondon, W1K 2HJTelephone: 01614-802 512

Company Registration Number 03145691Date of Incorporation 12/01/96Holding Company Ocean Park Management Ltd (Virgin Islands)Ultimate Holding Company Emaar Properties PJSC (United Arab Emirates)


Cashcoil Ltd (24/06/96)


A group engaged as estate agents.

SIC Codes

70310, Real estate agencies.93050, Other service activities not elsewhere classified.

Structure

Hamptons Group Ltd, which is marketed under the name Hamptons International, is owned bythe Dubai-based Emaar Properties. It is the UK’s eighth-largest estate agency in terms ofbranches, which numbered 70 in 2009, and has a strong presence in the country propertiessector.

Recent Developments

In November 2010, the company opened an office in Hong Kong with the purpose ofintroducing a range of new UK developments to the Asian market in the near future. The HongKong office will operate as a sales and lettings function for the local market and expand thecompany’s operations throughout the Asia-Pacific region.



FINANCIAL PROFILE


Sales

Sales (£000) 57,098 52,377 57,497 73,225% change year-on-year 9.01 -8.90 -21.48 -Exports (£000) 1,412 3,733 2,091 -Exports/Sales (%) 2.47 7.13 3.64 -

Profits

Pre-Tax Profits (£000) 4,686 -16,472 310 6,421% change year-on-year † † -95.17 -Profit Margin (%) 8.21 -31.45 0.54 8.77Operating Profit (£000) 4,655 -16,570 -656 5,472

Employees

Number of Employees 588 986 1,024 940Average Employee Remuneration (£) 43,888 32,859 35,831 38,476Sales per Employee (£) 97,105 53,121 74,866 77,899Profit per Employee (£) 7,969 -16,706 404 6,831Capital Employed per Employee (£) 34,937 16,859 22,941 24,804





KINLEIGH FOLKARD & HAYWARD LTD

Registered Office KFH House5 Compton RoadWimbledonLondon, SW19 7QATelephone: 020-8785 1340

Company Registration Number 02965708Date of Incorporation 07/09/94Holding Company Kinleigh LtdUltimate Holding Company Kinleigh Ltd


None


Chartered surveyors and valuers.

SIC Code


Structure

Kinleigh Folkard & Hayward Ltd had 59 branches in 2009. Based in London, the company claimsto be a major player in the capital’s property market and offers a comprehensive range ofservices, including residential sales and lettings, block management, commercial propertyservices, financial services, surveying and valuation.

Recent Developments

Kinleigh Folkard & Hayward is planning to open a further 30 branches over the next 6 to 7 yearsand expand its business into East London. Haywards Surveyors and Valuers is currentlyrebranding its surveying business to align its identity with Kinleigh Folkard & Hayward.



FINANCIAL PROFILE


Sales

Sales (£000) 2,355 2,744 7,327 6,768% change year-on-year -14.18 -62.55 8.26 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 126 -895 -623 -19% change year-on-year † † † -Profit Margin (%) 5.35 -32.62 -8.50 -0.28Operating Profit (£000) 126 -895 -629 -19

Employees

Number of Employees - - - -Average Employee Remuneration (£) - - - -Sales per Employee (£) - - - -Profit per Employee (£) - - - -Capital Employed per Employee (£) - - - -


Capital Employed (£000) -1,213 -1,342 -456 169Return on Capital (%) - - - -11.24Net Worth (£000) -1,213 -1,342 -456 169Current Ratio 0.21 0.26 0.68 1.06Liquidity Ratio 0.21 0.26 0.68 1.06



LSL PROPERTY SERVICES PLC

Registered Office Newcastle HouseAlbany CourtNewcastle Business ParkNewcastle upon TyneTyne & Wear, NE4 7YB



Lending Solutions Ltd (12/10/06)Broomco (3455) Ltd (21/07/04)


A group engaged in the provision of estate agency, property management, surveying andvaluation, and financial services.

SIC Codes

70310, Real estate agencies.70320, Management of real estate on a fee or contract basis.67130, Activities auxiliary to financial intermediation not elsewhere classified.

Structure

The company’s property services cover four main areas: surveying, estate agency, corporateservices, and financial services. In 2009, the company had 378 branches trading under the YourMove or Reeds Rains brand names. Both businesses are a mix of franchised operations andwholly owned offices.

Recent Developments

In January 2010, LSL bought the Halifax chain of estate agencies from Lloyds Banking Group.Halifax brought 218 branches to add to LSL’s 378, creating a business with just under 600 offices.In May 2010, LSL acquired over 450 advisers from leading financial services network Home ofChoice — these advisers now operate under the brand of First Complete, making LSL one of thelargest mortgage advisory businesses in the UK.



FINANCIAL PROFILE


Sales

Sales (£000) 157,703 161,733 219,518 197,966% change year-on-year -2.49 -26.32 10.89 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) 16,609 -6,184 22,287 19,223% change year-on-year † † 15.94 -Profit Margin (%) 10.53 -3.82 10.15 9.71Operating Profit (£000) 18,752 -1,193 25,986 23,387

Employees

Number of Employees 2,534 3,061 3,380 3,351Average Employee Remuneration (£) 27,093 24,173 28,322 26,554Sales per Employee (£) 62,235 52,850 64,946 59,086Profit per Employee (£) 6,554 -2,020 6,594 5,736Capital Employed per Employee (£) 31,529 29,246 24,480 18,673


Capital Employed (£000) 79,894 89,522 82,742 62,573Return on Capital (%) 20.79 -6.91 26.94 30.72Net Worth (£000) -43,510 -64,106 -68,196 -57,166Current Ratio 0.56 0.49 0.38 0.47Liquidity Ratio 0.56 0.49 0.38 0.47



SAVILLS PLC

Registered Office 20 Grosvenor HillBerkeley SquareLondon, W1X 0HQTelephone: 020-7499 8644



Akmed (13/05/87)Savills Ltd (27/06/88)


A group engaged in the provision of transactional advisory, consultancy and managementservices in connection with property and related financial services and fund management.

SIC Codes

70310, Real estate agencies.70320, Management of real estate on a fee or contract basis.

Structure

Savills PLC has 200 offices and is active throughout the Americas, the UK, continental Europe,Asia Pacific, Africa and the Middle East. The company specialises in residential and ruralupmarket houses and country properties, as well as property management and commercialproperties. Savills had 78 offices in the UK in 2009.

Recent Developments

In November 2010, Savills became the agent for One Hyde Park, the Knightsbridge apartmentblock where one home was sold for £140m. Savills has recently been appointed to handle thesale of a UK property portfolio for St Martins, Kuwait’s UK property investment vehicle. Savillshas seen profit surge on the back of the property boom in Asia; revenues from overseas weresaid to have made up more than half of the group’s total.



FINANCIAL PROFILE


Sales

Sales (£000) 560,700 568,500 650,500 517,600% change year-on-year -1.37 -12.61 25.68 -Exports (£000) 272,400 254,400 244,900 -Exports/Sales (%) 48.58 44.75 37.65 -

Profits

Pre-Tax Profits (£000) 13,500 -7,700 85,900 84,400% change year-on-year † † 1.78 -Profit Margin (%) 2.41 -1.35 13.21 16.31Operating Profit (£000) 10,900 -10,700 83,400 80,200

Employees

Number of Employees 19,948 19,834 18,029 15,844Average Employee Remuneration (£) 11,390 11,652 10,234 9,291Sales per Employee (£) 28,108 28,663 36,081 32,669Profit per Employee (£) 677 -388 4,765 5,327Capital Employed per Employee (£) 13,490 14,117 15,314 15,741





SPICERHAART GROUP LTD

Registered Office Colwyn HouseSheepen PlaceColchesterEssex, CO3 3LD



TMX Corporation Ltd (14/07/04)Minmar (535) Ltd (22/01/01)


A group engaged in the provision of estate agency and other related services.

SIC Code


Structure

Spicerhaart Group Ltd has a diverse group of subsidiary companies across the UK, which includemany well-known high-street names, such as: Mortgages Direct, Spicer McColl, Darlows andFelicity J Lord, as well as Haart and Haybrook. The company is in favour of the ‘one-stop’concept, providing sales, letting, surveying, legal and financial services.

Recent Developments

Spicerhaart purchased Property Market from Tesco in 2008. In March 2010, Spicerhaart andTesco launched the online agency isold.com together, providing services including propertysales, valuation, home consultation, advertising on the major portals, and support from abranch-based team of professionals. The company is in the process of acquiring three furtherbusinesses across the country.



FINANCIAL PROFILE

Year End 31/12//09 31/12/08 31/12/07 31/12/06Weeks 52 52 52 52Consolidated Y Y Y Y

Sales

Sales (£000) 82,837 71,340 119,268 117,619% change year-on-year 16.12 -40.19 1.40 -Exports (£000) - - - -Exports/Sales (%) - - - -

Profits

Pre-Tax Profits (£000) -2,454 -3,911 10,530 10,194% change year-on-year † † 3.30 -Profit Margin (%) -2.96 -5.48 8.83 8.67Operating Profit (£000) -2,121 -4,095 9,991 10,428

Employees

Number of Employees 1,310 1,656 1,961 2,048Average Employee Remuneration (£) 28,053 22,531 28,172 28,284Sales per Employee (£) 63,234 43,080 60,820 57,431Profit per Employee (£) -1.873 -2.362 5,370 4,978Capital Employed per Employee (£) 17,705 8,723 8,402 6,642


Capital Employed (£000) 23,194 14,445 16,477 13,603Return on Capital (%) -10.58 -27.08 63.91 74.94Net Worth (£000) 4,970 7,353 13,742 8,396Current Ratio 1.49 1.15 1.34 1.53Liquidity Ratio 1.49 1.15 1.34 1.53



11. Further Sources

Associations

Association of ResidentialLettings AgentsArbon House6 Tournament CourtEdgehill DriveWarwick, CV34 6LGTelephone: 0844-387 0555Fax: 0845-250 6062E-mail: [email protected]://www.arla.co.uk Home Builders Federation1st FloorByron House7-9 St James’s StreetLondon, SW1A 1EETelephone: 020-7960 1600Fax: 020-7960 1601E-mail: [email protected]://www.hbf.co.uk Institution of Commercial& Business AgentsArbon House6 Tournament CourtEdgehill DriveWarwick, CV34 6LGTelephone: 0845-250 6004Fax: 01926-417 [email protected]://www.icba.uk.com

National Association of Estate AgentsArbon House6 Tournament CourtEdgehill DriveWarwick, CV34 6LGTelephone: 0845-250 6001Fax: 0845-250 6061http://www.naea.co.uk National Federationof Property ProfessionalsArbon House6 Tournament CourtEdgehill DriveWarwick, CV34 6LGTelephone: 0845-250 6001Fax: 0845-250 6069E-mail: [email protected]://www.nfopp.co.uk National Associationof Valuers & AuctioneersArbon House6 Tournament CourtEdgehill DriveWarwick, CV34 6LGTelephone: 0845-250 6004Fax: 0845-250 6062E-mail: [email protected]://www.nava.org.uk

Estate Agents Further Sources


The Property OmbudsmanBeckett House4 Bridge StreetSalisburyWiltshire, SP1 2LXTelephone: 01722-333 306Fax: 01722-332 296E-mail: [email protected]://www.tpos.co.uk

Royal Institution ofChartered SurveyorsParliament SquareLondon, SW1P 3ADTelephone: 0870-333 1600Fax: 020-7334 3811E-mail: [email protected]://www.rics.org

Publications

• Estate Agency NewsEstates Press LtdKeenans MillLord StreetSt Annes-on-SeaLancashire, FY8 2ERFax: 01253-78 3217http://www.estateagencynews.co.uk

General Sources

Dun & BradstreetMarlow InternationalParkwayMarlowBuckinghamshire, SL7 1AJhttp://www.dnb.co.uk Kantar MediaEaling Gateway26-30 Uxbridge RoadEalingLondon, W5 2BPTelephone: 020-8433 4000Fax: 020-8433 4001http://www.kantarmedia.com

NEMS Market Research22-23 Manor WayBelasis Hall Technology ParkBillingham, TS23 4HNTelephone: 01642-373 355Fax: 01642-373 350http://www.nemsmr.co.uk Nielsen Media ResearchAtrium CourtThe RingBracknellBerkshire, RG12 1BZTelephone: 01344-469 100Fax: 01344-469 102E-mail: [email protected]://www.nielsenmedia.co.uk



Government Publications

Department for Business,Innovation and Skills1 Victoria StreetLondon, SW1H 0ETTelephone: 020-7215 5000http://www.bis.gov.uk HM Revenue & CustomsAlexander House21 Victoria AvenueSouthend on SeaEssex, SS99 1AAhttp://www.hmrc.gov.uk HM Treasury1 Horse Guards RoadLondon, SW1A 2HQTelephone: 020-7270 4558Fax: 020-7270 4861http://www.hm-treasury.gov.uk

National Statistics1 Myddelton StreetLondon, EC1R 1UWTelephone: 0845-601 3034Fax: 01633-652 747E-mail: [email protected]://www.statistics.gov.uk Office for Budget ResponsibilityRoom 3/061 Horse Guards RoadLondon, SW1A 2HQTelephone: 020-7270 5646http://budgetresponsibility.independent.gov.uk

Other Sources

Confederation of British IndustryCentre Point103 New Oxford StreetLondon, WC1A 1DUTelephone: 020-7379 7400http://www.cbi.org.uk Council of Mortgage LendersBush HouseNorth West WingAldwychLondon, WC2B 4PJTelephone: 0845-373 6771Fax: 0845-373 6778http://www.cml.org.uk

Halifax PLCPO Box 548Leeds, LS1 1WUhttp://www.halifax.co.uk Hometrack Data Systems LtdLevel 6The ChambersChelsea HarbourLondon, SW10 0XFTelephone: 0845-013 2350http://www.hometrack.co.uk Knight Frank55 Baker StreetLondon, W1U 8ANhttp://www.knightfrank.co.uk



Nationwide Building SocietyNationwide HousePipers WaySwindon, SN38 1NWhttp://www.nationwide.co.uk Office of Fair TradingFleetbank House2-6 Salisbury SquareLondon, EC4Y 8JXTelephone: 020-7211 8000E-mail: [email protected]://www.oft.gov.uk

Primelocation.comThe Digital Property GroupHammersley House5-8 Warwick StreetLondon, W1B 5LXTelephone: 03338-001 000Fax: 03338-001 001http://www.primelocation.com



Key Note Sources

Key Note Ltd

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Understanding TGI Data

TGI tables, produced by Kantar Media, are generally based on one of the following groups:

• Households — a private household consists of either one person living alone or a group ofpeople, usually, but not always, members of one family, who live together and whose foodand other household expenses are managed as one unit.

• Adults — any person aged 15 or over.

• Housewives — a member of a private household who is solely or mainly responsible for thehousehold duties.

Number, Profile, Penetration

Tables used in Key Note reports may give figures for the Number, Profile, and/or Penetration.These terms are explained in the following table.

Estate Agents Understanding TGI Data


TGI data used in Key Note reports are broken down by age, social grade and standard region.

Social Grade

This is normally based on the occupation of the Head of the Household, or if the Head of theHousehold is retired, their former occupation. If this information is not available, social gradeis based on environmental factors such as type of dwelling, amenities in the home, presence ofdomestic help, etc.

Social grade is assessed by the interviewer when collecting the information and is, therefore,based on information given personally and verbally by the respondent. Social grade is checkedby Kantar Media’s coding and editing office.

The following table broadly defines the six social grades used. The relationship between socialgrade and net income of the Head of the Household is a complex one and readers should notethat income is not determinant of social grade.

Social Grade Social StatusHead of Household’sOccupation

A Upper middle class Higher managerial,administrative or professional

B Middle class Intermediate managerial,administrative or professional

C1 Lower middle class Supervisory or clerical andjunior managerial,administrative or professional

C2 Skilled working class Skilled manual workers

D Working class Semi and unskilled workers

E Those at lowest levels ofsubsistence (no other earner)

State pensioners or widows

Standard Region

This is as defined by the Registrar-General.

Estate Agents Understanding TGI Data


Key Note Research

Key Note is a leading supplier of market information, publishing an extensive range ofconsumer, industrial, business-to-business and services titles. With over 25 years’ experience,Key Note represents clear, concise, quality market information.

For all reports, Key Note undertakes various types of research:

Online searching is carried out by product code or free search method, and covers the periodfrom the last edition of the report to the current day.

Trade sources, such as trade associations, trade journals and specific company contacts, areinvaluable to the Key Note research process.

Secondary data are provided by Kantar Media (TGI) and Nielsen Media Research for consumer/demographic information and advertising expenditure, respectively. In addition, various officialpublications published by National Statistics, etc. are used for essential background data andmarket trends.

Interviews are undertaken by Key Note for various reports, either face-to-face or by telephone.This provides qualitative data (‘industry comment’) to enhance the statistics in reports;questionnaires may also be used.

Field research is commissioned for various consumer reports and market reviews, and is carriedout by NEMS Market Research.

Key Note estimates are derived from statistical analysis and trade research carried out byexperienced research analysts. Up-to-date figures are inserted where possible, although therewill be some instances where a realistic estimate cannot be made or external sources requestthat we do not update their figures.

Key Note Editorial, 2011

Estate Agents Key Note Research


The Key Note Range of Reports

Key Note publishes over 180 titles each year, across both the Key Note and Market Assessmentproduct ranges. The total range covers consumer, lifestyle, financial services and industrialsectors.

Title Edition Published

Market Reports and Reports Plus

A

Access Control 11 2010

Accountancy 14 2010

Aerospace 12 2003

Agrochemicals & Fertilisers 3 2002

Air Freight 2 2005

Airlines 21 2010

Airports 14 2010

Animal Feedstuffs 11 2001

Arts & Media Sponsorship 4 2011

Automatic Vending 24 2010

Automotive Services 7 2010

Autoparts 19 2009

B

Baths & Sanitaryware 14 2009

Bearings 2 2007

Betting & Gaming 23 2010

Biscuits & Cakes 18 2011

Book Publishing 19 2007

Bookselling 17 2010

Bread & Bakery Products 26 2011

Breakfast Cereals 14 2009

Breweries & the Beer Market 28 2011

Bricks & Tiles 16 2010

Bridalwear 5 2010

Builders’ Merchants 17 2010

Building Contracting 10 2009

Building Materials 14 2011

Bus & Coach Operators 9 2008

Business Press 14 2009

C

Cable & Satellite TV 10 2004

Camping & Caravanning 13 2002

Canned Foods 18 2011

Carpets & Floorcoverings 16 2009

Catering Equipment 13 2010

Chemical Industry 13 2010

Childrenswear 8 2009

Chilled Foods 15 2009

China & Earthenware 27 2010


Cigarettes & Tobacco 24 2010

Cinemas & Theatres 9 2001

Closed-Circuit Television 12 2010

Clothing Manufacturing 16 2011

Clothing Retailing 8 2011

Commercial Radio 8 2004

Commercial Vehicles 15 2009

Computer Hardware 8 2010

Computer Services 9 2010

Computer Software 7 2008

Confectionery 28 2010

Consumer Internet Usage 4 2000

Consumer Magazines 17 2010

Contraception 4 2009

Contract Catering & FoodserviceManagement 21 2010

Contract Cleaning 21 2010

Cooking Sauces & FoodSeasonings 3 2008

Corporate & PromotionalGiftware 3 2008

Corporate Hospitality 6 2007

Cosmetics & Fragrances 24 2011

Cosmetic Surgery 8 2010

Courier & Express Services 16 2010

D

Dark Spirits & Liqueurs 3 2004

Debt Management (Commercial& Consumer) 6 2010

Defence Equipment 11 2010

Design Consultancies 3 2000

Digital Broadcasting 4 2009

Digital Communications 1 2009

Digital TV 2 2003

Direct Marketing 19 2009

Discount Retailing 7 2009

Disposable Paper Products 13 2009

Document Imaging Systems 1 2007

Domestic Heating 14 2009

Dry Cleaning & Laundry Services 5 2005

Estate Agents The Key Note Range of Reports



E

Electrical Contracting 9 2009

Electrical Wholesale 5 2009

Electricity Industry 6 2009

Electronic ComponentDistribution 12 2002

Electronic ComponentManufacturing 11 2002

Electronic Games 4 2003

Equipment for the Disabled 5 2009

Equipment Leasing 12 2003

Estate Agents 18 2011

Ethnic Foods 16 2010

Exhibitions & Conferences 12 2011

F

Factoring & Invoice Discounting 2 2003

Fast Food & Home DeliveryOutlets 24 2010

The Film Industry 4 2002

Finance Houses 11 2000

Fire Protection Equipment 8 2006

Fish & Fish Products 14 2010

Fitted Kitchens 7 2007

Football Clubs & Finance 4 2009

Footwear 16 2009

Franchising 12 2010

Free-To-Air TV 8 2004

Freight Forwarding 17 2009

Frozen Foods 24 2009

Fruit Juices & Health Drinks 13 2010

Fruit & Vegetables 21 2009

Further & Higher Education 6 2009

G

Garden Equipment 13 2009

Gas Industry 5 2009

Giftware 19 2010

Glassware 15 2009

Greetings Cards Plus 26 2010

H

Hand Luggage & Leather Goods 15 2010

Health Clubs & Leisure Centres 10 2010

Health Foods 22 2003

Heating, Ventilating & AirConditioning 9 2002

Home Furnishings 19 2009

Home Shopping 13 2009

Horticultural Retailing 17 2008

Hotels 24 2009

Housebuilding 19 2011


Household Appliances (BrownGoods) 11 2008

Household Appliances (WhiteGoods) 16 2008

Household Detergents &Cleaners 16 2009

Household Furniture 19 2011

I

Ice Creams & Frozen Desserts 14 2010

Industrial Fasteners 8 2001

Industrial Pumps 5 2000

Industrial Valves 8 2001

Insurance Companies 12 2009

Internet & Telephone Banking 1 2011

Internet Usage in Business 8 2005

IT Security 9 2009

IT Training 13 2010

J

Jewellery & Watches 26 2011

K

Kitchenware 7 2009

L

Laboratory Equipment 9 2008

Lighting Equipment 14 2002

Lingerie 10 2011

M

Management Consultants 10 2003

Market Forecasts 1 2005

Meat & Meat Products 21 2010

Medical Equipment 17 2009

Metal Recycling 5 2009

Milk & Dairy Products 24 2010

Mobile Phones 7 2010

Mobile Telecommunications 2 2007

N

Natural Products 2 2007

New Media Marketing 3 2002

Newspapers 18 2010

Non-Metal Recycling 3 2010

O

Office Furniture 21 2008

Offshore Oil & Gas Industry 5 2009

Ophthalmic Goods & Services 17 2010

OTC Pharmaceuticals 15 2011

Own Brands 13 2010




P

Packaging (Food & Drink) 6 2010

Packaging (Glass) 13 2008

Packaging (Metals & Aerosols) 12 2003

Packaging (Paper & Board) 14 2008

Packaging (Plastics) 15 2010

Paper & Board Manufacturing 14 2002

Personal Banking 11 2000

Photocopiers & Fax Machines 14 2005

Plant Hire 13 2007

Plastics Processing 10 2003

Poultry 4 2010

Power Tools 5 2007

Premium Lagers, Beers & Ciders 9 2010

Printing 15 2010

Private Healthcare 21 2010

Protective Clothing & Equipment 7 2009

Public Houses 26 2010

R

Rail Travel 7 2008

Ready Meals 11 2009

Recruitment Agencies(Permanent) 11 2011

Recruitment Agencies(Temporary & Contract) 11 2011

Renewable Energy 3 2009

Restaurants 24 2009

Retail Chemists & Drugstores 16 2010

Road Haulage 22 2009

S

Sauces & Spreads 12 2010

Shopfitting 14 2009

Short Break Holidays 4 2001

Slimming Market 8 2000

Small Domestic ElectricalAppliances 12 2010

Snack Foods 20 2010

Spirits & Liqueurs 1 2010

Soft Drinks (Carbonated &Concentrated) 18 2011

Soup Market 3 2009

Sports Clothing & Footwear 13 2011

Sports Equipment 16 2011

Sports Sponsorship 7 2009

Stationery (Personal & Office) 25 2010


T

Take Home Trade 17 2008

Telecommunications 21 2007

Timber & Joinery 19 2008

Toiletries 23 2010

Tourist Attractions 5 2001

Toys & Games 24 2010

Training 19 2011

Travel Agents & Overseas TourOperators 23 2010

Tyre Industry 4 2008

V

Vehicle Security 9 2010

Videoconferencing 4 2007

Video & DVD Retail & Hire 8 2005

W

Wallcoverings & Ceramic Tiles 18 2010

Waste Management 10 2010

Water Industry 5 2010

Windows & Doors 20 2010

Wine 20 2009

White Spirits 1 2005

Market ReviewsCatering Market 21 2009

Clothing & Footwear Industry 13 2010

UK Computer Market 11 2004

Construction Industry 11 2009

Contracted-Out Services 3 2007

Defence Industry 7 2003

Distribution Industry 10 2009

DIY & Home ImprovementsIndustry 11 2009

Drinks Market 18 2008

Energy Industry 8 2010

Film Market 2 2009

Food Industry 19 2009

Healthcare Market 10 2005

Insurance Industry 10 2009

The Legal Services Market 1 2005

Leisure & Recreation Market 15 2005

Leisure in the Home 3 2010

Leisure Outside the Home 3 2010

Local Government Services 3 2010

Mechanical Handling 1 2001

Motor Industry 12 2008

Music Industry 2 2010

Office Equipment Industry 9 2010

Packaging (Food & Drink)Industry 1 2003




Passenger Travel in the UK 5 2007

Pharmaceuticals Industry 6 2008

Process Plant Industry 1 2000

Publishing Industry 13 2010

Railway Industry 2 2006

Security Industry 13 2010

Sports Market 13 2010

Travel & Tourism Market 17 2010

UK Internet Market 1 2009

Market Assessment Reports

A

ABC1 Consumer 2010

Activity Holidays 2009

Advertising Agencies 2007

All-Inclusive Holidays 2000

Alternative Healthcare 2010

Audio-Visual Retailing 2000

B

Baby Foods 2006

Baby Products 2010

Baths and Showers 2000

Beds, Bedrooms and UpholsteredFurniture 2000

Betting and Gaming 2002

Book Retailing on the Internet 2010

Bottled Water 2003

Bridalwear 2002

Business Postal Services 2008

B2B Marketing 2008

Business Travel Market 2008

C

Cable and Satellite Services 2002

Charity Funding 2005

Childcare 2008

Children’s Publishing 2010

Clothing Retailers 2000

Coffee & Sandwich Shops 2009

Commercial Dynamics inFinancial Services 2010

Commercial Insurance for SmallBusinesses 2009

Condiments and Sauces 2008

Consumer Credit & Debt 2010

Contact Centres 2010

Contraception 2002

Cooking & Eating 2009

Cross-Border Shopping 2000

Cruise Market 2008


Customer Loyalty in FinancialServices 2000

Customer Magazines & ContractPublishing 2009

Customer RelationshipManagement 2008

Customer Services in FinancialOrganisations 2010

C2DE Consumer 2010

D

Diet Foods 2009

DINKY Market 2007

Direct Insurance 2010

Direct Mortgages 2010

Domestic Lighting and ElectricalProducts 2000

Domestic Telecommunications 2006

E

E-Commerce: The InternetGrocery Market 2009

E-Commerce: The InternetLeisure & Entertainment Market 2008

Electronic Banking 2008

EMU — The Impact on the UKFinancial Services Industry 2003

E-Recruitment 2006

E-Shopping 2002

Estate Agents and Services 2010

Ethnic Foods 2002

European Electricity Industry 2007

European Gas Industry 2007

European Long-Term Insurance 2008

European Oil & Gas Industry 2007

European Renewable 2008

Energy Industry 2008

European Short Breaks 2008

European Telecommunications 2010

European Tourist Attractions 2009

European Trends in FoodShopping 2009

European Water Industry 2007

Extended Financial Families 2005




F

Financial Services Marketing toABs 2006

Financial Services Marketing toABC1s 2000

Financial Services Marketing toBCs 2009

Financial Services Marketing toC1C2DEs 2006

Financial Services Marketing toDEs 2009

Financial Services Marketing toOver 60s 2004

Financial Services Marketing tothe Affluent 2009

Financial Services Marketing tothe Retired and Elderly 2007

Financial Services Marketing toStart-Up Businesses and the Self-Employed 2010

Financial Services Organisationson the Internet 2009

The Fish Industry 2001

Forecourt Retailing 2010

Functional Foods 2010

Funding in Higher Education 2002

G

General Insurance 2010

Generation Y 2007

Global Waste Management 2007

Green and Ethical Consumer 2008

Grey Consumer 2009

H

Healthy Eating 2008

Holiday Purchasing Patterns 2009

Home Entertainment 2008

Hot Beverages 2009

I

In-Car Entertainment 2000

Independent Financial Advisers 2008

Individual Savings Accounts 2005

Insurance Prospects 2008

Internet Advertising 2009

Internet Service Providers 2005

Issues and Challenges in the UKLife Assurance Market 2002

Issues in Higher EducationFunding 2006

IT Recruitment 2010


L

Lifestyle Magazines 2008

Low-Fat & Reduced-Sugar Foods 2008

The Luggage Market 2000

M

Marketing to Children 4-11 2003

Marketing in the Digital Age 2009

Media Marketing 2010

Medical & Health Insurance 2007

Men and Women’s Buying Habits 2008

Men’s Toiletries & Fragrances 2008

Millennium Youth 2002

Mobile Marketing 2009

Motor Finance 2011

N

The Newspaper Industry 2005

Non-Food Sales in Supermarkets 2010

Nutraceuticals 2008

O

Off-Trade Spirits 2004

Opticians & Optical Goods 2010

Organic Baby & Toddler Care 2007

Organic Food & Drink 2010

OTC Pharmaceuticals 2000

Over-40s Consumer 2005

Over-50s Consumer 2009

P

Pay TV 2004

Pension Extenders 2002

Pensions 2009

Personal Banking 2003

Personal Lines Insurance 2010

Personal Loans 2008

Pet Market 2009

Planning for Retirement 2008

Plastic Cards in Europe 2005

Plus-Size Fashion 2009

Private Sector Opportunities inEducation 2001

Public Relations Industry 2007

Public Transport 2001

R

The Railway Industry 2004

Ready Meals 2001

Recycling and the Environment 2000

Retail Credit 2000

Retail Development 2001

Rural Economy 2009




S

Savings & Investments 2010

Saving Trends in the Eurozone 2002

Singles Market 2009

Shopping Centres 2008

Short Breaks 2004

Slimming Market 2009

Small Businesses & Banks 2010

Small Office Home OfficeConsumer 2001

Small Office Home OfficeProducts 2001

The Soup Market 2001

Sponsorship 2000

Supermarket Own Label 2009

Supermarket Services 2007

Sweet & Salty Snacks 2010

T

Teenage Fashionwear 2008

Teenage & Pre-Teen Magazines 2009

Teleworking 2003

Trends in Food Shopping 2008

Trends in Leisure Activities 2007

Tweenagers 2005


U

Utilities 2007

V

Vegetarian Foods 2009

Vehicle Breakdown Services 2010

Vitamins, Minerals &Supplements 2009

W

White Goods 2000

Women Over 45 2007

Working Women 2009


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