At 170 branches Belvoir is one of the UK’s ‘big five’ franchised estate agencies. Like its competitors Martin & Co, Hunters, Fine & Country, Winkworth and Century 21, Belvoir has reported limited damage to its business during the Covid months, largely because they are networks of individual businesses sharing central costs.
Here CEO Dorian Gonsalves reflects on what Covid has meant for the industry and his franchisees so far and gives his views on other key issues facing estate agents today.
Will Covid be a final nail in the coffin for high street branches?
“Most agents have had lower footfall in the last five years and further reduced footfall will make little or no difference. Agents have already ‘adapted’ to this by means of being internet savvy and less reliant on business generated by shopfronts.
“I’m still a firm believer in shop or office-based estate and lettings agencies, and I’ll explain.
“If you’re not the type of person who wants to build and run a genuine business, and you’re happy being a home-based agent or LPE or hybrid agent, which are jobs dressed up as self-employment in many cases, then you don’t need premises from which to operate from.
If you want to build a business that isn’t ‘just a job’ you will need staff to help you operate your business.
“If, however, you want to build a business that isn’t ‘just a job’ you will need staff to help you operate your business. Some of our franchisees employ up to 30 people and they need somewhere to sit and somewhere to operate from.
“If you need somewhere to operate from, i.e. an office, you may as well have signage to advertise your business – for example a shopfront with plenty of office space. These are not expensive, and I suspect shops and office rents will become cheaper over the next two years.”
What will happen after the furlough scheme ends?
“No one is insulated from what I suspect will be a brief recession, mainly because it has been engineered by government by means of restricting activities in response to Covid.
“When restrictions are eased a recovery will soon follow. Our [rental] arrears are currently less than four per cent UK-wide and this may increase slightly when the furlough scheme has ended.
“We recently backed a campaign for loans for tenants who were in arrears specifically due to Covid and I believe a support package for tenants will be forthcoming.”
Will partial home working become standard for estate agency staff after Covid?
“Ninety-three per cent of our revenue is generated from outside of the M25 and in many of the areas we operate in, staff are not heavily reliant on public transport.”
“At our HQ in Grantham, although staff are not ‘front line agents’ we are currently operating on a 50/50 office and home working arrangement which is temporary and intended to help reduce the risk of infection in a building which normally houses more staff than in a typical estate agency or lettings office. In our retail offices this isn’t possible.”
Do you support the aims of RoPA?
“Yes, I fully support the recommendations in the ROPA report and I have been directly involved in several industry working groups. Anything that reassures consumers that our sector is safe, professional and fully regulated can only bring benefits to everyone. Regulation across our sector has cross-party support and is widely supported by most stakeholders.”
Do you think the current trio of portals will be disrupted soon?
“This isn’t my field of expertise, but I imagine a challenger will emerge in the coming months, no names mentioned!”
Do you see tech as an integral part of the industry?
“After several high profile proptech failures it’s likely that investors will be more cautious about investing in new models. Tech is an integral part of our industry and has been for many years. We’re part way through a rollout of a cloud-based operating system and this rollout will be completed in 2021.
“When finished, it will enable greater flexibility and future developments that are tailor made for a franchise business.”
Apart from Purplebricks, do online estate agencies have a future within the industry?
“There’s room for both and a market for both. However, investors in loss-making online agencies will lose patience eventually unless they begin to see a return on their investment. Online-only agencies have not impacted on the lettings sector due to the labour-intensive nature of the work involved.”
Will the Covid crisis lead to a clear-out of agent branches?
“We haven’t lost a single franchisee due to Covid-related business reasons. I’ve been forecasting a 20 per cent reduction in the number of independent and corporate owned agency branches for the last two years and Covid is only one of a number of factors that will contribute to this reduction.
“Other factors include: under-performing corporate chains, less reliance on footfall, higher costs of operating, retirement, consolidation… the list goes on.”
It has been predicted that all agents will be hybrid in one way or another very soon – do you support this view?
“Yes and no. Traditional “high street agents” have been mis-labelled as agents already interact with their clients online. The term ‘online agents’ suggest this isn’t the case.”
“High street agents will continue to develop and improve their online capabilities but it’s less easy for an online agent to develop a truly local network with customer-focussed staff at ground level.
“Franchising will continue to grow and in previous recessions franchising has attracted more people due to uncertainty in the jobs market. We’ve proved that franchising is highly resilient against economic downturns as it’s agile, efficient, and franchises are operated by highly motivated people.”
Do you think agents have the ear of government sufficiently?
“In a word, no! I personally feel that there has been some sterling work done by trade bodies and membership groups in recent years, and these include SafeAgent, ARLA, NRLA, The Lettings Industry Council, to name but a few, but it’s clear that although Government actively listens to our sector, our sector has very limited influence.”
“If some of the recommendations in the ROPA report are implemented, such as a new overarching regulator, this may change, and I certainly hope so.”
Do you think reservation agreements will work as proposed by the MHCLG?
“This entirely depends on whether they help to lower the sales drop-through rate and I believe a trial will be underway soon.”
Position: CEO, Belvoir PLC
Career: Gonsalves became MD of Belvoir in 2010 and then, when the company floated in 2012, stepped into the CEO role, which he stepped away from briefly in 2014 before returning. He originally joined Belvoir from Countrywide in 2005, initially as a Business Development Manager before being promoted to head up its sales operation. His other high profile job within the industry has been a five-year stint as a director of The Property Ombudsman.
UK WIDE AND CONTINUING TO GROW
Founded in 1995, Belvoir is AIM listed and the largest property franchise on the high street with over 170 offices. These four brands sit within the Group.