Member Info for cyberduck

I thought profits would be higher in H1 and the reduced operating margin because of the shift to BTR looks a concern as that is where they are heading. What margins can they achieve in this environment?

If you double their dividend for the full year, it's 17p. Are they telling us their best estimate for full year earnings is 51p. Again lower than I expected.

Still no Greystar deal.

Poor sales in Asia.

Still very much undervalued though if the Greystar deal is signed and sealed at decent margins.

Dave789,

No hard evidence but I'm sure Robert May would tell you he's an expert witness :)

Plenty of High Street Agents disappearing from the High Street too.

https://www.propertyindustryeye.com/estate-agents-third-most-likely-type-of-business-to-disappear-from-high-street/

Foxtons closing down flagship offices. Countrywide in a bit of a mess.

The main point, which is just an opinion based on what I hear and read, is that it's tough out there with Traditional agents being squeezed at both ends as RM put their fees up and Agents are reducing their commissions.

Dave789,

On the subject of there being too many traditional Agents. See https://www.propertychronicle.com/broken-estate-agency-market/

Just one man's opinion but a well qualified one by the looks of it.

Dave789,

I remember reading the 1 in 4 figure on PIE. See Robert May's comment #1 https://www.propertyindustryeye.com/shares-analyst-says-rightmoves-outrageous-profitability-is-set-to-continue/

>I would guess if they do the cost of NI, holiday pay, maternity pay etc would put a huge dent in any profit PB make

I really don't think the HMRC would get involved at the company level. This wasn't what happened when HMRC implemented IR35 specifically for dealing with disguised employment. Thousands of IT contractors suffered (but could afford it) but those hiring them didn't. Even if the setup fell foul of IR35 then I don't imagine it would have too much effect with LPEs either unless they earn as much as IT contractors were doing and if they do then they too can afford to pay the extra tax. See https://www.contractorcalculator.co.uk/what_is_ir35.aspx

You would imagine the LPE's accountants to be well aware of IR35. There was a huge fuss at the time. HMRC generally leave enforcement in the hands of accountants, they've got bigger fish to fry than the odd LPE who's managed to convince his accountant that their company is a bonafide business outside the scope of IR35.

Steph,

I sense a degree of urgency from reading May's comments and I imagine what we don't see is the lobbying going on from the financial sector, builders and any business that cannot make plans or is suffering from the uncertainty over Brexit.

It surprises me that Labour have said they will vote against the deal. I wouldn't have thought with something as important as this, mp's wouldn't be able to defend just voting along party lines. Conservatives have said they will not vote for the deal so do you see any chance that Labour MP's will vote for the deal?

If MP's are going to vote along party lines then it's pretty unlikely any deal will be accepted by parliament and the EU. I think the idea we can ask parliament to agree on something to take to the EU gives politicians more credit than they deserve. If they did come up with something they would accept, what chance is it that the EU would back down? They can spend forever going back and forth between the EU and parliament. More sensible just to go to referendum and take politicians out of the equation.

Is that feasible? If the deal didn't get approved by parliament, do you think the Government could hold a referendum with 2 choices? Accept or stay in the EU? Or one with 3 choices and the option to go for "no deal"?

stantini,

1 in 4 traditional agents can't afford their RM fees. The market is oversaturated with traditional agents given current demand. PB would have been mad to try and compete on the High Street.

> To my knowledge no online estate agency has yet made a penny profit

PB make a profit in the UK. For an Estate Agent to grow they repeatedly have new setup costs every time a branch opens. In theory PB's is a much better model in which income grows faster than costs. Originally they expected marketing costs to remain pretty much constant but they have been increasing. Admin. costs too. But if they've achieved breakeven and income grows at 20% and costs at 10% then that's a good business model. Admittedly not Amazon but one that can theoretically be reproduced overseas.

> I also wonder, and I know there is a Gig economy vibe out there, but will the tax man soon think these 450-people are really employed, rather than self-employed?

And what's your opinion on what will happen if they do?

>If not now when!

From the trading update "We expect the process to result in choosing a partner by the end of 2018 and entering into a contractual arrangement before 31 March 2019."

"Greystar have secured planning approval for 894 build to rent homes at Parkside in Nine Elms, subject to the usual legal agreements, and we are now progressing towards entering into a full build contract in order to start on site as soon as possible."

Let's hope they've sorted this out now. £15M to £20M of 2020 profits depend on this deal.

How often does Tony Blair recommend having referendums? Every couple of years? Perhaps every year?

>With 29,634 versus 412,319, maybe the general public do not like paying upfront for a ‘cheaper fee,’ preferring the no sale no fee option of traditional agents and the honeymoon period with online agent’s dot come is now over.

>Thoughts?

I think the signs are that the general public currently don't like the PB option or any of the other online options. The fact that 93% of new listings still go with the traditional agent demonstrates that.

Market share is growing for PurpleBricks though in the UK, albeit slowly, which is a sign that it's not a honeymoon period for them. I think if it was a honeymoon period then market share would be falling.

It's hard to guess what will happen from here on in the UK.

I think that once the doomsday scenario is ruled out overseas investors and UK owner occupiers who are currently delaying their decisions whether to buy a property or not will decide to go ahead.

Apart from doomsday which is out of their control, TEF just need to get this 9 Elms deal tied up on reasonable terms and their SP will look ridiculously cheap.

Unibet offering 1/2 on second referendum. Hedge your bets?

I'm thinking the proposal will be accepted by EU and parliament.

>Cybs keeps a close eye here so it would be good to hear his thoughts

Yes my UK proxy showing the usual slowdown. 18% up on last November so far though. Gets worse in December and then picks up after the New Year which will be the 6th January.

Nothing wrong with the UK business as far as I can see but does the market expect 50% growth in instructions like in FY18?. Can't say the same for Oz. USA is too early to say. Only really a year since they started in California and they keep moving into new territories. It's not as easy to follow what's going on in the USA but I'd say signs are that it's going OK.

Because the USA is such a huge part of the business it's impossible to put a value on the shares.

Oz definitely asking some questions.

1. Can they be a success overseas?
2. What affect a really bad market even here in the UK?

One for the brave. Do your own research.

From the FT site: "The 4 analysts offering 12 month price targets for Telford Homes plc have a median target of 505.00, with a high estimate of 533.00 and a low estimate of 469.00. The median estimate represents a 63.70% increase from the last price of 308.50."

My proxy for Oz suggests about 152 listings in the last 28 days. That would be 1976 on an annual basis which is I think is $8.7M guaranteed with a potential $8.7M extra if and when the listings complete. So £4.95M rising to a potential £9.9M.

For the 2018 FY turnover was £13.5M which resulted in a loss from operating activities of £12.4M.

Do your own research.

Dave789,

> You and I don't know how many customers those apply to but you decided to ignore them regardless.

Well I'm not convinced it is of much relevance. I'm quite open minded on the matter as there seems very little evidence but have found one person saying the PB quote was higher but they also said they were comparing with a local solicitor who aren't "no sale, no fee". In general I find that online is usually cheaper than traditional.

I think the £360 is a complete red herring in the context of 70,000 listings a year.

You have said "You seem to have missed out something quite important." but haven't commented on the importance factor.

Surely these people (and I use the term loosely) are just thinking about their political careers.

I'd imagine the vast majority of MP's didn't want to leave Europe so they'll support the deal if it's just a quasi-brexit.

Perhaps party politics will play a part but Labour probably better avoiding the hot-seat and sniping from the sidelines.

Very little chance of a "no deal" outcome as far as I'm concerned.

Dave789,

>You failed to address my second point

I did refer to that situation. See below...

"except when they pay £360 to buy themselves out of the agreement to use PB's solicitor"

Again, you need to produce figures for the percentage of people who do this. I'd be inclined to think the number of people who agree to use PB's solicitors and then don't is small compared to the number of customers and wouldn't make much of an impact on the £1000 (approx.) average fee.

I'd say that most people who don't have the funds to pay £1000 in advance wouldn't be looking to pay £360 so they can use another solicitor.

Also, don't undervalue the deferment option. If people can't afford to pay the £1000 in advance then perhaps they wouldn't even be able to borrow the money. Just had a quick look and it's not unusual to be paying around 20% on a credit card. That's about £165 on £1000 over 10 months.

In terms of the PB solicitors. It's my understanding that they provide you with a quote before you make the agreement and it's no sale no fee. Could be wrong. As I say I paid in advance.

Dave789,

You are thinking about this backwards.

Many moons ago I used to sell travel insurance and it paid a whopping 30% commission. The customer couldn't get it any cheaper if they didn't use me though. You couldn't say by using me they were paying more.

If somebody pays £1000 to PB via deferred payment and £700 to PB's conveyancer then they pay a total of £1700. If they borrow £1000 to pay PB in advance, pay interest of £100 and pay their own conveyancer £700 then you can say by using PB they've saved another £100.

It's got nothing to do with the commission PB earn except when they pay £360 to buy themselves out of the agreement to use PB's solicitor..

On the other hand, if PB's conveyancer are charging "over the odds". Let's say £1000, then you can say using the deferred payment has cost them £200 (£1000 - £700 + £100). £100 in saved interest. The £700 is what they would have paid for conveyancing if they had a choice.

You need to show that PB customers are paying over the odds for the conveyancing if you are saying that using the deferred payment option is costing them.

Dave789,

>it seems reasonable to assume that PB receive that amount from the conveyancer

PB may well receive a commission but we are talking about what the home-seller pays not what PB receive. You said it was "over the odds", so how much is the home-seller paying "over the odds"? That's the amount you could reasonably be saying the homeowner pays. After all they are unlikely to be doing their own conveyancing.

Then you should deduct the benefit of being able to defer payment. Again, I'm not sure how long the average deferment is and how much interest you'd pay for the loan but this is certainly a benefit to take into account.

Then you also need to know what percentage of people use the deferred option payment.

Could all add up to pretty much nothing if the conveyancing fee isn't that much over the odds. If it isn't actually "over the odds" then you should actually deduct something from the £1000 average I suggested earlier because deferring the payment without paying interest is a financial benefit.

Dave789,

>You seem to have missed out something quite important. What percentage deffered payment therefore either having to pay £360 to use their own conveyancer or pay over the odds to use Pbs ?

Yes that should be included. Personally I paid in advance. Not sure what percentage of PB customers use this option or how much "over the odds" they paid.

If you want to give us a breakdown of the average cost, don't forget to take into account the benefit of an interest free loan.