The London Estate Agent Experience

The London property market is now notorious for operating in its own financial world. The figures and trends in the nation’s capital often bear little or no resemblance to the rest of the country.

At the heart of this micro-economic climate are the estate agents – the people who oil the wheels of a rich market full of investors from all over the world. They appear to have done pretty well out of London’s success too. Sales in the 20 most expensive streets in the capital earned more than £10m in fees for estate agents in the past 18 months alone.

But, with financial riches and a powerful position in a turbo-charged market secured – what are these estate agents like to deal with?

Recently, the behaviour of these agents has come under the spotlight. That scrutiny has been sparked by a legal case involving a landlord – King’s College law lecturer, Dr Chris Townley – and Foxtons.

The landlord took exception to a £616 bill to repair a light fitting at a three-bedroom house in Forest Hill – a bill that included 33 per cent in commission on the £412.50 charged by the subcontractor who actually carried out the work.

Foxtons is confident that it stuck to the terms and conditions it had set out and it’ll now be up to the courts to rule on this particular case but it’s clear that this issue could be important for the image of the estate agent and the wider market.

Dr Townley reckons he’s not alone – and says he’s heard from more than 100 tenants and landlords who feel they have concerns over the way estate agents go about their business in the capital.

Of course mistrust of estate agents is not merely a London problem – about 22 per cent of the British public trust them to tell the truth which is, at least, higher than that for politicians.

It is, however, the case that London’s market offers the sort of scale of price that means missing a percentage charge here or there could be very costly. Tenants and landlords simply cannot afford to enter an agreement with an estate agents with their eyes closed.

As a result of this case they are clearly going to be wary over the full terms of their deal – regardless of whether the sort of charges paid by people in London are ruled to be unlawfully ‘hidden’ or not.

The focus has been on Foxtons before – with a BBC documentary in 2006 criticising the way it practised and raising questions about inflated property prices. Yet, despite that storm Foxtons has been a success. Shares jumped 28% in May alone on the back of the General Election, far outstripping the 0.3% average for the FTSE100.

Foxtons may have become a divisive brand for some but the firm’s bank balance would appear to show that many customers are more than happy to deal with them. There’s even a suggestion that some customers were secretly attracted to the firm after the BBC documentary – backing the agent to get them a higher price for their property.

In some respects it’s unfair to focus solely on Foxtons. They may have a reputation for an aggressive style but they’re far from the only operator in the capital. In some respects such a hyperactive property market gets a system of estate agents to match.

But, it’s clear that there are those out there – whether they are frustrated customers or people who are simply unable to get onto the housing ladder – who are fed up with the status quo. They might choose to put their faith in the emerging market in online estate agents.

With the costs of a house in London so high and the market so competitive, newer companies are coming on the scene, which threatens to shake things up. These companies promise to operate quicker and much cheaper than the traditional estate agent – whether it’s with a valuation, listing, arranging viewings or in the final cost of fees.

As these firms grow, experts will be watching on with interest to see how they impact on the behaviour of traditional agents when it comes to selling homes and managing properties for a tenant and landlord. It may well turn out to be that it is through these companies – rather than events in the courtroom – that the future of the London estate agent experience is shaped.

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Category: Politics