OnTheMarket on the ropes as fewer agents than forecast pay full-tariff

A trading statement from OnTheMarket reveals that fewer agents than anticipated have so far converted from free or discounted deals to full-tariff payments.

A key objective for the year, outlined some months ago by OTM chief executive Ian Springett, was to convert from discounted deals to normal market rates, so the trading statement also says: “Revenue and profit guidance for full year 2020 and full year 2021 is therefore reduced accordingly.”

In detail the statement admits: “Agents are facing well-documented headwinds with lower than usual transaction volumes, reduced lettings fee income, the possible onset of recession, the prospect of a no-deal Brexit and a strong sense of uncertainty and a ‘wait and see’ approach amongst buyers and sellers. These circumstances have given rise to a much more challenging backdrop against which to convert agents onto full-tariff paying contracts. 

“Agents are taking longer to consider such commitments and fewer are currently signing them than anticipated, with ARPA of £329 per month for those that have. The Group has, therefore, introduced shorter term, lower cost contracts, the ARPA on which is running at £207 per month. The availability of this alternative has raised the current rate at which agent offices are signing paying contracts to record daily levels.”

Even so, the portal claims what it calls “further progress” in converting agents to full fees. 

“Based on the latest data over 2,000 agent offices have been signed under paying contracts, overwhelmingly converted from free trial listing” says the statement; these contracts are on average returning £297 per month from each agent, and some 46 per cent of such contracts are for three or five years.

The total number of agent offices listing “remain in excess of 12,500” continues the statement: this is much the same figure that the portal has been quoting for several months and OTM says the stagnant figure is “reflecting recruitment of new agents offset by removal of agents at expiry of their free trials periods.”

Total listings on the portal are, in numbers, some 86 per cent of those on Zoopla and 65 per cent of those in Rightmove, claims OTM.

In operational news, the portal says it has recruited a dedicated sales team to attract new build listers: it recently announced Barrett Homes as the first in this category and “a number of smaller house builders on paying contracts have been added.”

The portal’s interim results for the six months will be revealed on October 10 but in anticipation, it says it expects September’s visits and leads to be at a record high.

OTM claims it will break even in 2021 with revenues of £27m to £29m and will achieve “significant profitability” in 2022.