Online estate agent Emoov is to launch a push into the lettings market following its recent three-way merger with Sarah Beeney’s Tepilo and Urban.co.uk.
Russell Quirk, Emoov’s chief executive and founder, said the merger integration work is now largely complete and the group is looking to make its mark in the fast-growing rental market while house buying remains relatively subdued.
“The Urban element of the deal was to give us a presence in lettings,” he told Proactiveinvestors.com
House sales have slowed but the letting market is ‘on fire’ with transactions this year running at well above 35% growth.
“It would be remiss to ignore that,” he adds.
Urban already doing well
Urban has already seen a surge in activity since it came under the Emoov umbrella.
Previously, its business came 15% from new landlords and 85% existing, but in just a few months the split is now 45/55%.
More business is coming from the existing landlords as well, adds Quirk, with larger transactions.
Turnover was running at around £350,000, but Quirk quickly wants to boost that to £1mln.
Instead of a traditional letting agent’s fee of 8-10% of annual rent, Urban charges a fee of £95 for its basic tenant finder service.
Landlords new to the market with one to two properties are the target, says Quirk.
Great opportunity for disruptors
Urban will run distinctly from the Emoov and Tepilo operations, which are focused on traditional estate agency services plus a listing on its platform and the likes of Zoopla and Rightmove.
Quirk reckons that problems afflicting established high street operations offer a sizeable opportunity for disruptors such as Emoov.
He points to the problems at high street stalwart Countrywide, which has just raised £140mln at a deep discount price of 10p to stay afloat after a slump in revenue sent it plunging into losses.
“We're a tech-driven business - we built a proprietary technology platform that allows elements of self-service from the consumers point of view but also helps our individuals whether it's the local property agents we have out on the road or the people inside the head office who look after customers on a day to day basis''.
Another element in the mix is the presence of Channel 4 Investments, which takes stakes in businesses in return for television airtime and should give the enlarged group plenty of marketing firepower across all three brands.
Quirk says it is likely it will keep its two estate agency brands as there is a huge benefit on internet engines such as Google, where Tepilo and Emoov both rank very highly in searches for estate agents.
Listing talk premature
Talk of a listing is premature, he adds, with another round of private or crowdfunding likely to the next step.
A £9mln finance last year valued the group at about £40mln, but it is considerably larger now and the market more advanced thanks to the growth of Purplebricks and newer start-ups such as easyProperty.
A recent crowdfunding raised £1mln in just three days and was closed after two weeks after the campaign raised £1.9mln.
Quirk says he would like to raise a further £8mln, which would be enough to get it through to the first half of next year when it will look at its options again.