What is the future for Rightmove and Zoopla ?
A bitter war among estate agents could leave movers getting thousands of pounds less when they sell their home, industry insiders believe.
Websites have become the major way of buying a home in the UK, with around 100million visits from property hunters every month.
Now a new website, called On The Market, is set to launch in the new year to challenge the existing online property giants Rightmove and Zoopla.
The challenger site has been founded by a group of leading agents, including Savills, Strutt & Parker and Knight Frank.
On The Market has caused controversy because of a contract it is asking other agents to sign. This effectively bans estate agents who want to join On The Market from advertising properties on one of either Rightmove or Zoopla (which is 31.8 per cent owned by DMG Media, parent company of the Daily Mail).
And in a further clause, documents reveal that On The Market is also persuading members to delay listing properties on Zoopla and Rightmove until after they have been shown on its site first.
Miles Shipside, commercial director of Rightmove, said: ‘Estate agents represent the interests of the seller and it’s hard to fathom how placing restrictions on where they can advertise is in the best interests of the selling party. In fact, it seems to fundamentally go against the best interests of the customer.
‘As an agent, how do you explain to a seller that you’ve signed up to something that wants to stop you advertising in one of the places that you know has all the buyers?
‘It will also be interesting to see how, or even if, this “rule” can be enforced.’
Rightmove and Zoopla have become household names since they launched in 2000 and 2008 respectively. Last year, Rightmove generated 36million phone and email enquiries for estate agents. Zoopla generates over two million enquiries a month.
There are 19,000 estate agent branches in the UK, with 18,000 sales and lettings agents on Rightmove and 16,460 on Zoopla.
On The Market has raised more than £8million from members and has lined up over £10million in annual listing fees from agents who have signed contracts already. By comparison, Zoopla is thought to spend £20million on marketing alone, with Rightmove spending an estimated £9.5million.
This is not the first time that estate agents have set up their own website. In 2001, a group of 200 firms started Primelocation, which is now owned by Zoopla.
Experts are concerned that home sellers won’t be told if their agent signs a contract with On The Market and is forced to drop one of the giant websites.
Analysts at investment bank Jefferies recently released a report which said: ‘Home sellers want to secure the best price for their home, and so marketing on all the major websites is in our view a prerequisite to achieving that aim. We therefore believe that those estate agents who choose to not renew their Zoopla or Rightmove contracts will be trying to win future sale mandates with one arm tied behind their back.’
Its research found that 70 per cent of consumers wanted their homes listed on both the major sites.
This week, Zoopla published annual results showing a 1.3 per cent increase in profit to £28.6m and warned of a short-term hit on agency membership numbers because of the launch of On The Market.
Lawrence Hall, head of communications at Zoopla, said: ‘Sellers hire agents to get them the best price and expect the agent to act in their best interest.
‘These websites represent great value to agents and are something that consumers must insist upon having from an estate agent if they want maximum exposure and to get the best sale price.’
Budget online estate agent Emoov claims that it has been banned from using On The Market’s website.
Russell Quirk, chief executive of Emoov, has contacted the Competition and Markets Authority urging it to investigate.
Mr Quirk said: ‘I don’t see how excluding what they term cheaper estate agents from their website is going to benefit the customer.
‘And as for restricting where agents can advertise properties – there is no way consumers are going to put up with this.
‘They will be charged the same fees to advertise their home but miss out on half of the exposure. It is completely anti-competitive.’
On The Market says that agents have to pay a monthly fee to advertise on these websites and claims these have been increasing every year.
Although prices vary, on average Rightmove currently charges £637 a month per branch and Zoopla £311 a month per branch.
Agents can pay extra if they want properties featured more prominently. On The Market is expected to charge an average of £288 a month. But the business that agents lose by only using one site may well outweigh the saving they make in monthly fees.
Over 1,900 firms with more than 4,000 branches have so far signed up to On The Market.
Ian Springett, its chief executive, said: ‘The restriction is to ensure that the new website can gain traction in the market, thus increasing choice and reducing the dominance of the current incumbents.
‘We understand that a complaint may have been made with the Competition and Markets Authority. At the outset, we took advice as to the legality of our model and contractual terms. The directors are satisfied that the company is operating within the law.
‘From January, neither Rightmove or Zoopla will be able to claim they cover the entire market.
‘On The Market will have a unique collection of agents and properties presented in the most modern and user-friendly website. It will rapidly become a must-see for serious property-seekers.’