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Welsh council angers private firms by setting up estate agency

by Martin Shipton,

Source: Western Mail

May 20 2011

A Welsh council has infuriated private businesses after becoming what is thought to be the first local authority in the UK to launch its own estate agency.

Angry estate agents have taken their complaints about Neath Port Talbot council’s new venture to First Minister Carwyn Jones and other senior public figures.

But the local authority has strongly defended its decision to open a business that will sell and let homes from Carmarthen to Cardiff.

Property Bay Wales, which is run from the civic centre in Port Talbot, is the trading name of a company wholly owned by the council. Yesterday its website was offering only one property for sale.

Steve Kidwell, the council’s coordinator for housing renewal and regeneration, said the company was set up using legislative powers to enable local authorities to trade.

Set up in 2007, it has offered property services such as party wall surveying, codes for sustainable homes, property design, project management, lettings and, most recently, estate agency.

“Property Bay Wales trades within the open market in the same way as any other private company and does not require funding from the council. All running costs are funded by trading income. Although it does not cost the council anything, all income it generates through its services are recycled by the council into local council services,” Mr Kidwell said

He said the skills of existing council employees were used in delivering the company’s commercial services and all salary and associated costs were paid from company income.

Mr Kidwell added: “It is fair to say that the estate agency is at an incubation stage. Assuming that it develops further, there are a number of markets that we are currently interested in other than that of a traditional estate agency service – for example, online “virtual” services.

“This is because we do not have a traditional shop front agency and much of our work is online, targeting disadvantaged groups that cannot move home as they are unable to afford the traditional sale fees. We can also provide a service for clients who specifically prefer a local authority approach.

“The company aims to apply core local authority principles, offering a customer-centred approach and value for money. There is no doubt given the current financial climate that it’s a competitive market, but difficult times require creative solutions.”

However, Port Talbot estate agent Mathew John labelled the scheme “an astonishing waste of taxpayers’ money”.

“Although we are seeing severe cuts in services throughout the borough, the council has invested in a brand new website, advertises weekly in the local property guides and employs staff to run this enterprise,” he said.

“It is an irony that, as if estate agents are not finding the current climate difficult enough, they now find themselves paying business rates to a local authority that is using this money to directly compete with and undercut them.

“Local authorities should be spending their budgets on essential services to the benefit of the community, not on an enterprise which is having a detrimental effect on the very people who live and work in them.”

Peter Morgan, another Port Talbot estate agent, said: “Whatever the council says, it is able to undercut established estate agents because it is using its own offices and doesn’t have the expense of operating on the high street. Their standard fee is 895 plus VAT – I wouldn’t get out of bed for that,” he said.

“It leaves a very bad taste in the mouth.”

Cardiff-based estate agent Kelvin Francis, of the Royal Institution of Chartered Surveyors Wales, said: “I think it’s doomed to failure. There’s an awful lot more to selling property than just advertising homes on a website.

“I haven’t heard of a local authority setting up its own estate agency before, but supermarkets have tried and failed. Superficially selling property sounds like a good and easy way to make money, but there are many potential pitfalls and it is by no means as easy as it sounds.”

A spokesman for the National Association of Estate Agents said: “So far as we are aware, this is the first time a local authority has launched an estate agency of its own. Our view would be that whoever works for an estate agency should have qualifications that are appropriate for the industry.”