This week saw fun and games in the world of property portals, as the new kid on the block OnThe Market (OTM) found itself being faced with legal action by a group or over 40 separate estate agents. To be technically and legally accurate, the action is actually being taken against Agents’ Mutual, the parent company of OTM and the aforementioned 40 odd property professionals are combining ire and kitties to fund the litigation. If you remember, OTM was set up to challenge the The Don himself, Rightmove by another group of heavy hitters including Savills and Knight Frank who got the hump over having to pay large fees to the astonishingly successful king of property portals. No one is knocking the rationale of reducing the monopoly, but where the reasoning fell short was that the OTM gang fully expected all of us mere mortals to join them in protest over the stranglehold of Rightmove. It didn’t happen and whilst OTM now have 7000 subscribers, which is not to be sneezed at, it is still a wasp sting on the bottom of an elephant. Where the real problem lies and what has got various parties demanding retribution/blood is how they have arrived at these figures.
When launched, OTM told its new members that their subscription fees would be always be equal to or even lower than future joiners. This raises two questions: 1. What business would be stupid enough to offer such a deal as without a crystal ball who knows what the future will hold and what market forces will be at play? and 2. What business would be stupid enough to believe this promise-from a group of estate agents of all people….? Now it is the turn of the subscribers to OTM to get the hump as the results of their joining are not what they had hoped or been told (again who believes that a group of estate agents are telling the truth, the whole truth and nothing but the truth..?) This failure to deliver what was promised coupled with the fact that many left Rightmove to join OTM and are tied into a 5-year contract, (yes you did read that correctly), is what has-yes, you’ve guessed it-given them the hump. Incidentally, Rightmove continues to go from strength to strength.
The reason OTM got to the 7000 figure is that they have virtually been giving away their product. We should know, as even in the lowly foothills of the property world that is the NP4 postcode, we got it for peanuts after holding out. Would we leave Rightmove? Now who is being stupid? If we did, we would be closing the door in a month. Whether we are happy with the fees charged is irrelevant; we could not operate without it and they know that. They have rightly made themselves indispensable. I am sure that these nice chaps will sort it all out…
Finding a way around things has just presented itself in the buy-to-let market which Chancellor Gideon had tried to stifle with the extra stamp duty thresholds. What he forgot to cover was commercial property; pubs, offices, shops, bars, even petrol stations. All of these are showing increasing rental returns, with far less legislation than a buy-to-let flat or house. Of course, in the future, if the owner wants to increase the capital value, they could always turn them into, yes, you are ahead of me on this one, residential flats or houses that would be ideal for the buy-to-let market. What about the stamp duty levels for the new buyers? Trust me, when a vendor has made a very healthy profit on their investment, they will be only too happy to factor in the new stamp duty as a discount for the buyer. Remember, they, the seller did not pay it in the first place when they bought the property.
So, one has to ask, did the resident of No 11 get it wrong without thinking and rush it through, or did he actually do an awful lot of cerebral gymnastics, because the people buying this type of commercial property are not your typical buy-to-let investors but extremely wealthy individuals or corporate bodies with bags of cash to spend and a lot of tax to write off. Now who is kidding who?