BREAKING PROPERTY NEWS – 21/10/2021

Daily bite-sized proptech and real estate news in partnership with Proptech-X. Today, Stanton looks at the class action case against online estate agents and the UK House Price Index

 

Millions in back payment may be due to workers. Is it the end for online agents?

There has been much written over the years about online agents, especially Purplebricks, the largest agent by market share. Many online companies have shuttered, and although technology would seem to be the way forward, online agents only hold around 7% of the property market share in the UK.

The big news rocking this sector though is that a legal outfit Contractors For Justice (C4J), has seen the opportunity surrounding the HMRC’s IR35 contractor regulation debacle. And is looking to put a class action lawsuit together for all the workers past and present who work for online agents but are not directly employed.

It is felt that if the action gets to court millions of pounds will need to be refunded to people who thought they were not employees, but now find they were.

These workers will inevitably look to their employer to pay the monies owed to them, and of course, there will potentially be a huge amount due to HMRC plus interest. As yet nothing has been decided one way or the other, but it is telling that after many years Purplebricks pivoted its model from having Local Property Experts who ran their own limited companies – yet solely worked for Purplebricks – to a normal PAYE employed model.

Of all the onliners, only Purplebricks has made a profit; £6.8 million for the current accounting period. Having made losses of £19.2million, £54.9million, £30.08million, and £3.01million in the last four years, totalling a £107.9 million loss.

The significance of an Uber-style upset, where it is ruled that setting up a limited company does not let a big corporation escape the burden of the HMRC requirements, will be a blow to all of the cash strapped onliners who rely upon continued rounds of investment to keep them afloat.

At present, the Purplebricks share price on the Alternative Listed Market is 57.5p, down from 525p in 2017, and even down from its original listing price of 95.5p.

It may have around £70 million in its war chest, but if it gets stung with a huge multi-million bill, and has to now pay for its newly recruited full-time sales force, things will be tight.

Add into this mix it is now refunding fees if it does not sell property, and its annual multi-million media spend to keep it in the public eye, its financial runway could be eaten through in less than 19 months.

The bad news for the other onliners, like YOPA, Strike, Doorsteps, etc., who may or may not have a similar gig economy model, is if the class action is a win for workers, do they have sufficient funds to cover any deficit? If the answer is no, and they also now need to pivot and employ everyone on a PAYE model, would now be a more prudent time to close the online businesses down?

The good news for the solicitors is they are on a great gravy train, asking for £250 upfront from people who feel they may be due compensation, plus 25% of any settlement or 40% of any settlement should the action win.

 

House prices continue to rise according to UK House Price Index

The headline statistics from the HM Land Registry intel says that in August:

  • The average price of a property in the UK was £264,244.
  • The annual price change for a property in the UK was 10.6%
  • The monthly price change for a property in the UK was 2.9%

Reacting to this information the Director of Benham and Reeves, Marc von Grundherr, commented: “Yet further proof that the drop in property prices following the initial stamp duty holiday deadline was merely a pause for breath in an otherwise marathon run of positive market momentum.

“There’s little sign of this letting up and should an increase in interest rates materialise, the likelihood is that it will be fairly palatable for the average homebuyer. Therefore, we don’t expect it to have any notable impact on the nation’s insatiable appetite for homeownership and the market should continue moving forward at pace well into next year.”

Managing Director of Barrows and Forrester, James Forrester, commented: “The current state of the market is quite remarkable given what we’ve been through as a nation since the start of last year. Employment and wage growth have remained firm, mortgage affordability is still hovering around record lows and house prices continue to climb ever higher.

“As a result, buyers continue to mob the market and while an interest rate hike is on the horizon, we expect these factors to continue to stimulate positive house price growth for the remainder of the year.

“Forget about a shortage of HGV drivers, we need more estate agents to get us through until Christmas.”

Founder and CEO of GetAgent.co.uk, Colby Short, commented: “A continued shortage of stock has seen the ball lie increasingly within the court of the home seller, as buyers fight it out to secure their ideal home.

“As a result, buyers entering the ring can expect some stiff competition that will see them pay close to asking price, if not more, in order to come away victorious.

“The best plan of attack is to be ready to act at a moment’s notice and if you are a cash buyer, ensure the seller is aware that you sit in a far more favourable position.”

With the Chancellor’s budget on the 27th of October and the Bank of England talking of raising interest rates, it will be an interesting last quarter of 2021 for sure.

 

If you have a view – please let us all know by emailing me at [email protected] – Andrew Stanton Executive Editor – moving property and proptech forward.

Andrew Stanton

CEO & Founder Proptech-PR. Proptech Real Estate Influencer, Executive Editor of Estate Agent Networking. Leading PR consultancy in Proptech & Real Estate. Want to contact me directly regarding one of my articles or maybe you'd like a chat about future articles? Email me via [email protected]

You May Also Enjoy

Breaking News

BREAKING PROPERTY NEWS – 19/08/2022

Daily bite-sized proptech and property news in partnership with Proptech-X.   Estate Agent Networking partners with Property Tech Show The ultimate property tech show is coming to London in February 2023 and Estate Agent Networking have been chosen as a media partner. The importance and the increase in interest of the subject #PropTech remains strong in 2022 and…
Read More
Home and Living

4 Reasons to Install a Loft Ladder at your home

While there’s no legal requirement saying that you need to have a loft ladder, investing in one can be incredibly smart. Sure, it’s perfectly possible to own a loft and make good use of it without a ladder, but it can become quite impractical at one point, especially if your family is growing or you…
Read More
Estate Agency delays
Software & Tech

Brief guide for managing time!

Time management is very important for everyone. It doesn’t matter what age you are and what kind of work you are busy with, it is important that you manage time. In the past there was no such way to keep track of time but today you have online time calculator by calculator-online.net and task manager…
Read More
Software & Tech

How Social Media Can Help Your Real Estate Business?

Selling or buying a property is a crucial decision. Most of us are full of doubts, queries, and problems while undertaking this endeavor. This means your clients are seeking someone who has more expertise than just a license to become a real estate agent. They are looking for agents who will look out for their…
Read More
proptech show
Breaking NewsProptech News

Estate Agent Networking partners with Property Tech Show

The ultimate property tech show is coming to London in February 2023 and Estate Agent Networking have been chosen as a media partner. The importance and the increase in interest of the subject #PropTech remains strong in 2022 and industry experts expect this trend to continue through 2023 and beyond. 15 – 16 Feb 2023…
Read More
property price crash looming 2022 2023
Estate Agent Talk

MSN Scaremongering again? Property Market Crash reports

We all know, or at least by now should be waking up to, that MSN delivers mostly inappropriate / fake news and are countless times accused of political agendas when it comes to reporting on what’s going on in the world. What newspaper can refuse a controversial headline these days regardless to how legitimate the…
Read More