The estate agents market is currently reeling from the latest Government announcement regarding Home Information Packs (HIPs). After 10 years of discussions and proposals, in May 2007, the Government announced that HIPs would initially apply only to four-bedroom and larger houses. In other words, most properties would be exempt. HIPs were going to be mandatory for the sale of all properties from 1st June 2007, but a High Court ruling at the end of May forced the Government to delay full implementation. The Government is now caught between two opposing camps: the estate agency sector, which, overall, wants nothing to do with HIPs — at least in their present form; and all of those who have invested in training to be the inspectors for HIPs and the firms that have trained them — all of whom have an obvious vested interest in seeing HIPs being imposed. Primarily, estate agents did not want to see HIPs implemented because they believed that it would deter `speculative property sellers', who play a significant part in the market.
Meanwhile, interest rates have risen to 5.75% by July 2007. The interest-rate rises are gradually slowing the property market, although there remain pockets of high activity, notably in London.
By far, Countrywide Estate Agents remains the largest estate agency, followed by Connells Residential, LSL Property Services (incorporating Your Move and Reeds Rains) and Halifax Estate Agency. This is an industry that is gradually restructuring, with acquisitions and mergers topical issues in 2007. After the purchase of Countrywide Estate Agents by a private-equity group, there is speculation that another chain of agents will be acquired by another investor. Meanwhile, Strutt & Parker and Lane Fox are in merger talks. Not surprisingly, the smaller, independent agencies feel threatened by the growing strength of their larger competitors.
Two issues are paramount for estate agents. The first is the future of HIPs, and some form of compromise between continuation and outright abolition seems likely. The second is the power of Internet portals and, indeed, the power of the Internet itself. If estate agents did not exist, would they now be invented?
This is the fundamental question that the estate agents market has to answer. Report forecasts that, between 2007 and 2011, estate agency revenues from residential sales will increase by 2%, with the number of property transactions in the UK rising by a forecast 1.8%.
