That grouping is now the largest concentration of agency brands within the UK operating some 1,200 branches and holding a 10% market share. But there is a new player in this corporate market, which has been on the acquisition trail since 2020 armed with City money and hoping to become a significant holder of market share within the sales, lettings and property management sector.

Lomond Group has acquired 50 or so estate agencies since launching, spending millions on the purchase of both small, medium and large firms across the UK from Aberdeen to Brighton, with almost monthly announcements of new acquisitions.

Perhaps its biggest coup was the purchase of Scottish sales and lettings agency giant DJ Alexander, making it the biggest industry operator north of the border.

Steering the Lomond Group ship, which has its headquarters in central London, is Ed Phillips who joined as CEO in July last year after a long stint at Foxtons.

The Neg sat down with him for a candid chat about his career, the group’s acquisition strategy and its future.

Have you taken the ‘Foxtons model’ to Lomond with you?

“Definitely because it’s become part of my DNA over the past 20 years or so. That includes working hard and going that extra mile and having a culture of reward and recognition, trying to always be one step ahead of the competition, always finding reasons to do things rather than not to, looking forward, dealing with bumps in the road effectively and ensuring you’re always relevant to the customer.

“I don’t think what Foxtons did was unique – the company just created a platform for certain traits, characteristics, and behaviours to be successful and people have been able to mirror that across the industry and the competition has to a certain extent, caught up.

“It’s about the evolution of our industry as a whole and not just in London anymore.”

LOMOND Brighton and South East team

How was Lomond created?

“At the end of 2020 Lomond was just 2,000 properties under management and a couple of PRS hubs plus the Yorkshire Linley & Simpson business already backed by LDC.

“And then, financed by them as our debt partner, we’ve been on a huge acquisition journey and we now employ over 1,100 people and operate across five regions managing 40,000 properties.”

What makes Lomond different from the other competing firms that ambitious estate agents have to choose from when looking to develop their career?

“That’s a good question, the answer to which I’m working hard to articulate both internally and externally because I feel that we are very different in our approach to estate agency. For example, if you take the franchise model [eg Belvoir] they offer a pre-packaged centralised support platform but once it’s handed over to the franchisee, it’s very much down to them to make it a success, and that’s why you tend to get performance inconsistencies from one branch or market to another.

“If you look at Connells/Countrywide it was always all about capturing as much high street market share as possible via brands like Bairstow Eves at the lower end and Hamptons at the top end.

“But with that model it’s not joined up and one danger of it is that lots of opportunities slip through the gaps because each brand operates independently. And there’s Leaders Romans Group as well, which, like us is looking to grow via acquisition – but there is not necessarily a distinct LRG blueprint that those agencies that are bought must adopt. “But what we’re trying to do is have all the single practices and systems in place as if we were a single brand across the UK but without losing the DNA and geographical nuances of why those businesses have been successful.

I want people to be excited to be part of the Lomond Group.”

“I often say our greatest strength is our centralised and decentralised model, but it can also be a challenge. I want all of our regions to have the autonomy and the understanding that what works in Scotland, for example, is very different and may not work in their region, but unite them all via a centralised CRM system. We also encourage people to share their knowledge and experience with colleagues from across the group. I want people to be proud to work for their brand, but also excited to be part of Lomond and have the two sit very comfortably together.”

How are you going to strike the balance between ‘corporate’ and ‘local’ that Countrywide arguable got wrong?

“The key bit is to ensure that we have a premium regional hub business and that when we acquire an estate agency it is integrated into that business – rather than having five or six acquisitions all competing against each other on their patch, and ensuring that each region has one or maybe two strong and powerful brands. Therefore, when we go and look for a new region to enter, we will identify the best available business that we can acquire, other than any clearly unavailable existing alternatives like say Knight Frank or Connells/Countrywide brands, and then see which is the best privately owned business with the best practices and a good lettings book. We will then make that agency the hub brand and use it to make the ‘spoke’ acquisitions of smaller agencies or lettings books – and ensure that the customer interaction is with just one brand.

“Lomond wants to avoid that issue of having a very fragmented regional collection of people and brands where no one understands what it means to be part of the larger group. That’s why across our six regions we only have nine or ten main brands.”

‘Spoke’ acquisitions will be business owners looking to exit the industry or retire?

“Yes, someone with one or two branches who wants to sell their business for personal reasons or offload their lettings book.”

Dexters famously doesn’t have a huge HQ – so will you be keeping yours slim? And where will talented/ambitious potential joiners fit into the structure?

“Either or really – if they want to start off in lettings or sales it will be in the regions and the same with our client accounting and property management functions Anything customer-facing is being kept in the regions – I don’t want to have what Countrywide had and have a huge call centre in Birmingham where staff tended to forget who they were answering the phone to.

“The perception that local knowledge and capability is key is important to our customers when deciding which agency to use but what we do have national marketing, finance, operations and HR hubs in London and Edinburgh and that’s how we power those regions. I want to take as much of the non-customer facing operational administration from the regions so they can focus on interacting with their clients and customers.”

You don’t appear to have operations or a regional hub, etc in London – why is that?

It’s part of the plan to move into the Capital – it’s where 30% of all transaction are in the UK. We have a Lomond investment team that we set up 18 months ago which is managing the 3,000 properties we already manage for Build to Rent clients, largely in London, but in terms of a hub in London we’re actively looking for the right business/brand to acquire that will sit best with the rest of our model in the UK. In London it’s about doing the right thing at the right time rather than just having a footprint for the sake of it.”

It’s about the evolution of our industry as a whole and not just in London anymore.”

You are owned by a finance business – the assumption would be that their overall aim is to build a big estate agency and then sell it?

“My role is to build the business and steer it in the right way for the long term but also deal with the direction of the board and shareholders – sometimes that can be at odds with one anther but yes, we are owned by a private equity firm.

“Anyone who understands about the private equity journey knows their aim is to realise shareholder return but also help the company find the next set of investors to take it on the next journey.

“But LDC is unusual because they are the Lloyds Bank private equity arm and don’t have such hard time limits to exit businesses because of the way they’re set up. We’re on the runway but there’s a long way to go.”

Ed Phillips – biography

After a BA degree in Law & Economics at Leicester University, Phillips joined Daimler-Chrysler UK (i.e. Mercedes Benz) as a graduate trainee in 1999 as part of a two-year graduate development programme, which saw him also do three months in different departments within the UK arm of the German car manufacturing giant. “That gave me the taste for customer-service and at the end of the graduate scheme I wanted to go into its sales operation but a lot of the established figures there were quite old compared to me and I wanted to try something fresh,” he says. 

So In 2001 Phillips switched industries, joining London estate agent Foxtons as a lettings negotiator, working his way up over the next 17 years to Chief Sales Officer in 2018. 

“Like many people who joined Foxtons back in the naughties I had seen the adverts and thought ‘why not give this a go’ and the rest, in my case, is history,” he adds. “I then left Foxtons for Lomond, which I thought was a pretty good stint but remember Foxtons was three very distinct companies during my time.That included the Jon Hunt, private equity ownership and publicly-listed company eras all of which were very distinct in terms of focus, behaviours and the way that the business operated.” 

Phillips ran the lettings side of the business for over a decade before he left, saying he eventually decided he wanted to tackle something different but not another London lettings operation. 

“I wanted something that was a [growth] journey, which Foxtons had embarked on many years ago in terms of development and sophistication, so Lomond felt like a fantastic opportunity,” he adds. 

He has also completed several London Business School courses.

The post INTERVIEW: The ex-Foxtons high flyer leading Lomond expansion charge appeared first on The Negotiator.

Property owners expect a round-the-clock service, constant and timely updates…

This high-pressure sector is not for the feint-hearted. Property owners expect a round-the-clock service, constant and timely updates and often much more than property management. For example, Ulhaq says she recently helped a client on his way by plane to New York to find a hotel room by the time he landed, even though it was already getting late in London and she was at the cinema. “But if you think prime landlords are handsoff then you’d be wrong; they want to know what’s going on and be kept in the loop all the time, so for me communication is paramount whether it’s on WhatsApp, phone, email or whatever,” she says.

International client base

“Mine is also a very international client base including American, Middle Eastern and Europeans with investments in London, so as a minimum we update them at the end of every month on what’s happened, even if it’s nothing to report other than the rent.

“They just want reassurance so if we do have a phone call, I follow it up in writing. That’s something I learned at Knight Frank – leave no room for misunderstandings.”

Ulhaq says her clients have properties in London because the Capital’s property market is always going to retain its value and the city is an ideal place to diversity their portfolio – although it does have quirks; for example its rents are quoted weekly rather than monthly.

“But we don’t have enough stock to meet demand at the moment so it’s not surprising that rent rises are in the double digits,” she says. “Add to that talk of a mansion tax and the renting reforms going through Parliament, which are just another attack on landlords – speaking as a landlord myself and not a property manager – this means the market is shrinking as some landlords look for other places to invest their money.”

She points out that these measures are unlikely to trouble the super prime landlord and investor market.

Long-term investors

These individuals are in it for the long term and she says that one of its most contentious proposals – the removal of Section 21 ‘no fault’ evictions – is not a factor in most prime landlords’ activities because very few tenants need to evicted.

“I understand that tenants need more protection but landlords need Section 21 ‘no fault’ notices to evict on reasonable grounds. It’s unfair that, to get a property, a landlord will have to go court under the proposed reforms; we need a compromise,” she says. Ulhaq reveals she’s only had to ask two tenants to leave a property since she began working in London.

“One case was a wealthy renter who had complained about mould in a part of the flat and, despite it being fixed at considerable cost including new windows, refused to pay any rent and fell into £80,000 of rent arrears,” she explains.

“He had a well-known model as a partner and to solve the problem we contacted her manager and negotiated that they left, something as a smaller company we can do informally but that a corporate would have conducted via lawyers.”

One thing Ulhaq cannot deny is that she’s chatty – something she posted about on her LinkedIn profile highlighting her ability to talk, but says the key other skill that is useful in the intoxicating world of prime property is resilience.

In this market you need a thick skin and the ability not to take things personally.

“In this market you need a thick skin and the ability not to take things personally because with high-end clientele you’ve got to have that detachment, be succinct and concise in your work and give them the problem, the solution and the timeline,” she adds.

Lifestyle service to the stars

One thing that sets her apart from most other lettings professionals in the UK is that she also offers a concierge-style ‘lifestyle service’ which “is very much a 100% London thing” she says.

“We work with some of the world’s big media production companies and help bring A-listers to London – for example one recently rented a property for £20,000 a week and had their luggage delivered three days in advance. We had people in to prepare all the wardrobes, stock the fridge and in general make the house ‘turnkey’ so all they had to do was walk in through the front door – oh yes, I and the introducing agent, were at the front door at 5am to welcome them when they arrived – which happens six or seven times a year.”

Talking to Ulhaq, it’s clear that the service her firm supplies for clients means she’s always on duty and admits that she never says ‘no’ to a client request, although naturally her ‘lifestyle concierge’ services are charge on top of her firm’s property management fees. Despite her bulging diary and constantly bleeping phone, Ulhaq says she is considering expansion overseas although would never opening branches like a traditional agency either inside or outside London. She says her main focus is to build her network of introductions and contacts who recommend her, not increase her overheads with a high street presence.

“It’s all about keeping my relationship with client to the forefront because I know that at some point down the line, that will come back to me. It’s the people that make me excited about my job – people are buying from me now so to speak and that’s what I love.”

Yasmin Ulhaq – career history

Yasmin was brought up in Edinburgh and had a father who operated a residential and commercial property business in the city and that “growing up I watched him navigate the intricacies of real estate and as I got older I would help him draft tenancies, collect rent, carry out inspections and therefore I picked up his passion for everything residential property related,” she says.

Yasmin then went on to complete a law degree as a mature student and began using her student loan money to begin building her own portfolio while she studied and, at 21, had bought her first property, a five-bedroom Victorian apartment in Glasgow and rented it out to other students.

On finishing her studies, Yasmin relocated to London working for a recruitment firm and, after having her first child, began investing in a property portfolio with her husband. After building it up, she realised she wanted to stay in London and have a career in property.

Knight Frank apprenticeship

After working at several boutique property management firms, she joined Knight Frank in 2016 working within its prime property management team.

“I wanted to take the next step and get into the more high-end property sector in places like Knightsbridge and Kensington and after talking to local agents realised you needed to be qualified and really ‘up your game’ so working at Knight Frank was an amazing experience getting involved with an exceptional client base including family and institutional offices, embassies and the entertainment world,” she says.

After nearly five years she decided to part ways with Knight Frank because it didn’t give her the work flexibility she needed as the mother of two children doing their 11-plus exams.

“One of my clients said I could do the job on my own and provide an even higher level of service, so I set up Glenfield Property Management which is a family-run service specialising in luxury homes and lifestyle services in London – and sometimes further afield – for property investors and landlords.

“I didn’t feel I could really get to know my clients at Knight Frank because it had such a big portfolio of properties, but Glenfield enables me to focus on a smaller group of core London, super and super-prime clients and offer a higher level of service,” she says.

The post Agent to the stars appeared first on The Negotiator.

But London-based Plentific is becoming a player in these sectors with a single platform that offers a wide range of services to ‘asset owners’ from private landlords to large providers such as social housing operators and even hotels. Established in 2013, it uses a cloud-based software system and a national network of tradespeople to deliver its service, backed by £100m from investors including, two years ago, an injection of £80m to help it go international.

Plentific deals in what the firm refers to as ‘real-time property operations’ that, for example, tracks property repairs from beginning to end regardless of where the complaint comes from, and ensures compliance with regulations. This was a key learning from the recent Rochdale scandal following the death of toddler Awaab Ishtak, whose parents’ complaints to their housing provider fell on deaf ears with tragic results.

To counter this kind of obfuscation, Plentific says it connects property owners, operators, service providers, and tenants via a single platform transparently.

Personally I was doing something with a positive impact on the world.

The company has also been busy in letting and made the industry news last year when it bought lettings software specialist TouchRight, a York-based company founded in 2012 by husband and wife team Terry and Rachel Lightfoot.

It enables agents to create a host of bespoke property inspection reports, including inventories, midterms, check-ins, check-outs, HMO and Legionella Risk Assessments with a few simple clicks.

The future of property management?

The Neg sat down with Henrik Von Bahr, its Vice President of Sales to ask – is it the future of property management?

Nigel Lewis – The Neg

Von Bahr joined the firm last year following a fast-rising career in the City including stints at Nomura, RBS and Morgan Stanley and he says although Plentific’s focus includes the private rented sector including signing up larger landlords and property management firms as clients, it has bigger fish to fry at the moment.

This is because its platform and service is better suited to the big owner-operators such as social housing and managing agents.

“They want a fully end-to-end system and so our approach is to be partner-led and we have a number of integrations including two software suppliers to the private rented sector,” he says.

“They will use the CRM of our partners but we will provide the maintenance – so whether its landlords or managing agents, both will be able to use our flexible supply chain.

“Plentific is also about innovation – I was sat with several CEOs recently who said our platform was the only significant tech development within the industry for many years.

“I believe the property industry has been failed by tech in the past – many people have promised a lot but not delivered it. So it’s time that housing providers realise they are not tech companies but customer service organisations.”

Nevertheless Von Bahr says the PRS is very much within “the scope of our ‘go to market’ ambitions but it’s just that right now social housing has a much stronger fit”.

This is because, for example, many housing providers are strong in their local or regional areas where they use their internal workforce, but visibility of repairs and maintenance disappears once they move into new geographic areas and outsource this to third parties.

Empowering the team

“Plentific is designed to knit this all together and “empower every member of the team and make what’s going on transparent and easy to track,” he says. “Once providers have the data, they and their teams can make the best decisions.”

If this all sounds applicable to the build-torent market because many operators increasingly have properties all over the UK, then you would be correct. Van Bahr says this is particularly true for most BTR operators when they become responsible for maintenance and repairs after the two-year contractual ‘snagging’ period.

So why did Von Bahr join Plentific? He reveals he was an early investor in the company when it was still ‘finding its feet’ and trying to work out if it was public or B2B facing service (it used to have its own branded vans) and, after it signed up its first big clients including Notting Hill Genesis, helped it raise more funds – somewhat successfully.

“I saw that there was huge potential for this organisation and its platform and unlike my previous career, I could see that personally I was doing something with a positive impact on the world because we are improving the lives of a huge number – potentially soon millions – of people on a daily basis who live in homes maintained and manager via our platform.”

The post Plenty to think about appeared first on The Negotiator.

One success story is Rayna Hunter, who after several decades spent working in PR including a stint running her own firm, joined London prime estate agency LH1 Global in 2017, rising to become its CEO in October last year. Here she reveals what it’s like been joining the property industry and what it’s been like being one of the relatively few CEO-level women within the sector.

Why the switch to property?

“Property is in my blood – from a young age I was exposed to the industry regularly when helping my father who led many successful property businesses when I was growing up. I was always gaining experience where I could, whether it was answering phones for an estate agency or sitting and taking notes during negotiations for high-profile land or development deals.

“As a self-starter and extremely motivated, one of the first careers I embarked on involved the formation of my own PR and events business, which I ran successfully for over a decade. This initial career path involved arranging high profile charity events culminating in over half a million pounds being raised over the years, plus multimillion- pound events and parties for high-profile individuals, including booking Rod Stewart for a private party in The Bahamas for one client.

I may have entered the property world late, but to me it’s all about delivering results.

“Then in 2018 I started working alongside my husband, Benjamin Hunter, at LH1 Global a leading International off-plan property consultancy, which was growing quickly. I was originally heading up the UK sales department then global sales and then proudly taking the role of CEO which is testament to my business acumen and previous history in property.

“I may have entered the property world late, but to me it’s all about delivering results, to be able to work on some incredible projects on a daily basis is one that drives me on to keep leading and learning.”

What’s it been like joining the property industry later in life?

“You could say I came onto the scene in later life [Rayna joined LH1 in 2017 when she was 57 years old] and especially as a woman in a leading position, there could have been added challenges in what is a typically male dominated industry.

“But I’ve only seen my age and my gender as a positive. I try to use my experience and world viewpoint to create a more diverse team that can deliver the best results for our clients. I still have enough background knowledge to be well informed of how the industry and property market works, whilst I can bring other skills and a fresh perspective to try to do things differently and improve current practices.

“There are still misconceptions of hiring older people into new roles, however, there is a lot of experience that is being lost and I am a good case study of being able to step into a new role in a relatively new industry and adapt and deliver.”

Do women find it harder in the industry?

“No, I don’t believe so, but I do believe a lot of that comes back to the experience I brought into the role. I wasn’t a junior making their first steps on the career ladder, I already had a base of knowledge and professional confidence developed over many years. But I still had to gain the respect of my clients and male peers. I would say I have done that by being assured and confident in my abilities, it is this more than anything else that has allowed me to enjoy success in the industry.

“I feel that people have judged me by who I am as a person, rather than the fact I’m female, and that has allowed me to build trust and strong relationships. If there has been any advantage to me being a woman in the industry it is the fact I may approach certain aspects of the role with a different viewpoint than some of my male counterparts and the fact I hold a senior role means that I can direct real change. I believe there is still some way to go until women can feel as true equals in the sector, but I certainly don’t think we are necessarily held back, like anything it is just going to take time for overarching views or stereotypes to change.”

Are there enough women at the top?

“Women can play a major role alongside their male peers in senior roles. Women must not feel intimidated by working in property or in a male workplace and need to be given the confidence and reassurance that they will be working in a secure, exciting, and challenging environment, whilst also having a voice that can be heard and respected.

“In my opinion, you just need to embrace the challenge, it can be a rough and ready environment at times, especially if you need to spend time onsite. My team bought me pink safety boots, so I can still embrace my femininity, but that doesn’t stop me commanding the best standards on a working site. It’s how you carry yourself that’s important. Ultimately, I believe there is a bright future for women in this industry, attitudes have changed enormously, and I hope that I and other female leaders in the sector can continue to inspire the next generations to get involved and continue to drive change.”

Has LH1 Global expanded since you joined?

“It has been an incredibly successful period for the business during a time when the UK property market has stagnated. I believe we have achieved this by firstly building a strong team that has a multitude of strengths and experience that is perfectly blended to deliver excellent results for our developer clients and across multiple projects. It is also largely down to the fact that we have established a fantastic model in the sales and marketing of off-plan city centre multi-unit developments.

“Overall, we find that our approach leads to faster sales and completions due to purchasers being managed carefully to ensure that if there are any issues, we are on hand to provide support or find a solution to the problem.

“We are also very good at identifying emerging markets before they become overheated and work closely with our clients to source strategic sites, which will deliver homes that will prove popular once released onto the market in spite of any potential negative market conditions. This has allowed us to expand the business into the international sphere and take our model to new and emerging global markets and it is a very exciting time to be spearheading the business alongside Benjamin Hunter who is driving this growth from our Dubai office.” I may have entered the property world late, but to me it’s all about delivering results.

WHAT IS LH1 GLOBAL?

Founded in 2017 originally as LH1 London the business has delivered prime projects across major UK cities in the past five years including those in London, Manchester, Birmingham, Leeds, Derby and Ashford. It also has a recently-opened office in Dubai which founder Benjamin Hunter now leads.

LH1 works with several well-known names within the UK agency sectors including LSL New Homes and Pygott & Crone.

The company was set up with an aim to become the UK’s leading international property consultancy, specialising in the off-plan sales and marketing of prime city centre residential developments.

Hunter says this has now achieved and it’s now time to “move on to the global stage and take our trusted and proven model to overseas developments”, he says.

The post Rayna Hunter CEO, LH1 Global appeared first on The Negotiator.

Its property division has some 1,500 offices in the US and beyond and 50,000 agents but it’s not like the other American brands such as Keller Williams which have entered the UK housing market recently; BHHS in the US and the UK is a traditional branch-based estate agency.

Bikhit is the son of Kay & Co founder and now chairman Samuel Bikhit, joining the family firm in 1997 in a sales role and in 2008 becoming its managing director.

Five years ago he led the drive to join the BHHS global network and, although he’s not met Warren Buffett, says the deal was signed off by him, as was the decision to add another London firm to the family, Marler & Marler, in 2021.

The Neg sat down with Bikhit to find out how being subsumed into such a huge global organisation has fared for a four-branch family estate agency.

How’s it been going?

“It’s been an interesting journey made more colourful by the wonders of Brexit which obviously had a big impact on our market, along with Covid of course.

“But despite these challenges we acquired Marler & Marler two years ago, and we’re getting a high number of extremely good quality referrals from the rest of the BHSS network particularly in Italy, Spain and Portugal.

It’s been painless being integrated into the organisation; it’s got a great business ethos behind it…

“The benefit of being part of this network is that people who perhaps wouldn’t have engaged with us when we were just Kay & Co are now keen to speak to us because the Berkshire Hathaway is such a globally recognised name.

“And it’s created some very interesting opportunities for us that you may be reading about in the coming months.

“It’s also good being part of a company like BHHS that, due to the business ethos of Warren Buffett, takes a more long-term approach to development – and coaches the firms within its global network to do better.

“And overall it’s been painless being integrated into the organisation; it’s got a great business ethos behind it and BHSS has a very relationship driven culture, which is unusual because many agents and brokers tend to have a very transactional mentality but within BHSS that’s not the case.”

What’s it like operating in such an unusual and rarefied market like Prime Central London?

“Yes our four offices mean we’re dealing with clients and properties in and around Hyde Park and north-east into Kings Cross but it’s quite varied – for example Knightsbridge is almost all international while Marylebone still has a very strong domestic market, but Kings Cross is very dominated by investors who bough off-plan in all the new developments around the station.

“But we’re not just focussing on the very expensive, multi-million pounds properties in these areas – we like to think we’re more approachable because we also deal with homes in the hundreds of thousands too.”

What do you think of the hybrid approach some other US property fi rms have introduced to the UK?

“We are very much a traditional British estate agency and we didn’t want to go down that self-employed broker route even though there is a place for it in the UK and some people are starting to do it well.

“We took the decision that we didn’t want to change our business model because the traditional approach was working well for us and the Berkshire Hathaway name has elevated us and given us a much louder voice in a very crowded market place.

“There are a lot of smoke and mirrors in this industry, so having a physical presence on the high street with a branch all backed by one of the largest property companies in the world gives comfort to buyers and vendors that in six months’ time we won’t be out of business.”

What does the future hold?

“We want to expand and have more offices but it will be a bit like a hotel chain such as the Mandarin Oriental – the best locations in the best cities in the world – and so for us that would be the best locations in London within the market that we serve so well – we don’t want to be everywhere.

“Also, I think we would look at applying that approach to other cities or areas of the UK in the future but we’re focussing on London. The UK is unusual because so much of our market is concentrated in the capital, rightly or wrongly.

“Conversely, if you look at Italy for example, it has multiple cities including Milan and Rome where international buyers would be interested in purchasing or renting properties.

JOINING THE LARGEST COMPANY IN THE WORLD

BHHS Kay & Co : Marler & Marler has a combined five branches in Knightsbridge, Bayswater, Marylebone, Sloane Street and Kings Cross and is part of Berkshire Hathaway Home Services, the largest property company in the world by number of transactions.

BHHS is one of America’s fastest-growing real estate brokerage networks following its launch in September 2013.

Brand expansion is now underway in global markets which include in addition to London, network members operating in Canada, Germany, Italy, Portugal, Spain and Dubai.

BHHS is owned by HomeServices of America (HSoA) which is the United States largest residential real estate brokerage. HomeServices of America is owned by Berkshire Hathaway Energy, a consolidated subsidiary of Warren Buffett’s Berkshire Hathaway Inc.

Boss Martin Bikhit says his goal is to ultimately have ten branches in the capital, pointing out that Buffett would never associate with or invest in a company that was ‘standing still’.

“Warren Buffett is renowned for making the right calls on markets, and his approach has been to invest in good quality businesses and then leave them alone,” he adds.

The UK operation that Bikhit runs now has 40 employees. In 2018 Berkshire Hathaway HomeServices – Kay & Co won Bronze for Property Management Department of the Year in The Negotiator Awards.

The post The agent who got into bed with Warren Buffett appeared first on The Negotiator.

Established four years ago, it already has a portfolio of 200 properties under management across West London with plans to expand further afield. The business model behind it is simple, which Sullivan says is surprising given so many people talk about ‘disruption’ within the industry. His firm’s 11-strong team find properties within neighbourhoods on a client’s behalf, usually in areas where professionals like to live, upgrade them into des-rez accommodation, improve their energy efficiency and then ensure each tenancy and property is run properly. “By upgrading our EPCs and making the properties more energy efficient, we’re creating 1% more yield on average for our clients,” he says. “We’re also running a project to eventually have all of the properties within our portfolio being zero emission homes.”

Increased returns

Consequently, and with cost control at the fore, Sullivan says his firm’s clients, who are either landlords, institutional money or ‘family office’ investors, see their returns increased by an average 40% on an annual basis for properties that his firm picks, upgrades and operates when compared to traditionally-sourced and operated ones.

We’re running a project to eventually have all of the properties within our portfolio being zero emission homes.

This is helped by the firm’s in-house rent pricing software and its own house-keeping operation for shorter lets. Smarter Rent, which is based in Richmond, West London, is essentially a ‘build-to-rent’ style service including flexible tenancies for tenants that can run for weeks or years and a concierge-style property management service.

“Build-to-rent is expanding because the professional money behind it is very patient, they have very large sums of cash to deploy and therefore BTR can spend big on research to find out what tenants want,” says Sullivan. “We’re emulating what the build-to-rent operators are doing but rather than providing homes just for young people in city centre apartment blocks, we’re after tenants in suburban areas and include a wider range of ages.

“What we’re doing isn’t terribly sophisticated, we just want to offer a renting experience that is based on listening to both landlords and tenants, rather than just doing it the way it’s always been done.” He says there are other agencies doing part of what Smarter Rent does, but he’s yet to come across one that’s doing exactly what they do.

Proptech start

Sullivan, like his business partner, started out in estate agency before delving into the worlds of initially fintech and later proptech – the latter of which he sold to Nationwide – and then helped establish Sutherland’s business. Sutherland began Smarter Rent because he became a single father, didn’t want to work full-time in central London any longer and consequently set up a business dealing with friends and family who wanted to invest in property.

“I came on board after it had been running for about two years and realised that he had something really special here because he made it easier for both new and existing property investors to acquire properties by doing the hard work for them; sourcing properties, kicking the bricks, completing the purchase negotiations, running property management and, more recently, all the design of the refurbs too,” he says. “We do the desk research to ensure we know how to design each property so that each one gives the best returns for an investor – as well as working out where to buy.”

Sullivan says that, for example, they researched from their own data which items were being damaged most often by tenants in rental properties and designed theirs to prevent this, consequently reducing maintenance costs.

One direct comparison with build-to-rent is that Smarter Rent offers flexible tenancy contracts and, although Sullivan is mindful that it’s a “strong statement”, says traditional agents are a “bit out of date and that the market has really changed”. This is something the Government agrees on; its Renters (Reform) Bill includes plans to usher in periodic tenancies and bin ASTs.

BTR opportunity

“A large portion of tenants are now over 35 years-old, with pets and children in tow, plus more renters are now over 50 years-old, but the ‘product’ hasn’t changed,” he adds. “That’s where we and the BTR operators see the opportunity.” Sullivan says his tenants want a ‘home’ not a property and therefore seek security of tenure – so Smarter Rent offers contracts of between one week and 36 months to serve both younger people who want short stays (and who are prepared to pay more for short-lets) with bills included and furnished properties, while at the other extreme also catering for older tenants who may want to stay in their properties ‘for ever’.

Tenants are also offered one-sided tenancy breaks where only they can give notice – assuming they pay the rent and look after the property – and agree to RPI-linked annual rent rises.

“This is much better because the tenants know what’s coming rather than being surprised by a huge rise after five or ten years of no rent rises,” he says. “It’s not fair on tenants when the rises are arbitrary and not transparent.”

“As a business, we’re growing fast because investors realise that they can make better returns than they would on their own, without lifting a finger, and that’s good because the PRS desperately needs fresh investors, so you’ve got to make it easier to get into the market.

Views on Buy-To-Let

“One error that many BTL investors make is to play it safe and only buy in areas they know or that are local – which is understandable but it’s not how you get better returns on your investment,” says Sullivan. “For example, there are many landlords who have long-standing properties or portfolios within Zones One and Two [of London’s Underground network] who don’t realise there are opportunities further out or if they do, don’t know where to look.”

Sullivan has also been watching the launch of the Government’s Renters (Reform) Bill but, unlike many commentators within the sector, says better returns for investors and the reforms within the draft legislation are “two sides of the same coin”. “What we’re doing is offering solutions to many of the challenges that the Bill seeks to address but I think many traditional agents and landlords don’t realise that their less flexible approach is soon going to come to a crunch point as the market changes as build to rent unit numbers grow and the reforms change everything,” he says.

This crunch point is also being accelerated by the hikes in BTL mortgages rates, which are likely to stay high for the foreseeable future. “Some landlords will quit, and more than usual have been, but those that remain can make a difference and have a positive impact on the market by changing the way the properties are rented and operated,” adds Sullivan. “And the returns will be better too.”

CURRICULA VITAE

ALEX SULLIVAN – started out at Buckinghamshire fi rm Michael Anthony Estate Agents in 1999, leaving after three years to join fintech FX fi rm World First where he rose to become its Group Chief Commercial Officer. He then set up property search AI chatbot ems.ai which he sold to Nationwide in November 2018, then worked for several tech platforms including as a NED before co-founding Smarter Rent with Sutherland.

ADRIAN SUTHERLAND – started out in 2001 as a negotiator and later senior sales neg at High Wycombe fi rm Hurst Estate agents before becoming a property investment consultant for three years and then joining FX fi rm World First where he stayed for five years. In 2014 he launched online property marketplace BeStreetSmart, and in 2016 created Smarter Rent with Sullivan.

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For a while it was a big success with impressive financial results and a brand that became a household name. It still is a household name, one of the few in residential property, and isn’t trashed in the eyes of the general public. News of its financial woes in recent years has not penetrated through to become part of the awareness of homeowners. It is a name recognised by most people, and TV ads have helped to reinforce the brand’s profile.

Industry disaster

Within the property industry of course the story is very different and the brand, which was always unpopular with agents, is now seen as a complete disaster. It is widely reported that Purplebricks’ financial performance has been woeful and profits have reduced. The recent deal with Strike, purchasing the agency for just £1, shows how low things had sunk. Purplebricks has departed from the AIM stock market becoming a private company, leaving later shareholders in particular with little return for their investment. At least the ignominy of a plummeting share price is now a thing of the past. A major restructuring, bringing its network of agents inhouse has backfired and ongoing employment dispute cases are testament to that.

Strike clearly believes Purplebricks can be a major force again.

Senior management appointments have been questioned, with Helena Marston as chief executive leading that particular charge. She came to the job with little or no experience of residential property selling and many onlookers wondered how it could work. There was a steady turnover in other senior positions, with for example, CFO Steve Long lasting less than a year. It is interesting that only his replacement Dominique Highfield has survived the buyout by Strike, with the departure of her management team colleagues being part of the conditions for the sale.

Strike takeover

Now, new owner Strike has moved quickly to change the pricing, with a single fee of £999 to apply anywhere in the country. Strike CEO Sam Mitchell (above) reflected his company’s excitement in the deal, despite the financial hangover it inherits, making it no secret that he was an admirer.

Mitchell said it is “highly likely” the two companies would eventually come together under the ‘Purplebricks’ name because its recognition was so high. Sam Mitchell CEO Strike.

He told The Neg he picked up the phone “incredibly quickly” once Purplebricks was put up for sale, wasting no time in making a move for the company he had watched closely. He said it was “highly likely” the two companies would eventually come together under the ‘Purplebricks’ name because its recognition was so high. The firms will operate separately initially, but will unite later this year into a single entity that Strike clearly believes can be a major force again.

Big backing

With the backing of Sir Charles Dunstone, who is well known for big brands like Talk Talk and Carphone Warehouse, Strike has the clout to make things happen. There is no doubt that it has plans to become a much bigger player in the residential property market, building on its USP for selling homes without a fee.

There are some uncertainties though which may prove to be more than a hindrance to its progress with Purplebricks under its wing. Can a set fee pricing approach work in a market that has become increasingly nervous in the last few months? Mortgage costs have risen sharply, and the Bank of England appears set on a course of even higher interest rates. Many buyers are either rushing to secure a deal before further increases, or holding back, waiting to see what happens in a housing market where prices may fall.

Others are seeing their existing mortgage payments spiral upwards as they come of fixed deals at a time when lenders are pushing their rates up.

Game on?

A phoenix rising from the ashes is the Strike vision for Purplebricks and perhaps it can work. The brand we know is a big advantage and gives the new combined company something solid to work with. “Time to unleash the potential of one of the UK’s best known brands. Game on,” Mitchell says in a LinkedIn post. And support has come from one of the founders, Kenny Bruce, who says the simplification of the pricing offer is a “great decision”.

Michael Bruce

But will Strike be able to steer the ship into a calmer more lucrative space, where it can pick up business from customers put off by the traditional high street agency?

We are about to find out.

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What does ‘Operations Director’ mean at Douglas Allen?

“In other businesses it would be an MD role, as here I run the business and, bar some help with running the financial services side, I’m in charge of business strategy, running the branches and hiring and firing,” he says. “Above me is Aldo Sotgiu the Group Managing Director, who all the people like me across the brands report into. But one of the attractions of this job is that you have a lot of autonomy – something I didn’t have when I worked at Countrywide and Haart.”

How did you start in the industry?

“I began 20 years ago as a young ‘Saturday boy’ at Bairstow Eves in Muswell Hill [in North London] at a time when that estate agency was considered the ‘top of the tree’ within the industry,” he says. “A couple of weeks later I was offered the role as a negotiator and from that point onwards I never looked back – and after running a couple of decent branches I was soon running North London for them.”

What is a good leader?

“A good one is somebody who leads by example by showing, mentoring, coaching or helping and someone who takes responsibility for the staff who work for them in the branch, and who doesn’t rely on a head office training department to do it for them,” he says. “Lots of branch managers have different personalities, but you’ve got to be emotionally intelligent, more so now than you had to be in the past.

Michael Wright

“When I started at Bairstow Eves I was ordered around and told to ‘effing’ do this or that, or have my chair taken away if I didn’t hit target – whereas now the world has changed, people can’t be talked to like that.

“I have three rules; one: tell the truth to your customers, your colleagues and to yourself and then you’re already above and beyond most agents on the high street.

“Two: people should work here because they do it for themselves and the customers, not because they’re told to do it. I always ask people – how many people have you helped today?

It’s all about the branch manager – get them right and the rest filters down from that.

“And three: you’ve got to enjoy your job. We all have bad days but you’ve got to enjoy it for the majority of the time to be winning.”

What’s the difference between an under-performing branch and a good one?

“It’s all about the branch manager – get them right and the rest filters down from that; I was saying in a meeting today that if you look after your customers and your employees via good ‘micro leaders’ like branch managers, then you’re set,” he says. “The biggest challenge is finding the ideal people to lead a branch – you can never tell how they’re going to perform until they settle in and understand our processes and how we work.”

MICHAEL WRIGHT – BIOG

Joined Countrywide in 2004 and worked his way up to be a Regional Manager by the time he left in 2016 to join Haart as a Regional Partner and latterly, an Estate Agency Director. In September 2021 he joined Douglas Allen as its Associate Operations Director before being promoted to Operations Director in September 2022. In his spare time he is a keen golfer.

What makes Douglas Allen different from says Pittis or Cubitt & West?

“It is geographic really – we have the East London and South Essex marketplace because that’s where we’ve been operating for years, and people tend to migrate from the former to the latter,” he says. “But then when you go over the Dartford crossing, you’re into Wards territory and so on – but we stand alone.

Douglas Allen have helped donate an incredible £15m to charitable causes close to our hearts.

“From an operational role we’re also different – for example Wards and Cubitts are each divided up into two operations with separate directors running them – whereas I get to run the whole show because we’re a little smaller.”

How’s business?

“In sales at the moment, we’ll take anything we can get but we’re in a good position because many of the areas we cover are still affordable but London and the SE standards – such as Romford, Ilford and East Hams,” he says.

What’s the biggest issue you face every day?

“People – by a long way. Whether it’s the recruitment, management or development of them,” he says. “Everyone here has a six-month review with me regardless of whether they’re getting promoted or not getting promoted or whatever.”

Arun recently signed up with Teclet for the group’s letting business – what’s your view on ‘proptech’?

“Arun is unusual because all of our technology has been developed bespoke for us by our own in-house developers – we don’t use Reapit or whatever – which is unusual,” he says.

“When we do try out new tech, we think it through and we’re pretty cautious, unlike other bigger agency groups, and will pilot them in a few branches first, then an area, then a brand.

“We also use SalesScreen, which is a ‘gamification’ of performance – which is important because so many of team are now younger and used to being engaged like this – but of course some of the older staff are coming along kicking and screaming.”

Is there internal competition among the different Arun brands for instructions?

“This is where we differ from companies like Haart and Countrywide which, when I worked there, weren’t that joined up when it came to passing referrals around the business,” he says. “But at Arun it’s actively encouraged for staff at different brands to compete for businesses, but we do work as a collective to ensure that if a lead comes in for Douglas Allen and we don’t have the coverage to deal with, then it’s passed on to one of the other estate agencies.”

DOUGLAS ALLEN – STORY SO FAR

The original and eponymous business was started up during the 1960s by Ivor Spiro, Cyril Dennis and Martin Garrard in East London although Garrard subsequently left to set up his own agency.

The remaining founders then purchased Essex firm Douglas Allen during the 1970s. At the start of the Thatcher years, Spiro bought out Dennis, selling some of his holdings in the company during the mid-1980s to an investment firm.

In 1988 Spiro sold his remaining shares in the company to Refuge Assurance and the company then went on to expand across North and East London as well as Essex.

In 1991 the agency had become rolled up into the Prudential Property Services empire which included five other agencies in and around London, and this was bought that year by businessman Paul Rooney.

In 1996 Douglas Allen opened its first letting operation and in 2000 a financial services arm and 12 years later underwent a major rebrand, with another following in 2020.

Arun Estates, which was the new name given to the group by Rooney in 1991, helped him become one of the first independent estate agents to make it into the Sunday Times Rich List in 2015. The other brands within the group, which he is credited with building up, including Cubitt & West, Pittis and Wards.

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