solent sme 100 growth index 19 100
SOLENT SME GROWTH
TM
Red tape in the road for growth
A raft of unnecessary regulation is hampering an industry already dealing with a shrinking market, according to the CEO of one of the south’s leading commercial and residential estate agency and property services network
David Errington joined Goadsby Group, which sells and lets residential and commercial property throughout Dorset, Hampshire and Wiltshire, as company secretary 30 years ago. In those days there were four simple one-page documents per property sale, including the contract. Now CEO of the Bournemouth head- quartered company, Errington said: “We have a 40-line checklist, 20 of which relate to legislation imposed.”
Errington said the rigours of implementing new legislation during the past six months had generated a mountain of paperwork and cost over £100,000. But worse than that were the unintended consequences – the most recent example being the additional 3% stamp duty surcharge on ‘granny annexes’ which came into effect on April 1 and was amended weeks later. Errington added: “There needs to be more people in business holding the hand of legislators, explaining that ‘if you do this; then those will be the unintended consequences’.” Errington agreed regulation had been needed to clean-up some areas of the industry, particularly unauthorised and unprincipled lettings agents but claimed 50% of new legislation was unnecessary or could be massively reduced. “It is often a case of throwing the baby out with the bath water,” he said.
Since joining and becoming CEO in 2003, Errington has presided over the growth of Goadsby from five branches to 29, including an increase from one commercial centre to four. Lettings has approximately 3,000 residential properties and more than 500 commercial properties on its books and has invested several million pounds over the past five years on its vehicle fleet and refurbishing/ expanding the branch network.
Despite more legislation on the way, including the reduction of mortgage rate relief for buy-to-let landlords, and competition from online estate agents Errington has no plans to slow down. He explained: “At the moment, the market is shrinking. There is a shortage of instructions and this is exacerbated by digital agencies. We can do one or both of two things – increase market share or become more efficient.” Errington is opting for both. In fact, he has his sights set on Goadsby becoming the dominant independent provider of property services in the south.
The company is well placed. Established in 1958 and owned by holding company St Gresham it is the highest ranking estate agent in The Business Magazine’s Solent SME 100. It regularly appears in the Estates Gazette top 30 composite UK property agencies and is ranked 26 of all composite property
THE BUSINESS MAGAZINE – SOLENT & SOUTH COAST – MAY 2016 services providers in the country.
Efficiency has a cost however, and there will be further investment in infrastructure and digital technology over the next year or so. A new digital control centre is planned, a new website is being built and the M27 corridor is a target for growth. Citing administrative legislature and uncertainty as hurdles to that growth, Errington hopes the capital investment will help tackle the former by making the company as efficient as possible. “The plan is to control all communication from a central point while the digital centre will streamline and speed-up customer services” he explained.
Less straightforward was countering uncertainty – currently compounded by the Brexit issue. “We can work hard at making ourselves efficient but uncertainty is not in our hands. All the markets are affected by what happens in China and Europe and, as sure as eggs-is-eggs, whatever happens there, will affect the property market here one year later.”
Online agencies have brought down commissions and legislation has increased costs for traditional agents. On the issue of competing with them Errington believes exceeding customer expectations through quality and service is key. “I like to think we are in John Lewis
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territory where we are recognised as a quality brand. We are owned by shareholder directors, we profit- share and invest in staff training. While we do not underestimate online agents such as Purple Bricks, it is worth remembering that while they cause a downward pressure on commissions they appear not yet to have made a profit.”
There is no shortage of predictions when it comes to the housing market but whatever happens it is unlikely to faze Errington. He was FD when base rates were 15% and has helped nurture the business through recessions. He concluded: “The company has been owner- managed for 60 years. Despite some very turbulent times in the economy the business has always been successful. I believe this investment in infrastructure will stand the company in good stead for many more years.”
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