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What is a Estate Agency Business?
More than 1.1 million properties were sold in the UK in 2022 and 4.6 million properties were rented privately in England alone. Despite financial uncertainty, the property market in the UK remains strong and house prices continue to rise.
Although there are approximately 22,000 estate agents currently in operation in the UK, the strength of the housing industry means there is still high demand for more estate agents, making now a great time for you to set up an estate agency business.
An estate agency is a company or business that sells or rents out homes, buildings and land on behalf of its clients. Although the term estate agency typically refers to a business that sells properties, it can also encompass the term letting agency (a business that rents out and manages properties), particularly because many estate agencies offer both sale and rental properties.
If you set up an estate agency business, you can operate as the sole estate agent, managing all of your listed properties, or hire other estate agents to work for your business.
When starting up an estate agency business, you will need to decide the type of property you are going to specialise in. There are multiple types of properties that your estate agency business could sell or rent out, including:
This refers to any properties that are used for residential purposes (to live in).
Some examples of residential properties include:
- Terraced, semi-detached and detached houses.
- Flats and duplexes.
- Student properties (rental).
- Individual rooms (rental).
This refers to any properties that are used for commercial (business) purposes.
Some examples of commercial properties include:
- Office buildings.
- Retail properties, including individual shops and shopping centres.
- Hotels, B&Bs and other holiday properties.
- Restaurants, cafes, bars and pubs.
- Gyms, swimming pools and sporting facilities.
- Healthcare properties, such as hospitals and clinics.
- Cinemas and theatres.
- Car parks.
- Petrol stations.
This refers to any properties that are used for industrial purposes, including:
Common examples are factories and warehouses.
This includes both developed and undeveloped land, whereby the land is the main feature of the sale or rental, rather than any buildings that sit on the land. This could be because the buildings do not increase the value of the land or because the land is undeveloped.
Some examples include:
- Vacant land, e.g. fields.
- Agricultural land e.g. a farm or orchard.
Special Purpose Property
This is property or land that has a special purpose and is generally used by the public. The property may be owned by the government or the local council or may be privately owned.
Some examples of special purpose property include:
- Places of worship (e.g. churches, mosques and synagogues).
- Cemeteries and graveyards.
- Libraries, community centres and youth centres.
- Government buildings.
An estate agency is a unique type of seller as they don’t sell something they own; instead, they are selling something on behalf of the owner. Your role is to act as a representative of the seller and the property and to act as an intermediary between the seller and potential buyers.
There are many responsibilities associated with setting up and running an estate agency business, including:
- Viewing and inspecting properties.
- Collecting information about a property, taking photographs and taking measurements.
- Talking to sellers about the property and any special features.
- Creating client contracts.
- Assessing the value of a property.
- Marketing and promoting properties.
- Liaising with both the seller and the buyer, offering professional advice and negotiating sales and lettings.
- Organising and providing advertising materials, such as ‘For Sale’ signs.
- Organising viewings of the property.
- Representing the seller in any negotiations with prospective buyers.
- Handling payments and commissions.
- Organising a property survey (although the survey will be completed by a qualified professional).
- Monitoring any sales as they proceed.
- Liaising with other professionals, including mortgage advisors and brokers, solicitors and surveyors.
- Collecting references and doing credit checks for renters.
- Ensuring any rental properties meet legal standards and comply with health and safety requirements.
- Creating tenancy agreements to be signed by both parties.
- Organising or collecting rental payments.
- Acting as a property manager and resolving any issues.
- Advertising and marketing your business.
- Managing staff.
- Completing business and administrative tasks.
If you are thinking of starting up an estate agency business, you will be pleased to know that the barriers to entry are relatively low. In the UK, estate agents are not currently required by law to be licensed or qualified. Depending on where in the UK your business is located, much of the sales process will be handled by other professional bodies (for example, in Scotland, a solicitor manages the majority of the sale). That means your business can primarily handle the marketing and selling of the property, rather than worrying about surveys, contracts and mortgages.
To make your business succeed, strong interpersonal skills, a friendly and personable manner and good communication skills are key. You will also need to be highly organised and have good negotiation skills. The ability to work well under pressure and to adhere to targets and deadlines is also required. As the business owner, a solid business plan and a well-developed strategy for growth will also be beneficial.
Types of Customers
The types of customers your business attracts can depend on multiple factors, such as:
Whether you provide property sales or rentals
You may opt to only list ‘for sale’ properties or to work with both sales and rental clients. Customers usually know whether they want to sell or rent out their property and will make this decision before approaching an estate agency. Equally, a prospective buyer or renter will look for an estate agency that is offering the specific service they are looking for.
The types of properties you focus on
You could choose to focus on residential, commercial, industrial, land or special-purpose properties. To focus your business and target your chosen niche, it is recommended that you only concentrate on one type of property (e.g. residential properties). The type of properties you choose to focus on can significantly impact the types of customers your business attracts.
The value of the properties
You may opt to list properties of varied values to target a wide range of customers, or you may opt to focus on properties of a specific value (e.g. multimillion-pound properties). The value of the properties you focus on will be one of the most important determiners of your typical customer base.
Particularly when your business first launches, you will likely focus your business in a specific location (e.g. a specific town or area of a city). Your typical customer base will, therefore, be primarily made up of people selling and buying properties in this area. As your business grows, you may choose to branch out to other locations.
Whether you operate an in-person or online business
Many estate agencies choose to operate both in-person and online. You may choose to have an estate agency website where you list all of your properties, with their photographs and information, whilst also running an estate agency shop or offering in-person meetings and viewings. Alternatively, you can choose to focus your business and only operate in-person or online. Some customers (for example, those who do not live in the area or have limited time) may prefer to work with an online business, whereas other customers may prefer to visit a shop and talk to the estate agent in person.
Equipment You Will Need
Equipment is an essential purchase, as without it you will not be able to operate your business. The type of equipment you require will depend on whether you run an online or in-person estate agency.
Below is a list of equipment typically required by an estate agency business:
An estate agency website
Your website will be an important advertising and sales tool. It should be professional, functional, attractive, easy to use and fit for purpose. Your website should include professional photographs of each property (including each room and the outdoor spaces), a specific location, a description, the price and any additional information about the property that a potential buyer could need. You should also include your contact information.
A computer or laptop
You will need a high-specification, reliable laptop that can handle the amount of time you will be using it each day and all the programmes and software you will need to install. Alternatively, you could opt for a desktop computer, although they are less ideal if you need to use your laptop away from the office.
A Customer Relationship Management (CRM) system
This is an important tool for estate agents and can help to automate a lot of usually time-consuming daily tasks and can help you to manage your customer database. A CRM can help you to stay organised, monitor your client relationships, manage lead generation, set follow-up reminders and move sales through your pipeline.
A lead generation tool
An increase in leads can result in an increase in listings, increased sales and higher revenue. Your leads can come from multiple sources, including visits to your website, through your marketing and advertising strategies and via recommendations. By using a lead generator tool, you can identify leads and convert a prospective customer into a real customer.
A lead generator tool can help you to:
- Create organic advertising and paid ads.
- Improve lead generation via emails and social media.
- Improve your business-to-business (B2B) marketing.
- Set up property enquiry forms specific to the type of customer (e.g. rental or buying).
- Automatically organise prospective customers.
An email marketing system
This is another important tool that can help you to increase your listings. It can help you to promote your business and promote any existing listings, by sending out automated emails with minimal effort from you.
A professional camera
Unless you hire a professional photographer who provides their own camera, you will need to purchase a high-quality professional camera to take photographs of your listings. Each property will require a minimum of 20 photographs, including the front of the property, the outdoor spaces, different angles of each room and any special features you want to highlight.
A video camera
If your camera does not come with a high-quality video option, you will also require a professional video camera to allow you to take videos of different areas of the property or film a walk-through of the property.
Although this is an optional piece of equipment, it is recommended if you plan to list large properties and pieces of land and high-value properties. A drone allows you to get aerial shots, so prospective buyers can see the scale of the property. Using a drone can also help your business to appear more professional and can make your estate agency more attractive to sellers who are searching for the perfect agency to list their property.
Video editing tools
Videos can be utilised as a way of allowing buyers to tour the property from their own homes. You can also use videos to film client testimonials or to introduce your business to potential clients. To ensure your videos appear professional, you will need to utilise a video editing tool, allowing you to make and edit your videos more professionally and effectively.
You may want to confirm dimensions that are on the property deeds or that are not included in the original floor plan, for example, if the seller has installed a driveway or a swimming pool or added an en-suite bathroom. These measurements may be important in your property listing and can help you to attract buyers. You may require measuring equipment, such as a measuring tape, a laser measuring device and a measuring wheel.
Electronic signature tool
To create a faster and more streamlined service, you will need an electronic signature (e-sign) tool. Having this tool will save you a significant amount of time compared to physically mailing each document when a signature is required. An e-sign tool allows you to email documents that need signing to your clients and receive an electronic signature immediately. Electronic signatures are legally recognised in the UK.
A secure storage system
Many of the documents you work with will contain highly sensitive information that you will need to store securely at all times. You will also have detailed pictures and videos of clients’ homes and personal information about your clients’ finances. The vast number of sensitive files will likely require you to invest in secure Cloud storage. You should ensure the storage you opt for is password protected and encrypted. You should also ensure everything is backed up externally to protect the information in the event of a technological issue.
Scheduling tool or software
Scheduling tools allow you and your clients to make appointments and meetings without needing to waste time trying to find an available date and time. The software links to your calendar and recognises your availability. If a client books a meeting with you via the software, you will receive an automatic confirmation email and the meeting will appear in your calendar.
Digital invoice software
This can help to make your life much easier. Rather than dealing with paper receipts or clients that instantly request an invoice, digital invoice software allows you to keep electronic copies and store them safely. You can send clients their invoices via email. This can help to save you time.
An email service
Setting up your own email service using your own domain may be beneficial as your business grows. A business domain can make your business seem more professional and official. Using a public email domain such as @google or @hotmail can look less professional compared to using your own business domain. You will need to make sure your email service is fully secure and encrypted and abides by email security policies in the UK.
Regardless of whether you run an in-person or online estate agency, you will need to ensure your Wi-Fi is reliable and high-speed. You will likely be using the internet for much of the day and will need to ensure it doesn’t cut out in the middle of a meeting with a client or when uploading a new listing. Contact the available providers in your area and ask for an approximate speed per second for uploads and downloads before choosing your Wi-Fi provider.
If you have an estate agency shop, one of the most important features will be the window display, featuring full-sized advertisement boards. These boards will have photographs of each property, the location, a brief description and the sale or rental price. These boards will need to be updated regularly, as properties sell and new properties become available. Ensure your boards are changeable and are sturdy and look professional.
‘For Sale’, ‘For Rent’ and ‘Sold’ signs
These signs will be an essential part of your advertising and marketing. They will be placed on the property (usually at the front so that they are viewable to passers-by) and will feature your business name and logo and your contact information. Your signs should be branded, be the same colour and be highly recognisable as belonging to your business. The signs should also be weather-proof and sturdy. You will need a large number of these signs to ensure you have enough for every property on your books.
Brochures are another important advertising tool. Although less popular now with the rise of the internet, some prospective buyers still prefer to look through a brochure. You can also post your brochures to potential customers as a way of advertising your business.
Business cards are an important marketing tool and can be given to new or existing clients. Your business cards should include your business name, contact information, location and the types of properties you list.
Each of your employees (and you) will require a business phone so that they are easily contactable for clients. You could also choose a main office phone with a main number that you use on your advertisements and that any customer can contact. Ensure your office phone comes with a reliable answering machine to record clients’ voicemails.
Office or shop furniture and accessories
Investing in high-quality, comfortable furniture can help to protect you from strain or injury. Ensure the furniture is an appropriate height and doesn’t require you to strain your neck or back. The amount of office furniture you require will depend on the size of your premises and the number of employees you hire.
Some equipment you may require includes:
- Office chairs.
- Secure filing cabinets.
- A printer, scanner and fax machine.
- A paper shredder.
- Stationery, such as pens, pencils, notepads, diaries, highlighters and Post-it notes.
- A water cooler and tea and coffee making facilities.
A CCTV system
Because you will be storing expensive equipment and sensitive information, CCTV can protect your business from potential break-ins and theft. CCTV can also protect your business in the event of an accident, an incident or an allegation. You can choose the specification of the equipment and how many cameras you require.
When you are creating your business plan, an important consideration you will need to make is your expected start-up costs and running costs. Calculating your expected costs allows you to determine your initial investment requirements, your pricing strategy and your profit goals.
There are multiple costs associated with setting up and running an estate agency business. Some of these costs will be one-off initial costs that you will need to pay when you are setting up your business. Other costs will be ongoing costs you will need to pay regularly – usually weekly, monthly, quarterly or annually.
Although the costs can vary depending on the type of estate agency business you set up, some of the typical costs you can expect are:
Your business premises
If you opt to set up a physical estate agency, your premises will likely be your biggest expenditure. You will need to rent your premises on a monthly or annual basis. Rental prices can vary significantly, depending on the location and the size of the premises. City centre locations and newly built premises usually have the highest rental costs. Rental costs are often calculated per square metre and can range significantly, from £500 to £15,000 per square metre annually. Your rental costs may also be higher if you are renting an already established or equipped estate agency. Alternatively, you could opt to purchase your premises upfront or take out a mortgage. Keep in mind that many estate agencies capitalise on local foot traffic, so a city centre location or a busy area can help to increase your sales.
Refurbishment and installation costs
Unless your premises previously operated as an estate agency, you will need to refurbish or convert your premises to install the equipment you need for your business and to make your premises fit for purpose. Luckily, an estate agency has limited layout requirements and can be set out any way you choose. You may be able to do much of the work yourself, although you may need to hire professionals for jobs such as improving the lighting, installing a bathroom and installing equipment and furniture. Refurbishment and installation costs can start at as little as £500, depending on the scale of work required.
Your equipment is an important purchase. Although equipment costs are not usually high for an estate agency, ensuring you have the correct equipment is essential. Consult the list above to determine the type of equipment you require. The cost of your equipment can vary significantly, depending on the specification of your equipment and how much equipment you need. The bigger your premises is and the more employees you hire, the more equipment you will likely require. You may opt to purchase less equipment initially and then expand your equipment as your business grows. Equipment for an estate agency typically costs between £2,000 and £20,000.
Maintaining, repairing and replacing equipment
Repairs, maintenance and replacements are ongoing costs you will need to factor into your budget. Although some of your equipment will come with warranties or guarantees, repairs and replacements are inevitable because much of your equipment will experience frequent usage and technology, such as laptops and phones, generally only have a lifespan of a couple of years. Maintaining equipment and ensuring it is used correctly can extend its life, but potential repairs and replacements should still be factored into your budget.
Monthly and annual equipment costs and subscriptions
Your monthly and annual subscription costs could include your Wi-Fi, website, email service and your secure storage. Depending on which subscriptions you require and the specifications of the ones you choose, expect to pay between £40 and £150 per month.
Your job may require a lot of travel, as you will be visiting a variety of properties regularly. You could choose to use your personal vehicle or purchase a specific vehicle to be used for business purposes. The cost of a vehicle can vary, depending on whether your purchase a new or second-hand vehicle. Prices typically start at £5,000 for a second-hand vehicle and £20,000 for a new vehicle. You also need to incorporate your vehicle running costs into your budget, including your vehicle insurance, petrol, MOT, services and the costs of any repairs. These costs can vary significantly, depending on the age and condition of your vehicle, the level of insurance you choose and the amount of travel you need to do. Typically, you can expect to pay between £50 and £200 per month.
Your business website
A business website is an essential advertising tool, as it allows potential buyers (and sellers) to find your estate agency online and view your available properties. You should ensure your website is attractive to customers and use search engine optimisation (SEO) so that your website ranks highly on search engines, such as Google. Your website will need regular monitoring, updating and upgrading. You also need to make sure your website is secure, particularly if you will be collecting any customer information or banking details. You may choose to set up and run your website yourself or hire someone to do this for you. You can expect to pay between £20 and £100 per hour for someone to set up and run your website.
When creating your brand identity, consider how you want your business to be perceived by potential customers. When creating your brand, consider the type of estate agency you are setting up, the types of properties you will focus on and your target clients. Branding can include creating your business’s visual identity, design and aesthetic, your business name and logo and your website. You could hire a professional to help you with branding or do some or all of the work yourself. Branding can cost between £500 and £10,000, depending on the level of work required.
Marketing and advertising
To ensure your estate agency business attracts customers and creates maximum profits, you will need to spend money on advertising and marketing. It is recommended that you spend between 1%-3% of your annual turnover on marketing. For example, if your annual turnover (or your desired annual turnover) is £100,000, you should spend between £1,000 and £3,000 on advertising and marketing. You may need to invest more money when you initially set up your business or when you are trying to grow your business. To reduce your costs, capitalise on free marketing strategies, such as through your ‘For Sale’ signs, on social media and in your local community.
You may initially operate your business independently and then hire more estate agents and other staff as your business grows. If you hire staff permanently, you will need to pay them at least the national minimum wage (although more qualified and experienced staff will expect a higher wage) and account for other expenses such as holiday pay, sick pay and maternity/paternity pay.
There are several types of coverage you could choose for your estate agency business.
Some coverage options available to you are:
- Professional Indemnity Insurance.
- Employers’ Liability Insurance.
- Public Liability Insurance.
- Cyber and Data Insurance.
- Office Insurance.
- Equipment Cover.
Prices can vary, depending on your insurance provider and the level of coverage you require. Prices typically start at £10 per month.
Safely Running an Estate Agency Business
Safe practices in your estate agency business can help to protect the health, safety and well-being of you, your staff and your clients (sellers and potential buyers). Safe practices can also help to protect your business. Safe practices can vary, depending on whether you have a physical business premises (i.e. a shop) or an online business.
Some ways you can safely run your estate agency business include:
Ensure properties are safe for potential buyers to visit
There are several potential hazards that customers could be exposed to when visiting a listed property. Even if you are not handling the visit, it is still your responsibility to ensure that both sellers and buyers are protected.
Some ways you can ensure a property is safe to visit includes:
- Check that nobody who lives at the property or is visiting the property is showing symptoms of Covid-19.
- Ask the seller to confirm that no potentially dangerous individuals are present at the address or no criminal activities are taking place at the address.
- Request that pets (particularly dogs) are restrained or away from the property during the visit.
- Ensure you record the time and date of the visit and the details of both parties.
- Confirm that the building is not condemned or that there are no other threats to safety.
Report any concerns to the police
During your line of work, you may come across information or have suspicions that a crime is taking place. If you witness or are suspicious of a crime (for example, when visiting a property), you should report your concerns as soon as possible to the police.
This is particularly important for crimes relating to:
- Drug dealing or trafficking.
- Money laundering.
- Child abuse or neglect.
- Sexual abuse, rape or domestic abuse.
Obtain qualifications and training
Although formal training and qualifications are not legally required to work as an estate agent, they can help you to run your business more safely and effectively and can make your services more attractive to potential customers.
Some qualifications you could obtain include:
- Estate Agent Diploma.
- Estate Agent at QLS Level 5.
- Estate Agent Apprenticeship.
Obtain health and safety training
Obtaining health and safety training can ensure that you and your employees follow safe practices at all times.
Some training courses you could opt for include:
- Covid-19 Awareness.
- Workplace First Aid.
- Assessing Risk.
- PUWER Awareness.
- Fire Safety Awareness.
- Office Health and Safety.
Keep detailed and accurate records
To prove that you are complying with all legal guidelines, it is recommended that you keep detailed and accurate records, particularly pertaining to procedures you have implemented and the ways you are ensuring compliance with any laws and regulations.
Properly maintain and set up equipment
If you open a business premises, you must ensure any equipment must be properly maintained, correctly set up and safe to use. You must protect yourself, your employees and your customers from accidents or injuries caused by equipment. You should also perform regular equipment inspections to ensure your equipment’s safety and help extend the lifespan of your equipment. Maintenance includes cleaning equipment regularly and checking it is functioning correctly.
Check and maintain electricals
Not only can this save you money by avoiding damage, repairs and replacements, but checking and maintaining electricals can help to protect your equipment from faults and protect the health and safety of everyone who visits your business. Implement a system for regularly checking electricals and ensuring they are up to code.
Install anti-virus software
If you use a computer or laptop in your business, anti-virus software can detect and remove malicious codes and intrusions on your computer or laptop. This can protect you and your business against viruses and malware. If your laptop becomes infected with a virus, this can cause irreparable damage to your equipment, can delete your computer’s data and cause you to lose money and business. A virus on your laptop could also be sent to your clients via email which could affect your business’s reputation. Anti-virus software should be installed on all of your devices and your Wi-Fi.
Carry out risk assessments
Risk assessments are a legal requirement for businesses with more than five employees. However, even if your business has fewer than five employees, risk assessments are still recommended to ensure the safety of you, your staff and your customers. Risk assessments can help you to identify any potential hazards and risks in your business and how these can be reduced or eliminated.
As part of your risk assessment, you should:
- Identify hazards.
- Determine who could be at risk.
- Evaluate any potential risks.
- Implement relevant safety measures.
- Record the results of the risk assessment.
- Review the risk assessment regularly.
Keep a fully stocked first aid kit
If your estate agency has a physical premises, having a first aid kit onsite is recommended. If a customer or employee has an accident or injury, it may not be serious enough to warrant medical intervention. Instead, you may be able to offer treatment yourself. Having a first aid kit that is checked and replenished regularly and is easily accessible is recommended.
Implement security measures
Security measures can be implemented to protect your business. Your business may store expensive equipment (such as computers and laptops), property keys and confidential files that could attract thieves. Some ways you can protect your equipment and materials include installing a CCTV system, using secure and reliable locks and installing an alarm system.
Complying with legal requirements is essential when setting up and running an estate agency business. Legal guidelines can vary depending on the type of estate agency business (e.g. property sales vs property rental) you choose to set up.
Some of the legal requirements you should be aware of include:
General Estate Agency Legal Requirements
Comply with the Estate Agents Act (1979)
The Estate Agents Act regulates the work of estate agents in the UK. It has several specifications, including:
- Estate agents must act in the best interests of their clients.
- Buyers and sellers must be treated honestly, fairly and promptly.
- You must provide clients with information on their prospective liabilities and be upfront with any charges.
- Potential clients must be provided with your terms of business, including any agency fees.
- You must not make misleading statements, show bias or provide a false description of a property.
- Photos of a property should not be doctored in any way.
- You must declare to a buyer or seller if you have a personal interest in a property (for example, you are selling on behalf of a relative).
- You cannot work as an estate agent if you have undischarged bankruptcy.
Failure to comply with this Act could result in you being banned from working as an estate agent.
Comply with the Consumer Protection from Unfair Trading Regulations (2008)
These regulations apply to a variety of businesses, including estate agents. It controls the descriptions used by estate agents and letting agents (e.g. you cannot provide false information) and ensures you do not engage in unfair commercial practices when attempting to sell or rent out a property.
Use legally binding contracts
Estate agents should sign a legally binding contract with a client if they are selling their home. You must also ensure you comply with the terms of the contract.
There are different types of contracts, including:
- Sole Seller Agreement.
- Sole Agency Agreement.
- Multi-Agency Agreement.
Your contracts must include a 14-day cooling-off period. You should also include a tie-in period, a sole agency agreement time limit and any fees your customers should be aware of.
Present all offers to the seller
Any offer you receive on a property (even if the offer is significantly under the selling price or doesn’t fit in with the seller’s terms) must still be presented to the seller. You are legally obligated to ensure that all offers are presented promptly and are presented in writing to the seller. These obligations apply right up until contracts are exchanged. Keep in mind that if the seller is using your services as an estate agent, all offers must be made through your agency.
Ensure your sellers or landlords have an Energy Performance Certificate (EPC)
An EPC is required whenever a property is built, sold or rented. Any client that intends to sell or rent out their property through your agency must order an EPC before you list their property.
An EPC should contain information such as:
- Information about the property’s energy use and typical energy costs.
- Recommendations about how to reduce energy and save money.
- The property’s energy efficiency rating (ranging from A to G).
If the property is located in Scotland, the EPC must be displayed somewhere on the property.
Comply with Consumers, Estate Agents and Redress Act (2007)
Under the Consumers, Estate Agents and Redress Act, your business must be a member of a redress scheme. This provides regulations to estate agents in the UK and requires you to keep records and allow trading standards officers to inspect your business.
The two approved schemes in the UK are:
- The Property Ombudsman.
- Property Redress Scheme.
If your customers are dissatisfied with your service or any part of the sales process, they can escalate complaints to the redress scheme you are registered with. Failure to comply with this Act can result in a Penalty Charge Notice of £1,000.
Ensure you belong to a Client Money Protection (CMP) scheme
If you operate as a letting agency, you must ensure your business belongs to a government-approved CMP scheme. This scheme reimburses landlords and tenants in the event that the letting agency (you) misappropriates their rent, deposit or other client funds. The rules regarding CMPs can vary depending on where in the UK your business is located. To comply, you must hold your clients’ money in an account with a bank or building society that is authorised by the Financial Conduct Authority. You must also get a certificate confirming your membership. Failure to join a CMP scheme could result in a fine of up to £30,000.
Register for money laundering supervision with HMRC
Any business operating as an estate agency must register with HMRC for money laundering supervision. You will need to update your registration every year and pay an annual fee.
Your fees will include:
- An annual registration fee for each premises.
- A fit and proper test for each person tested.
- An approval process fee for each person tested.
To comply with requirements, you must specify the customer identification procedures you follow and keep records of these procedures, you must specify your internal reporting procedures and ensure your employees are trained in these procedures.
Comply with the Auctions (Bidding Agreements) Act 1927
This Act applies to any estate agent businesses that conduct or take part in real estate auctions. It regulates the way in which these auctions are conducted.
Obtain a Basic DBS Check Certificate
As an estate agent, you will need to apply for a basic-level DBS check.
The type of check you require depends on the country you live in:
- England: Disclosure and Barring Service (DBS).
- Wales: Disclosure and Barring Service (DBS).
- Scotland: Protecting Vulnerable Groups (PVG) Scheme.
- Northern Ireland: AccessNI.
Comply with the General Data Protection Regulations (GDPR) and the Data Protection Act (DPA)
You must comply with both pieces of legislation when storing or sharing personal information, such as your customers’ personal information, contact details and banking information. You must also apply for a Notification to Process Personal Data Licence. You will also need to apply for a licence with the Information Commissioner’s Office and renew your registration every year.
Comply with employment legislation
If your hire any employees to work for your business, you must ensure you follow employment legislation, including the Employment Rights Act (1996) and the National Minimum Wage Act (1998). You must also comply with legislation relating to recruitment, working hours, sickness, discrimination, dismissals, and maternity or paternity pay.
Register your business
You must register your business with HMRC before you begin operating. You can register as a sole trader or as a limited company. You will need to register your business name and any other relevant information.
Register for self-assessment tax
This allows you to calculate and pay your own taxes each year. You will need to track your finances every month and submit any expenses as part of your tax assessment.
As part of your tax responsibilities, you must:
- Record all forms of income and expenses.
- Complete an annual self-assessment tax return.
- Register for VAT if you earn above the threshold (currently £85,000).
- Pay National Insurance contributions.
- Keep a record of your business accounts for the previous five years.
An Estate Agency Premises
The following legal guidelines apply specifically to estate agency businesses that open a physical premises (i.e. an estate agency shop):
Comply with fire regulations
As the business owner, you are responsible for fire safety measures on your premises.
There are multiple fire regulations you must ensure you comply with, including:
- Conducting a fire risk assessment.
- Complying with the Regulatory Reform (Fire Safety) Order 2005.
- Implementing any necessary fire safety measures.
- Implementing emergency procedures and ensuring these are clearly displayed.
Comply with the Electricity at Work Regulations 1989
The Electricity at Work Regulations state that any workplaces that use electricals must construct electrical systems in a way that prevents danger. You must also maintain electrical systems to ensure they are safe, ensure electrical equipment is checked by a competent person annually and conduct Portable Appliance Tests (PAT).
Comply with gas safety regulations
You will need to have your boiler and any equipment that uses gas inspected by a gas-safe engineer. If your equipment is deemed safe to use and complies with government requirements, you will be issued a Gas Safety Certificate. You will need to display your gas certificate clearly on your business premises.
Comply with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013
RIDDOR states that you must report all injuries, diseases and dangerous events that occur in your business. Reports must be made to the Health and Safety Executive (HSE) using an appropriate recording document. These regulations apply to any incidents that involve employees or customers and that occur on your business premises or when you are showing a client around a property.
Comply with the Provision and Use of Work Equipment Regulations (PUWER) 1998
PUWER regulations apply to you and any employees you hire. You must ensure any equipment used in your business is fit for purpose and is maintained and inspected regularly. You must also ensure that health and safety risks are minimised to an acceptable level, that you have the correct knowledge and training to use the equipment, and that protective measures are put into place. Equipment should also be used under appropriate conditions. These guidelines are applicable to equipment such as laptops and computers and any furniture you have in your premises.
Prepare a health and safety policy
The law states that every business in the UK must have a specific policy for managing health and safety. Your policy should state exactly how you will manage health and safety in your business, who is responsible for specific tasks and how and when these tasks are completed.
Comply with the Workplace (Health, Safety and Welfare) Regulations (1992)
Under these regulations, if your business has five or more employees you must ensure you conduct appropriate risk assessments, minimise any risks and maintain all equipment. You must also make sure high levels of cleanliness are maintained.
Appoint a competent person
A competent person should be appointed to help your business meet your health and safety legal duties. You can act in this role yourself or appoint another person to fulfil this role. The competent person should have the skills, knowledge and experience to identify any hazards in your business and put controls in place to protect people from harm.
An Online Estate Agency
The following legal guidelines apply to estate agency businesses that operate online:
Ensure your website is disability friendly
Under the Equality Act (2010), all websites in the UK must be accessible to people with disabilities. If you set up a business website, you must make reasonable adjustments to your website to ensure it is accessible, for example, having text-only versions of each page so that they can be read by text converters.
Ensure your website complies with the guidelines
If you set up a website for your estate agency, there are several guidelines you need to comply with, particularly relating to:
- Privacy policies.
- Cookie legislation.
- Service descriptions.
Keep in mind that your business will be subject to additional legal guidelines if you (or anyone in your estate agency) offers services such as:
- Financial services.
Positives of Owning an Estate Agency Business
Running an estate agency business can be rewarding in many ways.
Some of the main pros associated with this type of business are:
Estate agents can earn a high commission on top of their set salary. Commission amounts typically vary from 0.75% to 3.5% of the property’s sale price. If you sell a property for £290,000 (the average house price in the UK), the commission could be as high as £10,150. Even if this commission needs to be shared with other agents, you can still earn an impressive income from commission alone.
An exciting career choice
An estate agent can be an exciting career choice that allows you to look around a huge number of properties of different values and come up with new and inventive ways to maximise the potential of the property and attract buyers. The huge success of property TV programmes such as Escape to the Country, Selling Sunset and Under the Hammer shows just how much many people love to look around other people’s homes. Doing this for a living can be fun and rewarding.
Helping your clients
As a real estate agent, you will be an important part of your clients’ lives. You can help them buy their first home, their dream home or their forever home, invest in property or sell their home for a profit. Seeing the joy on your clients’ faces when they buy or sell a home and seeing the difference you have made can give your career a sense of purpose and help you keep motivated.
A flexible schedule
You will have complete control of your schedule and can pick and choose your working hours. If you need a specific day off or want to finish early, working in real estate gives you much more flexibility compared to traditional 9-5 office jobs. You can also control your own workload, choosing how many properties you want to list at one time. As your business grows and you hire more employees, you could also choose to take a step back and hand over a lot of the day-to-day responsibilities to your staff.
Opportunities for growth
An estate agency business is highly scalable, with great opportunities for growth. You can start off as the sole estate agent, working for yourself, and then grow your business by hiring more estate agents, branching out into more expensive properties and offering your services in multiple locations. Because you will already have a solid business plan, a good reputation and an established platform, you can easily adapt your business to take on more properties or handle increased market demand. You can easily increase your revenue without significantly increasing your costs.
Client recommendations and referrals
Unless your clients are investors who purchase multiple properties, they are unlikely to use your services repeatedly. However, if they have a good experience and you are able to help them buy or sell a property, they may recommend you to their friends and family. This can help you to grow your client base and take on more properties.
Despite consistent predictions that the housing market would decline, the market remains consistently strong, house prices continue to rise, and the number of buyers and sellers remains high. Having a high demand for your services makes it more likely that your business can grow and succeed and can help you to maximise your profits.
Design your dream business
You can set up your dream estate agency and make the best decisions for you and your business. You can choose the types of properties you want to focus on (e.g. commercial properties, high-value residential properties or rentals) and can decide how you want to run your business (e.g. online or in-person). Designing your dream business can be very rewarding.
Estate agencies get a lot of exposure from online property searches, social media and by having a ‘For Sale’ sign outside the property with your business name, logo and contact information listed. These free marketing methods can help to bring a lot of business to your agency and can help you to sell properties with very little effort.
Connect with other people in the industry
You can build connections with other people in the housing industry and even your customers. Building both professional and personal relationships allows you to stay up to date with new ideas and selling strategies and create useful business connections that can help you to grow your business. You can spend time with like-minded people, learn new skills and gain knowledge from them.
Do what you love
If you love the property industry and are passionate about selling houses and helping people to fulfil their dreams, then an estate agency business can be very rewarding. Genuinely loving what you do can make your business feel less like work and more like a vocation. Being passionate about your business can also make it more likely that your business will succeed.
Every day is different
Running an estate agency will never get boring. Every day will be different and will present new challenges and different customers. You will be touring different properties, dealing with a variety of clients and handling different tasks related to the properties and your business. A varied working week helps to keep your job interesting.
Create a positive work environment
An estate agency can be a great place to work. You will likely be working with different estate agents and other staff who all bring different skills, knowledge and experience to your business. You will also be spending extended periods of time with your customers, which enables you to build positive relationships and create a positive work environment.
Be part of your local community
You will likely run your estate agency in your local area (as you will already be familiar with the area and the property types and values). Helping people to buy, sell and rent property in your area allows you to connect with people from your local community, both personally and professionally. You can also give back to the community, by donating to charity and getting involved in community events. Your business could become an important part of your local community.
If you are an outgoing person and you enjoy speaking to people from all different walks of life, you will likely enjoy working in a customer-facing business. You can get to know your customers and spend time talking to them every day. Because you will be spending a lot of time with individual customers, you can build strong relationships with them.
Unlimited income potential
The more exposure your estate agency gains and the more properties you sell, the more successful your business will be. As your business grows and you develop a good reputation, you will see your profits grow. You can even charge higher prices for your services and hire more staff and expand your business to increase your profits. Real estate can have a high-income potential and your profit margins are likely to be high. With a good business plan and strategy for growth, your business could have unlimited income potential.
Be your own boss
There are multiple ways you can run your business and maximise your profits. As the business owner you decide the type of estate agency business you set up and your primary selling strategy. You can choose the employees you hire and the properties you accept, choose whether to expand your business and decide exactly how to run your business. You can make the best decisions for you and your business.
Negatives of Owning an Estate Agency Business
Although running an estate agency business can be rewarding in many ways, there are some negative aspects of this type of business that you should be aware of:
You will be dealing with properties of high value and helping your clients to buy or sell their most valuable assets. You will also be responsible for valuing properties, creating contracts, managing negotiations and handling large sums of money. As the business owner, you will also be responsible for complying with legal requirements, managing your estate agency and your staff and ensuring the success of your business.
There may be times when your agency is extremely busy and you have a lot of listed properties and other times when the market is quiet and you have few properties. Having inconsistent business can result in irregular income and can make it harder to create your business and personal budgets and plan your staffing requirements.
Irregular working hours
You will likely need to meet with clients, visit your properties and do showings at times when your clients are available, which usually means at the weekend and in the evening. Although you will have some control over your schedule, failure to work during these peak times can make it more difficult to sell houses and can affect your income. However, working irregular hours can have a negative impact on your personal life.
Each client requires a high time commitment
Buying or selling a property is a long and arduous process which requires dedication and a high time commitment from you. From touring, valuing, photographing and listing a property, to showing it to potential buyers, answering their questions and concerns and dealing with any issues that arise, it can take a long time to sell each property and it can be a stressful process.
Some clients can be difficult and demanding and have unrealistic expectations of you. For example, they may expect you to sell their property in an unrealistic timeframe or expect unrealistic discounts. Dealing with these clients can be stressful and time-consuming and can take your time and attention away from other clients. They can also negatively affect your business, for example, if they withdraw their property from the market or write a negative review.
Repeat business is rare
Many businesses capitalise on and succeed because of customer loyalty and repeat business. However, this is rare in the estate agency industry, as the majority of buyers and sellers stay in one house for years. Being unable to rely on repeat business can make it more difficult to grow your business and increase your revenue.
There are already many successful estate agencies in operation, including online, low-commission agencies. If these agencies are already operating in your area or in your chosen niche, this can make it more difficult for your business to grow and succeed and can reduce your overall profit margin.
A lot of skill, knowledge and experience is required
To help your business succeed, you will need to be highly proficient in a variety of skills (e.g. negotiation and property valuation) and will need to have a lot of experience working in the real estate industry. You will also need a high level of knowledge about a variety of properties and a strong understanding of the legislation. It can be time-consuming to gain the appropriate skills, knowledge and experience to make your business succeed.
Complying with legislation
There are many different pieces of legislation and legal guidelines you will need to comply with. Not only can this be complicated and time-consuming, but any non-compliance (even if this is accidental) can be punished with a fine or the forced closure of your business. Some types of legislation also require you to go through specific training and/or gain a qualification, which can be costly and arduous. This can be very stressful.
Issues out of your control
This can be one of the most frustrating aspects of running a business, as things that are out of your control can delay projects and have a negative impact on your profits. For example, a property you are just about to sell could be taken off the market or one of your properties could fail its survey. These issues can result in unhappy customers and a loss of income.
It can be stressful and demanding
Not only will you have a high number of responsibilities, but you will also be responsible for keeping your clients happy and ensuring each property sells. Running an estate agency business can be stressful, particularly if you also have to manage employees and you are listing multiple properties at one time. You are also solely responsible for the success of your business, which can be stressful.
Your business could fail
Starting up your own business can be risky. Many new businesses fail which could result in you losing money or getting into debt. Your business could fail for several reasons, such as high local competition, an ineffective business plan, if there is another recession or a period of financial difficulty or if mortgage rates continue to rise.
There are many staffing challenges you could face, such as a lack of staff motivation, customer complaints about staff and staff not fulfilling their expected duties. It can be difficult to create and maintain a positive work environment when working in such a busy, competitive industry. You will also have lots of responsibilities related to your staff, such as hiring staff, staff training, day-to-day management, staff rotas and staff payroll. While your business and your profits are growing, you may have to undertake many of these responsibilities yourself.
Although the majority of customers leave honest reviews, some customers are difficult to please and will leave a negative review because of the smallest complaint (even if it is something outside of your control, such as a property failing an inspection). Sometimes a fake customer also leaves a fake review, which can be extremely difficult to disprove and remove. Negative reviews can be extremely damaging to your business, particularly if your business is new or you’ve had relatively few reviews.
As you are self-employed, you won’t receive benefits such as pension contributions. You will also be responsible for doing your own taxes and organising your National Insurance contributions. You will also have a lack of job security.
Planning Your Estate Agency Business
If you are considering starting up an estate agency business, an effective and well-designed business plan is essential. A business plan can help you to focus on the specific steps that will help your business succeed, plan your short-term and long-term goals, determine your financial needs and help your business to grow.
Your business plan should contain information such as:
- Your company information.
- Your company description.
- The services you will provide.
- Your branding, marketing and advertising plan.
- The structure of your business.
- The operational plan for your business.
- The financial plan for your business.
When creating your business plan, some factors you will need to take into consideration include:
What types of properties will you specialise in?
Will you focus on residential, commercial, industrial, land or special-purpose properties? Once you have determined the type of property your estate agency will focus on, you can then choose to specialise further. For example, you could specialise in residential multimillion-pound properties or properties in a rural location. Consider where your business is located, your competition and your own experience when determining the focus of your estate agency.
Will you focus on for-sale or rental properties?
As an estate agency, you will definitely list properties for sale. However, you may also choose to list rental properties. If you do decide to focus on the rental market, you must then decide how involved you want to be. For example, do you want to handle customer deposits and monthly rental payments, do you want to act as the property manager, do you want to handle rental contracts? Being responsible for these tasks can be time-consuming. However, it can also provide you with extra income, as landlords will pay you a monthly fee for managing their properties.
Will you operate an in-person or online estate agency?
This is another important factor you will need to consider when planning your business. Deciding how to run your business and your primary operation strategy can be difficult. You could choose to utilise a combination of both approaches in order to increase your sales. The way you operate your business can impact your start-up costs and running costs, your typical customer base and your premises and staffing requirements. Consider your available capital and the market demand when making this decision. You may choose to set up one type of business initially and then change as your business grows and evolves.
What is your target market?
Multiple factors can affect your target market, including the type of properties you list, the value of the properties and your location. Determining your target market is a key step to helping your business succeed. Once you have identified your target market, you can then determine how best to attract them to your estate agency. Your target market can encompass both the sellers and the buyers.
What are your staffing requirements?
Your employees are another important consideration you will need to make. What are your staffing requirements and which employees are necessary for the running of your business? Because your employee requirements can change as your business grows, you could hire fewer employees initially and then hire more as demand grows and you have the ability to increase your running costs.
What competition do you have?
When considering your competition, look at independent estate agencies and larger well-known companies. Being aware of your competition is an important step to ensuring the success of your business. Analysing your competition allows you to look at what they do well and what you think can be improved upon. You should also look at the types of properties they specialise in and their fees and commission. Analysing your competition also helps you to identify whether there is space in the market for your business and can help you to identify any niches in the estate agency industry that you could exploit.
What is your brand and your unique selling point (USP)?
Creating your brand is a key way to ensure you stand out from your competition. Branding can help you to focus your target audience, attract customers and concentrate your marketing and advertising strategies. Some ways you can create your brand are by focusing on your business’s visual identity (e.g. your business name, logo, signs and your website) and creating a brand story. Your USP can also be part of your brand and can help your business stand out from your competitors. Consider what makes your business special and how this fits into what defines your business.
What are your advertising and marketing strategies?
There are many ways you can choose to advertise your business. This can include partnering with other businesses in your area, advertising on the TV and radio, advertising on social media and using paid online ads. Your marketing and advertising plan should detail what your brand is and how you plan to promote your business. As part of your marketing strategy, consider the most effective ways to reach your target audience and attract potential customers. Create an advertising plan that is specific to the type of estate agency you are going to run.
What are your equipment requirements?
Consult the list above to determine your equipment requirements. The equipment you require will depend on the type of estate agency you set up and the size of your business. Once you have determined your equipment requirements, you can then calculate the initial costs of purchasing the equipment.
What are your start-up costs and running costs?
Consult the list above to calculate your approximate start-up costs and running costs. Determining your approximate costs allows you to calculate your initial investment and what your monthly and annual running costs will be. You can then calculate whether you can finance your business yourself. Being aware of your expected costs also allows you to create a budget, which is a key part of your business plan. Once you have calculated your approximate costs, you can then calculate your pricing strategy and determine your profit forecast.
How will you finance your business?
Consult the list of start-up costs and running costs above to determine what capital you will require. Can you finance the business yourself or will you need to source outside investment? You will also need to calculate when you are likely to begin turning a profit. If you require outside investment, you could consider a bank or other financial institution, a business loan or an investment partner.
What will your fees and commission be?
This is an important factor you will need to consider before your business begins operating. You are legally required to be completely transparent with any fees your clients are expected to pay. Your clients should also be aware of how much commission you charge. You may choose to have set fees and a set commission percentage or decide these figures on a case-by-case basis.
What is your sales forecast?
How many properties can you realistically take on at one time? How long do you approximate it will take each property to sell? What are your weekly, monthly and annual sales forecasts? You can also analyse the sales forecasts of other estate agencies and look at how sales vary throughout the year to estimate demand. As your business grows, your sales forecast is likely to change.
Your strategy for growth
Your strategy for growth is the actions you will take to realise your goals for expansion and any potential challenges your business could face and how you will avoid or overcome them. Being aware of any potential challenges can help you to prepare for them and hopefully avoid them. This can help to make your business more successful.
Potential challenges could include:
- Difficulties finding listings.
- Your advertising not reaching your target audience.
Some potential strategies for growth include:
- Expanding your business into other locations.
- Hiring more estate agents.
- Targeting higher value properties.
What is your business summary?
Your business plan should include a detailed overview of your business, including the type of estate agency you are setting up, the properties you will focus on, your primary operation strategy, your typical customer base, your staffing and equipment requirements and your business goals.
What are your business goals?
Your business goals or objectives are an essential part of creating your business plan. Your business objectives highlight the targets and goals of your estate agency and help you to create a one-year, three-year and five-year business plan.
Your business objectives should be SMART:
- S = Specific
- M = Measurable
- A = Achievable
- R = Realistic
- T = Time-bound
Have you complied with all legal requirements?
Consult the list of legal requirements above to check you have complied with all requirements and regulations and that all your paperwork is accurate. Failure to comply with legal requirements could have a detrimental effect on your business or could result in a fine, the forced closure of your business or, in serious cases, prosecution.