It’s not uncommon for developers to set up their own in-house agency in an effort to take more control of the process and to increase their margins.
Joe Fogel, Managing Director of House Group Developments, has just started this process, so we sat down to chat about why he set up his new venture – House Group Estates, what he’s learnt so far, and how other developers could do the same for their business.
Initially, it was purely from an investment perspective.
Then within the last four years, I moved to doing more permitted development conversions.
Even though the recent updates to permitted development rights have opened up new opportunities and made more sites accessible, I've found that the newly updated process of applying for permitted development is often more time-consuming than it was before and more comparable to a full planning application.
This, combined with the fact we wanted to focus more on build-to-sell rather than build-to-rent, instigated our move over to sourcing off-market land deals to build out.
And now, my most recent venture has been to set up our own in-house estate agency so that we can list all our own properties.
There were actually a lot of factors that came together at once which finally pushed me to give it a try.
In my experience, many traditional commercial estate agents can be resistant to change and slow to reflect the realities of the industry.
For example, there’s still a focus on 10-year leases for commercial properties, even though we’re seeing a growing trend for 12-month flexible licenses, particularly when it comes to office space.
I have a number of mixed-office buildings in my portfolio and since the pandemic there’s been a real uplift in demand for hot-desking and shared work spaces.
So, we had to do something in order to sustain interest and keep our units filled – and this meant being able to offer more flexible lease terms through our own in-house agency.
There’s also the time-saving element. Before, it could take up to six months to even get someone in to view a unit, but now we can show people around a site within a week of posting about it.
With fewer external parties involved, we’re also able to draw up contracts a lot quicker and get moving forward with deals at our own pace.
Estate agents were invaluable for a lot of our history, and they do great work. But as we got a little bigger, we ultimately realised – if someone’s making a profit from this part of the process, why shouldn’t it be us?
There were some costs in setting up, obviously, but not as many as I’d assumed.
Then, once we had everything in place, the return on investment should be good enough that we not only get those other two advantages, but make some money along the way, too.
The process of getting set-up was actually fairly quick and painless (with relatively low overheads).
But, there were a few key steps I had to take before I could get started:
There is, of course, a lot of research that needs to be done to make sure this is the right business decision for you. But if it is a good fit, and undertaken correctly, there’s the chance to save a lot of time and money – and have more control over the whole development process.
If you’d like to find out more about how Joe set up his in-house estate agency, and whether doing the same could work for your business, watch our on-demand webinar – How to diversify as a developer and set up your own in-house estate agency.
During the session, we discussed: