UPDATED 28 JANUARY 2016
Let me start by saying there is no unimpeachable data on UK lettings, or any information on the performance of specific lettings agents (yet).
This topic all started with a tweet and a Google Ad
So, are online lettings agents now massive? And is this a niche or a transformation of the market? This is the 3rd annual update of this article, and each year we ask "is this the year online lettings agents overtake the high street?"
The questions that are currently crucial to this story, and cannot be immediately answered, are:
1. What proportion of landlords are absentee, and therefore unlikely to change paying a managing agent 10-15% for the foreseeable future.
2. The actual number of properties advertised for let each year
3. Those let before being advertised
It's impossible to quantify how big or small the lettings market is, until we can clearly identify duplicate stock on Rightmove and 'just gone' properties that are still being marketed weeks (or months) after being let.
This great post on The Property Investment Project makes a good comparison of online vs high street agents. The crux is that online agents are generally low-touch DIY services and high street agents are more involved. You often have little control when using a high street agent, but that's sort of the idea.
All agents, online and offline will tell you about how the agreements/legals they provide will protect you better than you doing it yourself. But let's face facts, if you rent out your residential property, the law says the agreement is an Assured Shorthold Tenancy and the terms are enshrined in statute. Most 'additional' terms often get thrown out as 'unfair'.
There are some assumptions we are going to make:
4. Low-cost, online lettings agents are now the mainstay of DIY Landlords (those who self-manage)
5. Young landlords, like 'Accidental Landlord' Victoria Whitlock, see no point in paying others for a job they can do themselves (no expertise required).
6. The practice of appointing multiple lettings agents, all on a no-win, no-fee basis, is still prevalent in the market.
7. If you're not on Rightmove, you're not worth mentioning.
As a result, the few DIY and young landlords will use online agents for lettings, but very few 'upgrade' to monthly subscription management services.
Previously the list below was based on number of listings on Rightmove and Zoopla at a specific point in time. That wasn't ideal.
So this year all the online lettings agents are ranked by number of *new* listings on Zoopla over the past month:
OpenRent - 3,094
Upad - 941
Urban.co.uk - 292
Purplebricks - 228
Visum - 212
Rentify - 205
Easyproperty - 203
Makeurmove - 179
Housesimple - 124
The Online Letting Agents - 112
My Online Estate Agent - 81
Lettingaproperty.com - 79
Landlord Direct - 19
I Am The Agent - 13
Tepilo - 6
Emoov - 6
So it seems Upad has been unseated by OpenRent as the biggest online lettings agent in the country.
DIY Landlords are the customer
It's important to understand who the customer is: DIY Landlords.
That's right, tenants are not the customer, and neither are Absentee Landlords (you know, the ones who have a day job or live abroad).
There are no stats on what % of landlords are DIY (self-managing) and how many are Absentee.
We ignored Spareroom and Gumtree for the purposes of this research, even though the volume is significant. We can't figure out how many DIY Landlords use a combination of Spareroom/Gumtree and Rightmove (via online agents), and how many just use the free-to-list services offered by Spareroom and Gumtree.
Since publishing the above, various online agents have come forward and explained they put listings on Rightmove last, if at all. It seems that Zoopla is significantly cheaper and to keep the financial penalty low these online agents put less property on Rightmove.
Daz Bradbury, of OpenRent, has said that Rightmove is more expensive, so they try to let without Rightmove to prevent posting a larger volume of listings on the major portal.
This behaviour throws up all sorts of extra questions:
a. Do agents list properties to Zoopla immediately? Or try and let through their own means (list of tenants, own website) first?
b. How soon after the property is let by the landlord, does the online agent find out and make a change to the listing.
c. Do time-limited free offers, like OpenRent's former 5 days free listing, skew the results.
Below are the top agents ranked by an assumption of how quickly they succeed in letting a property, using Zoopla listing age data (this was last updated in 2015):
OpenRent - 1 week
Upad - 4 weeks
Visum - 5 weeks
Purplebricks - 5 weeks
Makeurmove - 5 weeks
Easyproperty - 6 weeks
Housesimple - 7 weeks
Urban.co.uk - 8 weeks
Rentify - 7-16 weeks (multiple accounts on Zoopla)
So OpenRent is the speed champion. However, OpenRent used to offer new landlords a free listing on Rightmove, which OpenRent expired after 5 days. If they have a lot of landlords taking up the free offer and not following on, these results could be quite dubious.
Disruption or niche?
Lettings agency is not a difficult job, and landlords certainly don't have the same fears as they would when selling, so the motivations that force them into using an agent are different.
So for DIY landlords to access Rightmove and Zoopla via online agency makes rational sense.
What doesn't make sense is how only one of these businesses are tech savvy. It may come as no shock that the runaway leader, OpenRent, is the only one to truly automate the process and deliver on the lower cost of operation that online agents endless bleat about (none but OpenRent is sustainably profitable, which is telling): the internet is about openness and transparency of data, yet none of these agents provide any added value beyond: "we'll get you on Rightmove".
Landlords, the paranoid people that they are, care first about finding the right tenant, and second about the speed of let (to avoid void periods). When online agents market themselves as tackling these problems better than anyone else, then high street agents will have real competition on their hands.
Until then, online agents are filling Rightmove and Zoopla's coffers and not truly differentiating from the indifferent service received by high street lettings agents.
Why won't any of these agents kill off or disrupt traditional agents? They aren't adding value. If you tell the world you'll let their property, for less, you're telling them you'll let their property for less.