Ryan: Ian, as property market’s slow as we go into the winter, there’s currently a misunderstood storm brewing, if you will, within the UK listings market. There are three players operating in the property listing forums for the buyers and sellers in the UK, namely Rightmove, Zoopla and now your company, OnTheMarket, which is being described as the ‘Robin Hood’ of the UK property agents. Ian, in as straight talk as possible for our viewers, can you explain and clear up what’s really going on?
Ian: If we wind the clock back to 2014, the portals market having really started in any meaningful way in the UK in the early 2000’s consolidated from multiple players to just two. It’s also worth remembering that this is a business that relies on estate agents, not only for the revenue or the lion’s share of it but also for the essential content, the listings that draw the visitor in.
The agents generally have no interest in being portal owners, or certainly didn’t have, provided that a couple of conditions pertain. Firstly, that those two very large businesses charged them fairly and secondly, that they behave in a way which is supportive of the agent’s business and keeps the agent at the centre of the transaction and actually doesn’t try to chip away of how the agent makes their living. They’re not looking for their portal supplier to eat their lunch.
Bear in mind also the structure of the estate agency industry contrasts very sharply, there are some 20,000 estate agent and letting agent offices in the UK, 65% of those are small firms so people that own 1-3 branches, it’s a highly local business. The industry is very fragmented, so you have a situation where you have two portal groups with very strong positions were beginning to exploit that position. Those two conditions I mentioned about fairly perceived pricing and behaviour commensurate with supporting the agent were already beginning to be broken.
So, the raison d’etre OnTheMarket, as an agent-backed portal, is to say we need first of all, to inject more competition into this market to dampen down and dilute the power of the existing players. We are essentially a price disruptor in the conventional way, but agents also are the majority owners of this portal and they stand to gain in two ways, firstly from a degree of control although they are overwhelmingly passive shareholders except when something that really challenges them occurs in the way that they’re now seeking via us to challenge Rightmove and Zoopla. Of course, they can benefit in the equity ride now that we’re a public company.
The other part of this is that we have a significant pot of new shares to issue and we’re authorised to do that over the coming period as a means of attracting even more agents to come on board and commit to a long period, 5 years, paying contracts, paying a fixed tariff in return for the issue of some shares to them. So, first of all incentivises them to join but also gives them a long term interest in the fortunes of this business which after all is working for them in the first place.