November 2010

ESTATE AGENCY SURVEY 2010

General subject: How has the downturn in the property market since 2008 affected your business in terms of workforce, tools and advertising/marketing?

Name of business: Connells Group

Your name and role: David Livesey, Group Chief Executive

Head Office location: Leighton Buzzard

Number of offices as at Sept 30, 2010: 467 (with a small number of addition openings inprogress)

Number of offices at Sept 30, 2009: 464

How does the way the company works now compare with 12 months ago?

Size of workforce?
The Connells Group has increased its workforce slightly to 3,800 as activity picked up during 2009. Due to our strength and financial success in 2009, we are making a significant commitment to increase the number of branch based mortgage consultants this year.

Use of associates (as opposed to employees)?
Connells employs a large workforce and invests heavily in training and continuous professional development for each and every employee. We find this approach, as opposed to relying on external consultants and associates, more effective and continue to generate outstanding levels of performance from our dedicated staff. By employing a highly-trained, highly skilled workforce, there is also the benefit of being able to produce consistently excellent levels of customer care so Connells makes very limited use of external consultancies across its business.  

Use of software (e.g. Vebra)?
Technology plays a huge and increasingly important part in how the Connells Group functions. Most of the business applications used are developed in-house so we can tailor them to exactly match the requirements of the business. Over the last 12 months, Connells has redeveloped the main residential application to incorporate the suspension of HIP regulations and introduced automated EPC processes.  In addition this application has been enhanced to integrate vendor/buyer preferences with our newly developed websites.

Have you imposed any major changes, such as additional services, in light of the downturn in the property market?

Connells has introduced many new services designed to help our customers (both consumers and corporate clients) and the Connells business  in the downturn including:

• Residential sales services – ‘Value Share’ and ‘Cashback’ are designed to help customers secure a mortgage and give them financial help at a time when they need it most. In today’s economic climate, these products have been of great benefit to our customers

• EPC proposition – further to the suspension of HIPs Connells’ ‘Free HIP with Home Conveyancing’ became a ‘Free EPC with Home Conveyancing’ proposition. This has generated a very high conveyancing conversion rate so far and removes a financial barrier to customers entering the market

• Connells Developer Asset Management (CDAM) – set up in 2009 to help banks and institutions manage distressed new build property assets. CDAM was born out of Connells existing expertise in land, new homes and asset management and contract have already been secured with major UK and European banks, lending institutions and insolvency practices

• VEM – Connells’ acquisition of EPC Provider Vibrant Energy Matters (VEM) in July 2010 is a valuable addition to its range of B2B and B2C services. VEM is the UK’s largest EPC provider employing the highest number of DEAs in the country so the union will improve the provision of EPCs to Connells customers, and create greater efficiencies due to the high volumes of business Connells can generate for the VEM business

• Wills – In June 2009, Connells launched its own will writing service by creating a new subsidiary company, Redstone Wills. This new service allows customers to give clear instructions on their estate and beneficiaries to avoid problems and extra cost, should the worst happen. We have already had a great deal of take-up for the new service with some Consultants achieving an 100 per cent success rate at selling Will Writing alongside their mortgage applications. At a commercial level, Will Writing has the potential to be a significant business for the Connells Group business over time. We are keen to demonstrate this proposition to our fellow estate agents

• Overseas proposition – Connells will shortly be announcing a partnership with CAM Mediterranean, the property arm of Spanish bank CAM, in which it will be offering heavily discounted Spanish properties from the bank-owned and repossessed properties. With the type of discounts offered on the overseas homes, some at 50 per cent, we expect this initiative to be very successful and profitable for Connells in the current climate

What has been the reaction (from your company and clients) to HIPs being gone?
In my opinion, the government’s decision to suspend Home Information Packs in May was a victory for common sense and we were pleased that the new coalition government acted quickly and decisively on this issue. The move is also good news for the UK housing market as it removed a barrier to entry for those wanting to sell their property and we saw a lot more speculative vendors as a result. Of course, there were short-term concerns for those who has already bought a HIP in order to put their home on the market. But in the longer term, and bearing in mind the huge changes to the housing market since HIPs were introduced in August 2007, the suspension of HIPs was welcome news, although we should spare a thought for those working in the HIPs industry who have lost their jobs as a result of the suspension.

Use of advertising media: portal sites, newspapers, etc., specifically:

• Where do you prefer to list and why? Do you list on more than one site? Why?

Connells lists all of its properties on Rightmove and has recently formed a strategic partnership with leading property portal Zoopla which includes a long-term listing agreement and a seat on the Zoopla Board of Directors. This partnership has been formed in recognition of the opportunity that online poses for our estate agency business, and to make sure a healthy level of competition is maintained in the online property portal space.

Connells recently recruited Paul Betteridge as its new Head of Online Operations. Paul, who is the former Managing Director of Nethouseprices.com, will be responsible for developing and implementing web tools and using new media to drive traffic to Group websites and exploit online commercial opportunities. Paul’s appointment is significant to Connells Development and ongoing strategy as the internet and social media become more important to the business.

As well as the portals outlined above, Connells lists all its properties on its own websites and has recently re-launched both Connells.co.uk and Sequence.co.uk. We have invested a significant amount of time and resource into the enhanced features on the new sites which are now more interactive for customers who can monitor the online performance of their properties, and more user friendly with larger displays and slide shows of our properties, a ‘My Account’ function allowing users to save properties and get information on moving home, and easier access to Connells range of services like mortgages, conveyancing, land, new homes and lettings.

• Rightmove pushed through a listing price increase. What is your reaction?

I don’t like price increases!

• Are you developing the use of branding options offered on sites?

Connells is currently trialling two branding options through Rightmove. The first is the application of Connells adverts on searches for localities where there is a Connells branch. For instance, if a Rightmove user searches for properties in Rugby, the local page will include a Connells advert with a link through to the branches Rightmove profile page. The second trial is for Rightmove’s ‘Featured Home’ function which appears at the top of the listings for any property search. This showcases selected properties based on a users search criteria and Connells will be reviewing the success of this trial to see whether we intend to use it going forward. Connells also used ‘Premium Display’ extensively to highlight our vendors’ properties on Rightmove listings.

• Are you using newspapers? How frequently? More or less frequently than in 2008? Are publishers raising prices? Any concerns regarding the use of print media?

The Connells Group has increased its market share of instructions over the last two years despite scaling back newspaper advertising, both in terms of frequency and the size of adverts that appear. Online advertising remains more static and the split between print and online advertising varies by region with areas like London using online adverting almost exclusively. We currently have some parts of the business which do not advertise in the local press at all and this does not impact on their success rates when it comes to instructions.

• How do you intend to change your use of advertising media over the coming year?

Connells will be focusing more on internet and less in the local press advertising

Any other comments on the current economic situation and how it affects your business?

Earlier in the year, Connells sales tracked closely with those in early 2009. However, over the last four months, there has been a noticeable step down in activity, not a collapse but a distinct slow down compared to activity at the start of the year. As a consequence, we at Connells are again tracking our costs very closely, increasing our sales commissions  and making sure that each and every member of staff is taking every and any opportunity to generate business for the company.

Success in 2011 will depend on there being better access to 90 % LTV mortgages, this is key to getting the housing market back on track and giving first-time buyers much needed help in getting on the property ladder.