Zoopla Making £29.5m From Landlords and Tenants While Driving Rents UP

I didn’t want to start a New Year talking about a negative issue but this is too important to ignore.

The biggest change that has happened to my business in the last few years is being able to find great tenants through property letting web sites at a cost of less than £100. Previously I was paying a High Street Agent an average of £600. I did not use their tenancy agreements; I only use National Landlords Association ASTS because I know that they will be there to support me if the AST fails me. I did my own referencing because I want to speak to previous landlords and get a feel for their relationship with prospective tenants, credit referencing costs me less than £10 and I check my prospective tenants with LRS to make sure that I am not taking another landlords bad tenant. I like to do my own viewings because I am more experienced than most Agents, having been in the business for almost 42 years, and I am good at picking up on “fairy stories”. I need to know that I am comfortable handing over my expensive investments to a stranger. I protect my own deposits because I will be managing the tenancy and I will be the person who prepares the Inventory and inspects the property when they move in and out. I only used a High Street Agent to find tenants because I could not advertise my properties on the big letting web sites and I was prepared to pay an average of £600 for this privilege until my High Street Agent let me down for the second time.

The first time the agent signed up a tenant for 6 months, took their fee from the first month’s rent and deposit. The tenant did not pay the second month’s rent and I spent weeks chasing him, he did not pay the third month’s rent and I served a Section 8 Notice. I called the Agent to be told “We are not managing the property and we let it in good faith so there is really nothing we can do”. The tenant moved out at the end of month 3 taking all the keys to the house and the only keys to the garage. I had 6 weeks rent as a deposit (the Agent kept the first month to cover the fee &VAT) and by the time I paid the lock smith to gain access and change the locks on the garage (I always change locks on the house anyway) I had 5 weeks rent to cover a total of 3 months occupancy – I cleaned the property myself. I called the Agent who offered me 10% reduction on the next let!!! I should have left them at that point but I will always allow for one mistake.

The second time the agents let a house, agreed a move in date, this meant a month’s void but the Agent said that this tenant was the best person who had viewed and would be a good long term tenant. On the day before the move in date I called the Agent to find out why the AST had not been signed. The tenant told the Agent that he had decided not to move in!! The Agent told me that they would start marketing the property again and offered a 10% discount. I asked for the rent that they had taken from the tenant who had not moved in and I was told that they had only taken a holding deposit, equivalent to one months’ rent, and this was theirs to cover the work that they had done letting the property. I pointed out that they had not let the property ….I won’t bore you with the rest.

At this point I began searching on line for another Agent and I found an Online Agent who would place my properties on Rightmove and Zoopla, vet the enquiries and pass on prospective tenants to me all for less than £100. I was delighted, I had not heard of online agents until then. I have been using this agent every since and I have taken on some great tenants. without losing a month’s rent in fees every time I turned a tenancy or paying 10% management fees throughout the year, and this has enabled me to keep my rents below the market rates while offering nice homes.

On 9th December I read an article on Estate Agents Today which made my blood boil. In a nutshell the High Street Agents have put pressure on Zoopla who have decided to stop online letting agents advertising on their site unless they change their business model to offer the same services as a High Street Letting Agent and of course that would mean charging self managing landlord the same fees for services that we don’t want or need. What is the Officer of Fair Trading (OFT) doing allowing Zoopla to have this impact on free trade? The online agents are paying them their fees, they are placing ads in the same way as a High Street Agent, they are complying with ASA standards and all of this is very much the business of Zoopla. What is NOT the business of Zoopla is the service that the online Agent offers to landlords and tenants.

Imagine this:

BP Will No Longer Sell Fuel to Drivers of Private cars.

From January 2014 BP will only sell fuel to drivers who offer lifts to strangers in exchange for a fee. Those who use their cars only for themselves and their families and friends will no longer be able to buy fuel from BP services stations or those that they supply.

The move comes after mounting disquiet by Taxi and Private Hire companies Only days ago Mr Important of the Taxi Owners and Private Hire Self Interest Association criticised the big fuel suppliers for allowing “what are, essentially, private vehicles to buy fuel at the same pumps as professional drivers ”.

This could not happen because of conclusion of the last OFT investigation of the industry in May 1998

ANNEX 3.1 – FUTURE MONITORING OF THE UK PETROL MARKET

1 We see the purpose of any further monitoring of the market as being to determine whether any participants are singly or collectively abusing a dominant position and thus reducing choice to consumers and forcing up prices. Monitoring will thus concentrate on any prospective structural changes to the market, crude oil prices, margins, pump prices and site closures and openings.

2 Mergers which qualify for investigation under the mergers provisions of the Fair Trading Act will be closely scrutinised to see whether they should be referred to the Monopolies and Mergers Commission for investigation. (Mergers qualify for investigation where two or more enterprises cease to be distinct and either the gross assets of the acquired enterprise exceeds £70 million or a market share of 25% or more is created or enhanced.)

Why then do the same rules not apply to Property Advertising sites?

In June 2012 Zoopla and The Digital Property Group, who own Prime Location, FindAProperty and Globrix merged with approval from the OFT. At that time David Dutton, Chairman of Digital Property Group, said,

“This is an exciting day. Our combined businesses have the scale and the resources to transform the online property sector for the benefit of consumers and advertisers alike. We are committed to providing the most innovative products and the most cost-effective advertising propositions, which will give our users and members a genuine powerful alternative in our marketplace.”

In their notes to Editors they said

“At Zoopla.co.uk we are fans of transparency and everything we do is aimed at making the market more efficient for both property consumers and advertisers alike.”

What this actually should have said is that they would now have the power to control the property letting industry and would use that power to force landlords and tenants to use High Street Letting Agents thus increasing costs to consumers. What next? High Street Agents will only deal with properties that are offered to them on the basis of full management?

Thousands of landlords and tenants choose to use High Street Letting Agents and those who do a good job enable busy people to become landlords, but thousands of us choose to manage our own properties and I, for one, resent having this choice taken away from me. There has been a lot of pressure on Government this year to regulate Letting Agents and in particular, to stop some of them charging unreasonable fees to tenants. Self managing landlords don’t usually charge fees to tenants and this, coupled with the fact that we can keep our rents down because our overheads are lower, gives tenants the chance to rent a home without finding huge amounts of money before they can even move in. Zoopla are taking away the choice of tenants too.

I am pleased to say that Righmove has not indicated that they intend to take the same action, though I have no doubt that they will be under a great deal of pressure. If they have the courage to continue to allow a free market I will not really care about Zoopla because most tenants come to me having used Google or Rightmove to find properties for rent in my area and if Rightmove are still advertising my properties they will be let anyway.

This does not alter the fact that Zoopla are using their muscle to drive costs up, in a business to which they are only a service and which has provided them with £29.5m profits this year, all this will be at the expense of tenants who will see rents increasing to cover the additional overheads – I hope that tenants become aware of this a boycott their sites. I wonder what Shelter will make of this?

This move must be investigated by the OFT which exists to protect consumers from Giants who use their market position to push prices up and choice down and there is no business more fundamental than the supply of homes.

Zoopla will not want the adverse publicity ahead of a potential stock market listing that could value the property website at over £1bn and this is the best chance we’ve got to stop them. Come on Property118 use your considerable marketing skills to protect our freedom of choice – Please.

Share This Article