In The Street - Where You Live
Like tiki-taka football and haute cuisine, living in rented property was, for a long time, the exclusive practice of our laid-back European counterparts. Now thanks to the transient and ever-expanding population of the UK, the lettings market – and related franchises’ success – has exploded. Gareth Samuel investigates
Property and lettings franchises are attracting the attention of investors across the country as the UK population continues to grow, sending house prices and demand for rental properties soaring. In November 2013, The Daily Express reported a seven per cent rise in average house prices across the board. This figure, juxtaposed with a 2013 report from the Office for National Statistics, which shows wages rose by just 0.4 per cent in the year leading up to May 2013 (the lowest average rise in more than a decade), is forcing many to look at renting property as a long term solution.
Matt Hill, journalist for The Telegraph, frequently alludes to the idea that renting is becoming the standard expectation for young British adults. He wrote in January last year: “It’s hardly news that home ownership is an ever-receding dream for increasing numbers of today’s young (and not-so-young)…renting is the new normal for my generation of young adults.” Lettings-specific franchises, then, such as Belvoir Lettings and SureLet are extremely attractive prospective opportunities for investors looking to buy into a lucrative business.
One of the world’s largest and most recognisable property management franchises, Century 21, offers its customers both residential and lettings properties and has built up a global network of franchise owners operating successfully in more than 75 countries. The business started, as many successful franchises do, in America, in 1971. It has thrived on the back of its ultra-compact and transferrable business model that has enabled thousands of franchise owners to be wildly successful. Rob Clifford, Chief Executive of Century 21 UK explains: “Our plans for expansion are ambitious and we have some major new business relationships to announce in the coming months that will make the Century 21 franchise proposition even more attractive. We believe there has never been a better time to become active in the property market and the beauty of our model is that it is available to those who have worked in this area all their lives and, conversely, those who are looking to take their first steps.” Like every industry the world over, the Internet has played a massive part in revolutionising the property and lettings market. As Richard Martin of the Martin & Co property franchise explains, by embracing technology, franchise owners can take advantage of a ‘fragmented’ but growing rental market. He says: “I think there will be consolidation in the market – it’s getting more sophisticated, you need proper training, you need digital and social media expertise. It’s no longer enough to stick an advert in the local paper.”
Franchises such as Century 21 and Northwood in particular have responded to changes in modern day business practices by concentrating their efforts on brand awareness, digital marketing and streamlined business practices. Northwood franchise owners take full advantage of the business’ ‘Guaranteed Rent’ policy. This enables landlords who rent their property through any branch of the Northwood franchise to continue to earn rent even where their property is empty because Northwood becomes the tenant while the property is vacant. Northwood franchise owner, Jane Munden told The Franchise Magazine: “For me it (the appeal) was about the unique selling point that Northwood has with guaranteed rent. We find that, quite often, landlords come to us for help. Lettings in my experience, is a lot like life in general – it is fine 90 per cent of the time, but for the other ten per cent when its not – that’s when the Northwood guaranteed rent makes a real difference.”
In the case of Century 21, franchise owners are benefitting from the recent launch of a ‘Global Listings’ website. This brand new initiative enables franchise owners to view properties globally, providing each branch with an international portal into property all over the world. Rick Davidson, President and CEO of Century 21 Real Estate LLC, comments: “Property transactions today are occurring from country to country and continent to continent. Through the development and launch of our global website, Century 21 has positioned its 7,100 worldwide offices to collaborate, connect and engage buyers, sellers and investors around the world so they can transact business confidently.”
The franchising model suits property and lettings franchises particularly well because it enables concepts like Northwood and Platinum Property Partners to be taken on by other investors across the world as property demands are universal – everybody needs a place to live and therefore an estate agent. But property franchise opportunities and their offerings differ greatly – it is therefore vital to conduct due diligence with every opportunity before making any form of investment.
But what are the advantages of buying into a property and lettings franchise over setting up an independent estate agency business? Property and lettings franchises provide brand awareness, fully branded paraphernalia, help and support and most crucially – a business model that has proven itself to be successful in a volatile housing market for years. Having a clear and well-defined path to follow in the housing market is worth any initial investment fee because of the nature of the property industry. In terms of background, different property and lettings franchises look for different qualities and areas of experience. Martin & Co looks for investors with either a strong business background or a sales background in property, whereas HomeXperts looks for franchise owners who are passionate, friendly and have an interest in the property and sales working environment – provided you have an interest in property and making money, there is an opportunity for you in the property and lettings franchise market.