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

by Mary Latham

15:11 PM, 27th December 2013
About 7 years ago

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

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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.Zoopla



Comments

15:21 PM, 27th December 2013
About 7 years ago

Hi Mary,

I think that Zoopla have a right to do this and I think you have misunderstood things a bit.

They are only stopping on-line lettings agents who abuse the Zoopla service.

Agents such as Upad and OpenRent are unaffected by this.

Regularly on Facebook, I see landlords asking if anyone has a Zoopla account so that they can post their properties on it for next to nothing.

I have also heard of one property guru who sells the log-ins to his Zoopla account hundreds of times over so that newbies can use it to post their properties.

This is an abuse of the system and I believe that it is right that it should be stopped.

Why should agents and ethical providers like Upad and OpenRent be undermined by people abusing the T and C's of Zoopla's accounts? You do not have to have these agents manage your properties. You can just use the "tenant find" option so you will not be forced to pay for services you don't need. That is my understanding anyway, and I just looked on Upad and the "tenant find only" option is still available.

There are strict new rules now about advertising and transparency of fees, not to mention the fact that all agents will have to be registered with an Ombudsman Scheme next year.

I just see this as Zoopla cleaning up their part of the industry ahead of improving standards to protect the consumer.

Mary Latham

16:03 PM, 27th December 2013
About 7 years ago

Vanessa if that was in fact what they were doing I would have no problem. The fact is that they are telling online agents that the must
1. Do viewings
2. Visit the properties before they advertise them
3. Do the Inventory
4. Take the photographs.

My online agent does not use an automated service - which I agree is abusing Zoopla - they speak to me and to my prospective tenants and only send me those who meet my criteria - this is a service to both tenants and landlords. When I am busy they will also speak to previous landlords and do a full credit check. For landlords who are less experienced than I am they will give advice on rent levels, wording of their ads and discuss any concerns those landlords have about prospective tenants. If Zoopla really want to weed out those who are simply the middleman who only give landlords access to their site the could put systems in place to do that and could easily spot check to catch them. This is a sledge hammer to crack a walnut and it WILL drive rents up and cause resentment among landlords and our tenants.

Mary Latham - follow me on Twitter @landlordtweets

Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver

Ed Atkinson

16:06 PM, 27th December 2013
About 7 years ago

Mary, if you are correct then I agree this is of massive concern. I use Discount Letting who charge about £60 for a month on Rightmove and Zoopla etc and I have never failed to get a tenant. I couldn't agree more on all the advantages of self-managing.

I've just checked and Discount Letting properties are still listed on Zoopla.

I looked at one and I note with approval that the Property description starts with "Discount Letting do not charge any tenant fees for this property."

So please post again to confirm the Estate Agents Today story and which online agents are affected.

PS - just finished your book Mary, very good, and well done.

16:11 PM, 27th December 2013
About 7 years ago

Hi Mary and Ed,

I got my understanding from the horses mouth, James Davies, CEO of Upad:

http://www.propertytribes.com/the-end-of-diy-landlords-t-9763.html

The key to understanding this information is to understand the difference between an on-line lettings agent and an "aggregator". It is only aggregators who are no longer going to be allowed to advertise on Zoopla.

Mary Latham

16:16 PM, 27th December 2013
About 7 years ago

Reply to the comment left by "Ed Atkinson" at "27/12/2013 - 16:06":

This is the link to the article
http://www.estateagenttoday.co.uk/news_features/Zoopla-acts-to-expel-aggregators-o

It clearly states
* operate as an estate or letting agent, not a pure aggregator

* prepare property details on behalf of the vendor or landlord

* handle enquiries directly with no call forwarding to “principal”, ie the landlord or vendor

* act as an intermediary between the parties during transaction

* not provide a ‘listing only’ service as a back door to private sellers and landlords using portals.

While I can see the point of some of these I cannot agree with points 2 and 4.

I am pleased that you enjoyed my book Ed.

Mary Latham - follow me on Twitter @landlordtweets

Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver

16:20 PM, 27th December 2013
About 7 years ago

So, it is what I suggested Mary.

They will only allow full service agents, not aggregators.

But you are not forced to use all the services of the on-line agents who are allowed.

Zoopla themselves say that it will only affect a tiny proportion of aggregators using the site.

The key point is:

* not provide a ‘LISTING ONLY’ service as a back door to private sellers and landlords using portals.

Have you checked with your current on-line agent if they are affected?

Colin Childs

16:22 PM, 27th December 2013
About 7 years ago

Reply to the comment left by "Vanessa Warwick" at "27/12/2013 - 15:21":

You lost me with the sensationalist unsubstantiated topic headline. Better suited to the front page of the Daily Mail.

Care to back it up?

Couldn't help missing either you use the opportunity for free self promotion advertising yourself.

Mary Latham

16:23 PM, 27th December 2013
About 7 years ago

Reply to the comment left by "Vanessa Warwick" at "27/12/2013 - 16:11":

Vanessa if only that were true I would have no problem with it but it is not what is actually happening. I do understand the difference between an online agent and an aggregator it is Zoopla who do not understand the difference and I've got the evidence

Mary Latham - follow me on Twitter @landlordtweets

Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver

Mary Latham

16:28 PM, 27th December 2013
About 7 years ago

Reply to the comment left by "Vanessa Warwick" at "27/12/2013 - 16:20":

Yes I have Vanessa and that is why I am so angry.

Mary Latham - follow me on Twitter @landlordtweets

Also see http://www.amazon.co.uk/dp/1484855337 for the perfect present for landlords for under a fiver

Mark Alexander

18:16 PM, 27th December 2013
About 7 years ago

Hello from Russia

Just a quick post from my iPhone whilst I'm in a restaurant with wifi. I'm looking forward to getting stuck into this thread on my return but in short I agree with Vanessa. This is a storm in a tea cup and I doubt Mary's agent will be struck off by Zoopla unless they really are breaking the rules which, from what I can tell, are not being changed but are being enforced.

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