Most people identify Purplebricks as the leading Online Estate Agency in the UK. And rightly so.
They are killing it, even though there are much cheaper alternatives. But I get it.
I understand why the average Joe Schmoe would use their property selling service; their brand is gigantic (because they shove it down our gobs through every media outlet known to man!), they’re highly rated (and poorly rated), and in most cases their sales service is comparatively cheaper than the local high-street estate agent.
However, their letting services – presumably the runt of their product line – now that’s a division of their company that literally confuses the shit out of me. WTF even is it?
But more the important question, why are landlords using it? I genuinely want to know.
Just to clarify, this isn’t a review of Purplebricks services. I’ve never used any of their services; it could be mind-blowingly spectacular or a complete shit-show for all I know. This is merely an objective overview of their lettings services through the lens of a tire kicker, who’s “in the market” and weighing up the options.
I don’t have any gripes with Purplebricks, even though there’s no shortage of alleged scandals, from bogus reviews to complaints of misleading advertising, which do make the mind wonder. No smoke without fire, ‘n all that drama.
However, my point is, when I look at the online/hybrid lettings landscape, I struggle to understand why landlords choose to use Purplebricks’ lettings service over the other suppliers available. This is why…
Back to basics: why we use online agents!
By and large, the shift to online agents (including “hybrid”) has been so popular and arguably successful (depending on who you ask) because they’re substantially cheaper than the traditional options.
No one of sane mind is using an online agent because they prefer a call-centre over a local high-street presence. That would be bananas.
FYI: when I say “online agent” or “online letting agent”, it also includes “hybrid agents”
I’m sure if I don’t make that clear, some random and anal boff-job is going to rip my heart out of my nostril, and remind me that I’m an idiot and Purplebricks is technically a hybrid agent.
Purplebricks: the online letting agent with very offline’ish prices!
If you weren’t aware that Purplebricks offered letting services, I wouldn’t blame you. They don’t talk about it much. But I assure you, it’s alive, remarkably.
In the world of online lettings, Purplebricks services seem like an anomaly. ’cause they ain’t cheap. Even when stacked up against high-street agents I don’t see the shocking discrepancy in price like I normally do when comparing them with online lettings prices. So obviously I’m sitting here, scratching my ass, thinking this is a bloody calamity! What’s going on ‘ere?
Purplebricks currently offer 3 letting packages:
Tenant Find
Let & Rent Collect
Fully Managed
How much do they cost? That’s a good question. Purplebricks only disclose their prices after you submit your postcode and the monthly rental income into their “fee calculator”
I tested a few random postcodes and a couple of different rent amounts, and these are the [sporadic] rates I received:*Purplebricks “Tenant Find” Service Fees (inc VAT)LocationRent (pcm)Service FeePercent of annual rentEssex (CM17 9AS)£500£66011%Essex (CM17 9AS)£1,000£6605.50%Essex (CM17 9AS)£1,500£6603.66%Central Manchester (M1 1AF)£500£5809.67%Central Manchester (M1 1AF)£1,000£5804.83%Central Manchester (M1 1AF)£1,500£5803.22%London (E17 6AY)£700£1,48517.68%London (E17 6AY)£1,500£1,4858.25%London (E17 6AY)£3,000£1,4854.13%*Purplebricks “Let & Rent Collect” Service Fees (inc VAT)LocationRent (pcm)Setup Fee One offMonthly FeeAnnual Fee First year / After first yearPercent First year / After first yearEssex (CM17 9AS)£500£390£37£834 / £44413.9% / 7.40%Essex (CM17 9AS)£1,000£390£73£1,266 / £87610.55% / 7.30%Essex (CM17 9AS)£2,000£390£112£1,974 / £1,5848.23% / 6.60%Central Manchester (M1 1AF)£500£390£33£786 / £39613.10% / 6.60%Central Manchester (M1 1AF)£1,000£390£79£1,338 / £94811.15% / 7.90%Central Manchester (M1 1AF)£2,000£390£106£1,662 / £1,2726.93% / 5.30%London (E17 6AY)£700£1,200£59£1,908 / £70822.71% / 8.43%London (E17 6AY)£1,500£1,200£106£2,472 / £127213.73% / 7.07%London (E17 6AY)£3,000£1,200£198£3,576 / £2,3769.93% / 6.60%*Purplebricks “Fully Managed” Service Fees (inc VAT)LocationRent (pcm)Setup Fee One offMonthly FeeAnnual Fee First year / After first yearPercent First year / After first yearEssex (CM17 9AS)£500£465£53£1,101 / £63618.35% / 10.60%Essex (CM17 9AS)£1,000£465£86£1,497 / £1,03212.48% / 8.60%Essex (CM17 9AS)£2,000£465£172£2,529 / £2,06410.54% / 8.60%Central Manchester (M1 1AF)£500£465£46£1,017 / £55216.95% / 9.20%Central Manchester (M1 1AF)£1,000£465£92£1,569 / £1,10413.08% / 9.20%Central Manchester (M1 1AF)£2,000£465£132£2,049 / £1,5848.54% / 6.60%London (E17 6AY)£700£1,100£73£1,976 / £87623.52% / 10.43%London (E17 6AY)£1,500£1,100£139£2,768 / £1,66815.38% / 9.27%London (E17 6AY)£3,000£1,100£257£4,184 / £3,08411.62% / 8.57%
*Fees were collected on the 23rd February 2020.
Boy, I’m taken aback by some of those batshit crazy price-tags!
I actually had to double triple-check some of the figures. For a moment there I thought I was unwittingly pissed out of my head and seeing double-vision.
Apparently I’m fine. It’s the numbers.
Purplebricks Vs Other Online Agents
As you’d expect, there are much cheaper online letting agents providing similar services. But that’s not surprising. Purplebricks have never been or claimed to be the cheapest of its kind.
In all fairness, I think the cost of their tenant-find service, which seems to start from £580, is acceptable if your property isn’t located in London. Notably, their tenant-find service does include “hosted viewings”, which normally isn’t included as standard with tenant-find packages offered by other online agents. That said, some online agents do allow you to add hosted viewings as an optional extra, which does make for a much cheaper alternative. But as said, £580 is acceptable (and not a bargain by any stretch).
However, if in London, then fuck me sideways, we’re in the land of cuckoo prices. £1,495 for the bog-standard tenant-find service. Well, shit, they charge £4 more to sell a house in the same location. Let that sink into your cranium.
Besides from the tenant-find services – which seems to have a fixed rate based on location – Purplebricks base the cost of their two managed services on rent and location. Which is unusual for an online letting agent.
Typically, the fundamental appeal of an online agent is that they offer a low fixed fee, regardless of rent or location (with the only exception being London, usually). Or at least, I thought it was.
‘spose Purplebricks could argue that they aren’t like any other online agent. Whether that’s a good or bad thing is up for debate. But not today.
Purplebricks Vs High-Street Managed Services
According to MoneySuperMarket.com:
“Tenant find and rent collection fees will typically cost landlords around 8-12%”
“Full property management fees will typically cost landlords around 10-15%”
It’s also worth bearing in mind that most high-street agents are open to negotiating their fees.
While eyeing-up the menu, you could argue that PB do have some sweet-spots (e.g. ‘Let & Collect’ service in Manchester, £2,000pcm is 6.93% for the first year, and 5.30% from then on), but for the most part I’m not seeing the bargains I expect from an online solution, but more worryingly, I don’t even feel like I’d make enough of a saving compared to high-street prices (when they are actually cheaper, that is). And that’s the dilemma.
I use an online agent because when I see a tenant-find service for £50’ish compared to my high-streets £1000’ish, I’m blown away by the price difference.
But when I’m seeing 18.35% for a fully managed ‘hybrid’ service in Essex, I am left gob-smacked and confused as shit. WTF?
Yes, the pain does ease after the first year, because the initial setup fee doesn’t apply, but it doesn’t ease enough. Plus, we still need to take into account that initial hit, because that can become critical if our tenants’ decide to leg-it after the first year, or even the second. Don’t we?
What’s also worth prodding at is that in certain locations, Essex for example, there doesn’t seem to be the price difference you’d expect between the rent collection package and the fully managed. Which seems odd. There’s probably a lot more oddities all over the UK, I only scratched the surface with 3 postcodes.
So, as I asked, WTF even is this shit?
Ironically, slap-bang in the middle of their homepage, there’s a beautiful little quote from Purplebricks’ founder, Michael Bruce:
Traditional estate agents have charged too much, for too little, for too long.
I hope Moneybags is strictly referring to estate agents (not lettings), ’cause his lettings service rates don’t even seem to make sense, let alone make for a bargain against high-street letting fees. Forget the online variety.
But ultimately, what I’m more confused by – and equally intrigued by – are the actual landlords coughing up the doe for these letting services, and why? WHO ARE THESE SPECIMENS?
But before that…
Cheaper online options…
First and foremost, if you’re after a fully managed service and you’re prepared to pay north of 8% of the annual rent, then I can only recommend using the services of a local high-street agent. Or at least, looking into your local options.
I personally don’t see any sense in using an online solution if you’re looking for a local/hybrid service and willing to pay high-street prices, or close enough to. If it boils down to a percent or two more for a high-street service, I’d personally cough it up. Don’t be weird.
Now, if you want to use an online letting agent to simply save a fortune compared to high-street agents, then stalking PB’s menu is obviously futile. However, here are a few alternative fixed-price (regardless of location or rent amount) online solutions that really do make high-street prices look awkward…
“Tenant Find” alternative
Oh, but of course…
Letting AgentRatingDurationIncludes / NotesPrice OpenRent Rating 4.9 Google Reviews Duration 5 days / 3 months* Includes / Notes
Ultimate Advertising package
5 days / 3 months* marketing on Rightmove, Zoopla + more
*5 days free, and then the option of continuing service for 3 months for £24 (Inc VAT) for new customers, and £29 (Inc VAT) for returning customers! Price*FREEInc VATNo hidden fees, no credit card details required!
Free Trial Visit Website
OpenRent do provide the option of paying £300 for a hosted viewing service if that’s what you’re after.
Here’s a full list of online letting agents that offer tenant-find services. Fees average around £50.
“Let & Rent Collect” alternative
I swear to all the new and old Gods, OpenRent didn’t put me up to this, they just happen to offer insanely good value when it comes to tenant-find and rent collection services, and I’d be kidding myself – and even worse – potentially hiding a gem from you, if I didn’t list them both just because it may seem a little suspicious.
In any case, OpenRent’s tidy reputation speaks for itself, not to mention their cost-effective prices, so no one should be smelling any rats…AgentRatingContractNotes / IncludesPrice OpenRent
Rating 4.9 Google Reviews Duration Month by month Notes / Includes
Advertising + Rent Now Package
Great Value: OpenRent's "Rent Now" package includes a Tenant-find service + monthly Rent Collection!
Advert on all major property websites, including Rightmove & Zoopla.
Monthly Rent Collection.
Tenant Referencing.
Contract drafting & digital signing.
Deposit Registration.
Ongoing support & advice throughout the process.
Rent Collection Process
Use OpenRent's tenant-find service.
Enable optional rent collection service:
Tenants set up a standing order, and rental income is sent to your bank account directly.
You will receive rental income straight to your bank account and OpenRent will also send chasers to the tenant if rent hasn't been paid.
Access to dashboard showing the payment status in real-time.
Cancel rent collection any time.
*First months rent collection is free, and then you have the option of continuing the service for £10 per month with no tie-in contract. You can pause/unpause the service as and when you choose, and you'll only be charged the monthly fee when collection is unpaused and paid in full by your tenant. Price *£49 + £10pmInc VATVisit Website
“Fully managed” alternativeLetting AgentRatingContractNotes / IncludesPrice Howsy
Rating 4.4 TrustPilot Reviews Duration Month by month Notes / Includes
Full Management Service
£0 up-front - nothing to pay until tenant moves in.
Tenancy agreement drafted and signed.
Rent collection service.
24/7 phone support.
24/7 repairs and maintenance support.
Inspections: full photographic reports after 3 months and then 6 months thereafter.
Access to legal helpline.
Key holder service
Free legal helpline
Negotiate renewals on your behalf
Online platform gives you visibility over your portfolio, including overseeing repairs, statements etc.
Optional Extras
£149 Tenant find service.
£300 for hosted viewings. Covers 30 days of unlimited viewings.
£95 Professional photos for marketing
Pricing & Discount explained
*£45pcm price is based on one years' fee and with the usage of the discount (which qualifies you for 3 free months service). Normal price is £59pm.
*£67pm for properties inside of the M25 with the usage of the discount (which qualifies you for 3 free months service). Normal price is £89pm.
**Sign up to get the first 3 months FREE if you mention you came from Property Investment Project. Price *45pmInc VATPrice shown with discount!
Discount availableVisit Website**First 3 Months FREE using link above!
Here’s a full list of online letting agents that offer fully managed services. Fees start from £35pcm.
So, who’s using Purplebricks lettings service and why?
I’ve spoken to many landlords that have used Purplebricks to sell property. I’ve yet to encounter a single landlord that uses or has used their letting services; the product clearly isn’t flying off the shelves like their beloved sales packages.
Admittedly, there’s a sigh of relief that Purplebricks currently only has **56 rental properties listed on Rightmove, compared to, say, OpenRent’s stonking **5789 listings (that number even surprised me!).
**Data collected on the 26th February 2020.
Purplebricks sparse rental stock probably isn’t due to their comparatively unfriendly fees, but rather, I don’t think most landlords associate Purplebricks with lettings. Presumably that’s the case because PB’s colossus marketing machine isn’t pushing the services to any significant degree. I’ve never seen any marketing material of theirs which specifically hypes their letting services.
For the past few months Purplebricks adverts have been chasing me around YouTube like I’m a drug mule and they’re a crack addict on the brink of destruction. At some point I must have triggered one of their sensors, and presumably I’ve been darted in the ass with a tracking device ever since.
While I’ve been fighting through their relentless sales funnel, I haven’t heard or seen one of their adverts even mention their lettings services. They’ve all been about how Bob & Daphne saved X amount when selling their home with Purplebricks, and how they’ve recommended the service to their neighbour’s dog-walker’s aunt’s cousin, or some shit.
It’s impossible to know how many landlords have stumped up the cash, or how many are continuing to splash out on the managed services each and every month, but it’s clear that some are.
So back to my question, who are these landlords? Where do they hangout?
I want to talk to them.
I want to understand “why”
Did their foggy, piss-stained spectacles spot a bargain? Did they lose a bet? Were they blackmailed, physically and/or emotionally? Or did the gazillions of pounds that Purplebricks have pumped into growing their brand actually work and turn some of our beloved comrades into brain-dead morons zombies?
Surely it can’t be a case of “money is no object”, ’cause then they wouldn’t have used an online service in the first place, because the entire hook and ethos is to provide a cheaper solution. Right?
I have two potential theories that seem possible, I believe:
We (society) are starting to blindly use online solutions over offline because we automatically assume they’ll be vastly cheaper, when often they’re not. We don’t even bother comparing.
People digest and accept fixed-monthly rates easier than percentages, and don’t bother converting the totals into annual costs as a percentage. For example, it’s psychologically easier to accept £80 per month, than 15% per month/year.
No excuses, just theories for why.
Is Purplebricks Lettings division a cash-grab?
I’ve painfully witnessed other successful online estate agents do this before. Not well, mind you.
They start off by flogging houses, and then after picking up some momentum and growing their brand, the beautiful minds of the Product Development team start brainstorming ways of expanding the income stream.
Introducing a lettings division is the natural progression for an online estate agent, because once you have the infrastructure to push “online sales”, it’s relatively easy to apply the same processes to online lettings (and vice versa); there’s a lot of cross-over in terms of tech and service.
It’s kind of a no-brainer, so I hope no one received a bonus for giving birth to that obvious brainchild.
I understand the logic and I ain’t angry about it, but I ain’t buying it.
The problem is, these attempts almost always feel like cash-grabs, because they’re usually never taken as seriously as their most profitable bread and butter services. Sadly, the result of that can often result in compromises for the consumer:
The service isn’t as well supported or developed as the core and most lucrative service(s). Obviously!
The agent relies on their already strong brand to sell the product, and not necessary the product itself, or competitive pricing.
Now, I can’t say that’s always the case, but it usually is from my observations.
Some of you may remember my deeply unflattering analysis of Housesimple’s attempt at lettings. To summarise, I thought it was piles of bullshit cobbled together. It felt like they half-assed bolted on an unpolished and comparatively expensive letting service and thought it would *ahem* simply, sell itself – because they’re “Housesimple”
Yeah, I don’t think it worked.
Thankfully, since then, Housesimple (who have now rebranded to “Strike”) got a conscious and put their lettings service out of its misery. They shut that pile of shit down, and now only focus on sales (which they do well, for free).
I’m not saying Purplebricks lettings service is poor or unpolished (’cause I don’t know either way), but it does seem like they’re relying on their brand for growth, because it sure as hell can’t be their butt-ugly prices, or the underwhelming amount of promotion.
My final thoughts
If you want to sell your house then use an online estate agent that sells property as their core service, just like Purplebricks.
If you want to rent out your property, then use an actual online letting agent, like OpenRent, Howsy etc.
If you’re willing to pay high-street rates, then use a high-street solution.
Am I telling you NOT to use PB’s lettings service? Nope! I’m just saying I hope we all have the sense to evaluate the value of the product, and not just blindly follow the biggest brand.
Peace xox
Comments