The property market needs a Tesco-style shake-up
Tesco's push into estate agency is proving less ambitious than first promised. In 2007, the supermarket giant launched its own online property portal, only to withdraw it a few months later amid regulatory pressures.
Three years on, it has teamed up with Spicerhaart, Britain's largest independent estate agent, which is trialling iSold, a full estate agency online service that offers home-selling packages costing between £999 and £1,299. Tesco will run its ads on its own website.
It is a pity that the grocer has not yet felt able to have a proper tilt at the market, which is a fragmented industry sorely in need of a dose of competition from someone with Tesco's skills. Still, this is a start. The commissions charged by estate agents have long seemed difficult to justify. Does it really take twice as much work to sell a home costing £300,000 as a property priced £150,000? By charging a commission rate of 1.5% or 2%, that is what estate agents are implying.
No doubt many of the horror stories people tell about estate agents are unfair or, at worst, isolated — the Office of Fair Trading's recent inquiry into the industry concluded as much and standards do seem to have improved in recent years. But there has been little movement on price for as long as anyone can remember and no competition to speak of from operators with a different business model.
Good luck then to iSold. But if we want more competition, it would be wise for the Government to accept the OFT's recent recommendation to loosen the regulations on online estate agency services. Then maybe we might at last get a full-blooded launch into the sector from Tesco and other new entrants capable of causing a stir.