Online agents only work because they are parasites on Rightmove, says Martin & Co boss

Chancellor George Osborne’s announcement that there will be a 3% Stamp Duty Land Tax surcharge has wiped £6m off the share price of Martin & Co in the week since the Budget Statement.

The share price of competitor firm Belvoir has also been hit.

Yesterday, shares in Martin & Co stood at 157p and in Belvoir at 115p.

Since last Wednesday’s Budget Statement, there have been two other highly significant moves.

Osborne – again – has announced that the Government wants to encourage online-only estate agents, while yesterday afternoon EYE reported on speculation that online agent Purplebricks is set for imminent launch on the stock market with a valuation of £230m.

It is further speculated that just 20% of that value will be available for trading on the stock market.

The launch is thought likely to be on AIM, where it will join the likes of both Belvoir and Martin & Co – which now trades as the Property Franchise Company.

Martin & Co started off as a lettings-only franchise, but as the Property Franchise Company is also active in sales and has several brands.

Yesterday, chief executive Ian Wilson offered what he called an alternative view on the Purplebricks valuation, as speculated.

He said that online agents are parasites on Rightmove.

Wilson said: “When we are asked by investors whether we think the centralised call centre online agency is a good model, we point out that these businesses are wholly parasitic on the Rightmove business model.

“If the online model catches on, then Rightmove can extract the profit by increasing its fees to agents operating this type of non-geographically specific business.

“The real innovator and first mover in this space was Rightmove and if you think online agency is a winner, you should buy Rightmove shares.”

Separately, Russell Quirk of eMoov welcomed the Chancellor’s latest move, highlighting the Government’s support of online agents but while also acknowledging the sector’s low penetration of the market.

Quirk said it was “rare for the Government to set out plans with the emphasis so heavily tailored to a single area of industry, but this latest announcement certainly seems to do that”.

He went on: “This latest paper from the Treasury really is a significant nod to the success of the online property sector and how far it has evolved in such a short period of time.

“When I started eMoov five years ago, the traditional sector found the concept of an online agent laughable and dismissed it as a fad.

“For the Government to now acknowledge its success and the superior service provided to the consumer, by bringing it to the forefront of their plans to further advance it, really indicates that the online sector is the future of estate agency.

“We’ve known for a long time that we offer a vastly superior service for a fraction of the cost of the high street. If you ask me, we have most definitely penetrated the market already and have been injecting innovation for quite some time now.

“However, I understand that the Government can’t base its plans on a whim and so having now had enough time to evaluate the results, their latest intention shows that they, like us, are clearly consumer centric when it comes to the property selling process.

“Since starting eMoov we have seen a number of competitors join us in the space and to further encourage this is good for us and good for the consumer, as it will further enhance the service provided to the customer, something we are passionate about.”

Originally posted here.

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