Could stricter regulation mean higher fees? A marketer explains….

I'll start with a confession. I am not an estate agent - I'm a marketer. But since I joined the industry in 2016, I've made it my mission to understand the nuts and bolts of the industry and the people it serves: the agents themselves, business models, buyers, sellers, landlords, tenants, property investors, developers and the communities in which they operate. Amongst my family and friends, it's no secret that I'm a fan of the property industry and the people within it.

Recently, I explored the most recommended and highly rated national estate agencies in Estate Agent Today. That caused a natural grumble about local independents being the driving force in the industry. I agree, they are.

The fascinating thing about the findings was despite the usual suspects of "big brands" in real estate, a coalition of nearly 200 local independents operating under the Fine & Country umbrella brand was the consistent winner. The runner-up? The self-employed model in the guise of eXp. There is something in that finding about independence and empowerment.

Revolving door

Estate agents often get a bad rap, with the Ipsos Mori Veracity Index lumping them in with politicians, a group notorious for low public trust. That said, from our private research, many people harbour distrust for the collective of 'estate agents' but like and respect the one they have personally dealt with, much like how people often appreciate their own MP but despise the collective 'politicians'.

As I often point out to my non-estate agent peers, we can't ignore the elephant in the room: issues often blamed on estate agents are frequently out of their control. There is a revolving door of housing ministers, an epic housing shortage, some homeowners have unrealistic home valuations, and those dreaded collapsing chains.

And let's also remember how the industry has been commoditised, almost like turning it into the fast food of real estate that focuses on the volume of transactions rather than the value of relationships.

1) There are no barriers to entry as regulations and qualifications are light-touch

2) Real estate is an unusually highly fragmented market - the average market share of the top 10 brands in UK sectors is around 50%. In estate agency, it is 12%

3) Incomes are low, so commission chasing matters - the average salary of an estate agent is £24,685 per year compared to £31,876 in the UK as a whole

So what do we do?

Unchained.marketing's two polls in March 2023, "Voice of the Agent" and another by Opinium, revealed a complex tension: while 94% of agents surveyed were calling for tighter regulation in the survey, most consumers (52%) love low fees and minimal oversight. A fifth wanted even lighter regulation and even lower fees!

But here's a thought: What if stricter regulations could benefit everyone? More qualifications and tighter regulations could translate to higher trust and better customer experiences, improve working conditions for estate agents, and justify higher fees.

In desk research for Voice of the Agent, we examined fees and regulations across 19 countries. The UK, Netherlands and Singapore had the lowest agent fees (~1.5%), while South Africa had the highest (~7.5%). 90% of the ten highest fee countries have robust government oversight compared to just 50% in the lowest fee ten.

We also know that qualifications affect incomes; those without degrees have a median annual salary of £25,000 compared to graduates' median salary of £34,000 (36% higher).

To sum it up, while I might be a marketer operating in the property world, it's clear that there's a tug-of-war in my adopted industry: the UK property market. People love low fees but aren't too trusting of estate agents. Conversely, agents deserve better rewards and want more rules in place. The facts back them up: agents earn more when there's stricter oversight. 

Maybe it's time we rethink how we view estate agents and the rules the industry works under.

Simon has worked with industry giants like Fidelity, Emap, Prudential, AXA, Autotrader, Barclaycard, Abbey National, Daily Telegraph, and Northcliffe Media. In addition to his corporate roles, he has ventured into entrepreneurial projects, founding startups such as AffinityIQ, Untopia, and Blue & Green Tomorrow, a leading UK-based online magazine focused on sustainable investment. Simon has held significant leadership positions, including Group Marketing Director for Countrywide Plc and Global Head of Marketing and Partner for Knight Frank LLP. He has also been the interim CMO of Keller Williams UK and the Global CEO of Fine & Country. Simon now helms unchained.marketing, a specialised marketing consultancy that delivers data-informed strategies to its clientele.