REACTION: Rightmove facing £1bn group legal action by estate agencies
Leading financial figure Jeremy Newman is heading up the group which seeks to recoup 'excessive' fees charged by the portal to agents.
Rightmove is facing fresh pressure over its fees after an ‘imminent’ group legal action was today launched to represent estate agents seeking to recoup what it calls “excessive and unfair fees’”
This legal action is being led by former Competition and Market Authority panel member Jeremy Newman (main image) and its action is being funded by City firm Innsworth Capital and supported by law firm Scott+Scott UK LLP and economists Kairos Economics.
£1bn compensation claim
The group says the amount of money it hopes to recoup on behalf of participating estate agents could reach £1 billion. It says any estate agent who has paid fees to Rightmove over the past six years are eligible to join the group, which will be on an ‘opt out’ basis.
Newman is an accountant by trade and a leading figure within the legal, charitable, housing, Government, open banking and financial worlds including spells as Deputy Chair of the Government Legal Department and Non-Executive Board member and Chair of the Audit Committee of the Crown Prosecution Service.
He says: “Rightmove knows that, due to its first-mover status, its product is considered a ‘must-have’ for estate agents.
It exploits its dominance of the online property portal market in the UK to charge excessively and unfairly high subscription fees.”
“It exploits its dominance of the online property portal market in the UK to charge excessively and unfairly high subscription fees, both at face value and when compared with its competitors.
“Estate agents have had to absorb consistent, excessive price increases on a regular basis.
“My case will seek to return the overpaid fees to estate agents across the country and to rebalance the relationship between Rightmove and the estate agents that use its online property portal.”
Levelling the playing field
Ian Garrard, Managing Director of Innsworth Advisors says: “Jeremy’s claim is about levelling the playing field for businesses up and down the country, deterring anti-competitive behaviour and correcting the imbalance between big and small in the property sector.
“Without the opt-out collective actions regime, it would be much harder – or even impossible – for SMEs to seek redress for anti-competitive behaviour.
“As a result of Innsworth’s funding – and at a time of considerable uncertainty for the opt-out regime – businesses within the class will not have to pay a penny towards the claim.”
Agents want more information should contact the group via email.
Rightmove says: “Rightmove notes press articles relating to a potential claim against Rightmove. Rightmove has received notice of a potential claim.
“We’re confident in the value we provide to our partners. Further updates will be provided as appropriate.”
Industry reaction
Anthony Codling, RBC Capital Markets
“The fact that estate agents don’t like paying fees to Rightmove is hardly breaking news. Are the fees uncompetitively too high? Fees are in the eye of the beholder. Is a business class flight from London Heathrow to JFK too expensive?.” he says.
“For many of us yes, but cheaper seats are available that get you to the same destination on the same plane at the same time. Some willingly choose to turn left and the rest of us turn right.
“Rightmove offers a range of packages to its customers, and they choose which to pay for. They balance the return on investment – if I spend a few pounds more will I make a greater return (win more instructions or make efficiency gains which justify the costs)? Just like asking prices for houses, if the price is too high, make a lower offer or buy another house. Very few of us choose to sue the supplier.”
Rightmove’s response to this news is yet another example of their crass arrogance. “We’re confident in the value we provide to our partners. Further updates will be provided as appropriate.”
How on earth can they describe us estate agents as “partners”? Businesses work alongside their partners, they don’t screw them into the ground for every single penny they can get!
Anthony Codling, Managing Director, RBC Capital Markets – fair point on flights, but you’re comparing an open competitive market with one dominant portal that many small estate agency businesses simply cannot trade without.
So before accepting your analogy, I’d be genuinely interested to know how much first hand experience you have running a small independent estate agency in a non London market, paying Rightmove’s full fees without corporate discounts, rebates or preferential terms. Because the reality on the ground is very different to what you describe.
Small agents are not choosing between turning left or turning right on the same plane. They are choosing between paying whatever RM decides to charge, or risking losing business entirely. And unlike airlines, there are no “cheaper seats” that deliver the same buyers in most parts of the UK. RM knows that, which is why they can increase prices far above inflation year after year while keeping one sided contract terms.
If you have real world experience of running a small agency, juggling tight margins, dealing with vague pricing triggers and reconnection fees, and trying to compete with large corporates who pay a fraction of what you do, then your analogy might hold more weight.
So I’m curious, and I mean this respectfully, how much practical experience do you have of the small agency side of the industry and of Rightmove’s fee structure as it is actually lived, not modelled on a spreadsheet?
Spot on – the airline analogy doesn’t quite fit. In truth, we’re already paying for first-class seats, yet the price keeps going up, the headphones still don’t work, and the champagne is flat.
That’s the reality many small, independent estate agencies face when it comes to Rightmove — ever-increasing costs with very little improvement in the overall experience or value delivered
I too remember John Pring working so hard to put together the NAEA Portal case. This was such an important missed opportunity and It would be interesting to know who controlled the software provider that was employed by the NAEA to advise and develop the NAEA Portal at the time?
The NAEA are funded by Rightmove as are many causes. It doesn’t sit well with me.
Agents had their chance to create there own Portal through Propertymark and just did not support it. Perhaps in hindsight that was not a wise choice!
Correct. Although back then it was the NAEA. A sub-committee under the most excellent John Pring had it worked out. Months of traveling to Warwick, only to be dismissed by the Council. Rightmove at the time was possibly in planning, but certainly wasn’t a thing. Short-sighted. A little like our present government.
You can’t change the past – only the future
I completely agree with all of these comments – as agents we simply have to find an alternative.
Having been an estate agent for almost 30 years and whilst still running two small independent agencies the costs payable on a monthly basis are difficult to say the least for an established business and must be horrendous for any new start ups.
This is the sole reason I set up http://www.realmove.com with a multi-millionaire funding partner. Whilst we have all seen numerous portals trying and failing to take on the behemoth that is Rightmove, this lawsuit against Rightmove for excessive fees brings the issue of their market dominance into sharp focus.
Agents who are tired of being squeezed by portal costs should consider alternatives such as Realmove.com (currently the fastest growing property portal in the UK)
whilst still far behind Rightmove at present, it is certainly more transparent model and it is free of charge to all estate agents.
Exploring alternatives for either new start ups or indeed established agents is about saving money and diversifying lead sources, whilst reducing reliance on a single, expensive platform.
Now might be the time to support portals that do not exploit their market position.
About time! Good luck.