This week’s exclusive interview is with Rob Clifford, group commercial director at property specialist SDL Group, and his experience and thoughts on the property market and the new homes sector in particular.
Hi Rob, please tell us a little about yourself and SDL Group.
I’ve been involved with SDL Group and its predecessor, Direct Valuations, since it started in 1989 – initially as a mortgage firm doing business with SDL, then as a joint venture partner, finally as a member of its executive team. In March 2000, I launched a national mortgage advice business which pioneered franchising in the UK and which was backed by SDL’s investment. SDL and I sold that business to West Bromwich Building Society in 2005 and after a spell as a director at West Brom, I was asked to run Virgin Money as its UK MD.
In 2009, I made the decision to return to SDL Group, attracted back by the dynamic nature and potential of the business. I took on the role of running our estate agency franchise CENTURY 21 UK, and also leading the group’s financial services interests, and marketing and PR across the group as commercial director.
Since returning, the company has grown substantially, with one poignant change being the rebrand in 2015 – moving from Shepherd Direct Limited, to what is now the SDL Property Services Group. Not to mention the extent to which the group has successfully transformed itself from being a leader in mortgage valuation management to being a leading national property services group.
Through a number of very positive organic growth stories and acquisitions over the years, SDL Group has matured into a £100m turnover business, employing more than 600 staff in 16 locations, from Glasgow to Southampton and HQ’d in Nottingham. I’m proud to have played my part in creating a business that offers innovative solutions right across the UK, in valuations panel management, surveying, lettings, property management, estate agency, mortgages and insurance broking.
How has the property market been over the last 12 months?
It’s fair to say that it’s been both sporadic and unpredictable for estate agencies. It seems to have been a case of when listings have been lower, buyers have been aplenty, and when listings have increased, the number of buyers has dropped off.
We’ve seen far more caution in the market over the past year, with buyers and sellers often only making decisions through necessity. It’s been less of a case of ‘let’s see what’s around’, which in the past has been a driver of people’s buying and selling emotions, facilitating non-essential moves. Fee levels have been flat, which impacts on agents’ ability to invest and grow.
How does the new homes market look compared to re-sale properties?
The new build market has experienced significant growth, but developers have still had to offer substantial incentives to win their share of potential buyers, such as free legal fees, refunds of Stamp Duty or mortgage-related initiatives.
The ease of a new home purchase, combined with the zero-maintenance perception and developers offering better pricing and Part Exchange, has kept new homes sales at a material level. We have seen pleasing year-on-year growth in new build work in both our CENTURY 21 UK and SDL Surveying businesses.
Have there been any 'hotspots' with exceptional buyer interest?
Areas around the new Crossrail locations have seen a significant increase in activity.
The Slough area is a core hotspot in our experience, with high growth and strong demand. There has been much PR regarding Slough being seen as a place which offers great commercial growth, given new companies moving into the area and high investor interest resulting in the likes of new apartment developments being constructed. We have a very successful CENTURY 21 business in the area.
We are also seeing a significant increase in interest in regional cities where the price point of properties is significantly more attractive than London. As a result, we have seen house prices increase in Birmingham (7.3%) and in Manchester (7.9%), while the growth rate across London has stabilised (remaining at 3%).
Have the tax changes of the last couple of years cut the buy-to-let market all together?
Not altogether but it has certainly influenced investor behaviour, as the market has seen, from the marked shift from purchase to remortgaging in buy-to-let.
We are finding that serious investors often switch to commercial units or semi-commercial units, such as retail shops with flats above, to mitigate the yield-squeeze which is the consequence of the regulatory and tax changes. Central London investors are now typically looking at East and North London, along with Birmingham, Liverpool and Manchester. Our year-on-year growth in these locations is significant.
What are your thoughts on the last Budget?
In recent years, the property industry has only been provided with token gestures and cursory mentions as part of the budget. However, in the autumn, it took centre stage.
The move on stamp duty, albeit long overdue, is positive progress for the industry and we are at least getting some evidence that property is back at the top of the agenda.
There’s no doubt this move will help to free up the market for the short-term and has been welcomed by estate and mortgage professionals alike. However, we are all wary of the fact that the retraction of stamp duty for first-time buyers, in the long-term, could lead to increased property prices due to demand exceeding supply of housing. So, for many looking to get a foot on the housing ladder, these changes may prove to be of little help.
Do you generally find buyers well-versed in details of legal issues, mortgages and schemes such as Help to Buy and Shared Ownership?
In the most part, yes we do, given the availability of so much material and information online. We still argue that it is no substitute for a face-to-face explanation to answer any key questions, but at least the information is out there.
Shared Ownership is still seen as an almost last resort and this is probably the part of the market on which people often need the most advice.
How are High Street-based estate agents dealing with the online agency sector?
High street agents need to focus on the aspects that just aren’t achievable online and that’s high customer service levels. For each customer, we are striving for a smooth transaction and the highest possible price. No question that it’s now tougher for ‘bricks and mortar’ agents to make it pay.
It’s about focusing on the local office and the expert knowledge of the team, offering the ability for customers to pop in and chat face-to-face. There’s also the need to reinforce the ‘no sale no fee’ message, which people tend to forget with online upfront fee agents being pushed so hard.
Would you recommend buyers try an auction as a way of acquiring a home?
Absolutely - it is a fantastic way to secure a buyer either from the start or as a part of a remarket exercise when considering a price reduction. In the UK we are missing a big trick – by not using auctions enough.
If sellers reduce that bit further as a reserve price, they will encourage more bidders. This often leads to their top figure being achieved with an unconditional sale, all in a more suitable timescale to suit their needs.
Perceptions are most certainly changing when it comes to auctions – and not before time.