Few have profited more from London’s property boom than Foxtons’ owner Jon Hunt. But has the estate agency earned its reputation for sharp practice, asks David Teather.
As the lift doors open and you enter the Foxtons head office, you are hit by an unexpected wall of sound. On the main floor there are some 400 young men and women, telephone headsets strapped to their ears as they take and make sales calls. Most calls to any branch of the estate agency will be redirected here. It is like being in a noisy Wetherspoons pub on a Friday night. The men especially fit the estate agent type: early 20s, suits and spiky birds-nest hair that says they are in touch with their inner boy band.
The banks of telephones carve up London. Signs hang from the ceiling marking out the territory of the teams underneath: Wimbledon, Canary Wharf, St John’s Wood. Upbeat music is playing in the background to keep the blood pumping and when someone makes a sale he or she leaps from their seat to hit a large red button in the middle of the floor, briefly setting off the kind of police siren that Starsky & Hutch used to fix to the top of their car. There is a ripple of applause and the odd cheer each time. The joke never seems to get old. It is them against the world.
Estate agents are widely regarded as an unfortunate side-effect of modern life, like mobile phones on trains or the background hiss of other people’s iPods. For anyone living in London, Foxtons particularly is unavoidable. Its agents dart around town like bothersome mosquitoes in a fleet of 560 branded Mini Coopers, something even its harshest critics will admit was a stroke of marketing genius. Its ersatz “cafe-style” branches with large plasma televisions can’t help but turn heads on the high street.
Once a Foxtons salesperson gets their talons in, it is hard to shake them off. They have a reputation as the most aggressive in the industry. The agency is also well known for its punchy valuations. It was reported to have won the instruction to let the Blairs’ Islington house with the promise of getting 15,000 a month and ended up letting it for 8,000. Rivals willingly gripe that such behaviour sometimes oversteps the mark and a BBC documentary earlier this year appeared to back that view. “Their methods of doing business are at times hideous,” says Harry Hill, chief executive of Countrywide, Britain’s biggest estate agency group.
But despite the bad publicity, Foxtons continues to grow. Figures produced by the agency claim it has 6,090 flats and houses currently on its books in London, more than twice its nearest rivals, Kinleigh, Folkard & Hayward and Winkworth. It emerged this week that the company is now considering a stock market flotation early next year to raise cash for expansion in Britain and in the US, where the agency is building a presence.
The success of the business has made its founder and chief executive, Jon Hunt, enormously wealthy. He recalls borrowing a 100 deposit to buy his first flat at the age of 19, a one-bedroom conversion in Woking for 4,500. Even then he made a profit, selling it two years later for 7,750.
Today, the 53-year-old is a little more used to luxury. He has two homes. A house in Kensington Palace Gardens and a grade I listed country pile with 25 bedrooms that could be straight from an adaptation of Pride and Prejudice – and we are talking Mr Darcy, not the Bennets. A vaulted hall in the the 18th-century estate, called Heveningham Hall, has been described as the “most beautiful room in England”. Hunt was ranked at number 182 in the Sunday Times Rich List this year with an estimated fortune of 347m. He has, he says, a collection of “six or seven” classic Ferraris.
Hunt describes himself as an “army kid”. From the age of seven he saw his parents for just eight weeks a year, and travelled from boarding school in England to Singapore, Canada or Jordan for the summer holidays. He still seems more upper class than flashy estate agent. Despite only a brief spell in the army himself he has a military gait, his hair is carefully combed and the only remotely showy things about him are the bright green cufflinks peeking out from the sleeves of his double-breasted grey suit. He has the firm handshake of someone who has just closed a deal.
He says he is not very political. “This government is pretty good,” he remarks. “I think Thatcher was great. They are both strong leaders. You can go on criticising Blair but he’s not bad. I mean 50 years ago he would have been a raving communist.”
The first branch opened in Notting Hill in West London in 1981 in a former restaurant. Hunt says it was “pure accident” he landed in what would become one of London’s most expensive postcodes. It was five years before a second branch opened in South Kensington. Today there are 20 Foxtons in London. This year, Hunt says profits from the UK business will reach more than 25m and turnover will be 100m.
Hunt makes no apologies for the aggressive style.”They are misunderstood,” he says. “This word consumer in our business is misleading. As an estate agent, if you ask me to sell your house, I am acting for you. You are my client and it is buyer beware. If the buyer wants to take advice he should go off and ask someone else. He shouldn’t ask me. I’m acting for the seller. My job for the seller generally speaking is selling a house for as much money as possible.”
Reports suggest the company motto is “We will go to war for you”. Hunt laughs and says he never said it, but wouldn’t mind if he had. “Of course I would go to war for a client. I’ll do everything I can to get the best price. I’m not shy about it at all.” Foxtons has certainly changed the way that estate agents operate. It is open from 8am to 8pm, 362 days a year.
“It is known to be aggressive,” says Simon Agace, chairman of rival Winkworth. “They will go in with a high valuation and say ‘I am spending a fortune on advertising and will get you the best price’. If someone says ‘I can get you 20% more,’ then very rarely will you turn that down. If it doesn’t sell then the price comes down to perhaps the average that other agencies had valued the property at. But then do you change agency or do you just stay with Foxtons? It is a business model. It is not my model but it is a model.”
The lengths that Foxtons will go to in order to ensure a high price were partly the subject of the BBC documentary Whistleblower, which embedded undercover reporters in five different agencies.
The show directed a number of allegations at Foxtons. Among these were the use of faked documents to support inflated prices, and false offers put forward to sellers. It also alleged that Foxtons-owned mortgage broker Alexander Hall would pass details of buyers’ finances to the agents so they would know how far they could push them. Foxtons, though, were not the worst offenders in the programme, which also fingered competitors including Chard and Prime Time.
“I was pretty disappointed,” says Hunt. “Pretty unhappy. There were several things we had done in there that were wrong. The bit about submitting [false] lower offers was absolutely wrong, clearly wrong and after that I did 600 20-minute interviews inside Foxtons. I don’t think [the problems] were pervasive. I am not saying there were not a couple of things that we did wrong and we straightened those out.” He dismisses the most serious allegation, that Alexander Hall and Foxtons shared information, as “total nonsense”.
Three Foxtons staff featured in the report have since left, and a fourth has been “substantially retrained”, the company says. Still, Hunt adds, it could have been much worse. “If you put two cameras in any organisation for four months … imagine them in some of the financial institutions … and this is what they came up with?” The Office of Fair Trading says it is “keeping a watchful eye” on the company.
The chain has also found itself in trouble for flyboarding, putting boards up in streets irrespective of whether they have an instruction to sell and even pulling down rivals “for sale” boards and replacing them with its own; it was fined in 2003. The most famous occasion of flyboarding was when Alastair Campbell woke to find a Foxtons “For Sale” sign outside his house.
Hill recalls buying a London agency some years ago. “I went to the first board meeting and they said they were having problems with Foxtons pulling down boards. They would go around every night and systematically pull down dozens if not hundreds of boards and replace them with Foxtons’. I said, well, we are not going to put up with that. So the first thing we did was hire a firm of private detectives … The guy came to me two weeks later and said, ‘here’s the evidence but I am not going to do this anymore’. He had been confronted by someone who had smashed his camera and said ‘we know where you live and where your kids go to school’, and he said frankly he was not prepared to put his children at risk. These guys are tough, nasty people. We decided to just swallow the expense and continue putting the boards back up.”
Hunt says flyboarding is now an old story. “We categorically don’t flyboard. We don’t take people’s boards down.” The suggestion of intimidation is the only time he even vaguely loses his composure. “Guaranteed total bollocks, I mean absolute rubbish.”
Foxtons is criticised for refusing to join the voluntary industry ombudsman scheme that gives the public a means of redress if they feel they have been unfairly treated by agents. Hunt suggests trade bodies are anti-competitive, but he will be forced to sign up to a code of conduct under recently announced laws. He says that Foxtons staff undergo 60 hours of classroom work before they are allowed to pick up a phone. After four months they have another 10 hours’ training. “Compare us to anyone in the industry and we are Daz white,” he says. “If I wanted to be the victim, I would say it is the high poppy syndrome.”
Ranged behind Hunt in his office are three maps; one of London, one of the US and one of the world, hinting at the scope of his ambitions for Foxtons.
A seventh branch in the tri-state area surrounding New York will open next year. The target is 15 in Manhattan and 35 in the wider tri-state area. This year the company will make a 6m loss in America. “We are investing for what we hope will be a glorious future,” says Hunt. He believes Foxtons can crack the US not least because of the average 6% commission fees charged, compared with the 3% charged by Foxtons. He wants to export the British model. But is the US not littered with the bodies of British businessmen who thought they could show the yanks a thing or two? He is ready for the question. “I look at [James] Dyson and [Lord] Hanson” he says, “because they are frighteningly successful”.
Money from a flotation would help fund the expansion. “We would be going public after 25-26 years. We are mature enough and profitable enough. You need to be of a reasonable enough size to be on the radar screen of the institutions.” A number of investment banks pitched to handle the Foxtons flotation. He picked Credit Suisse, partly because it had been stalking him for the past five years. If nothing else, Hunt is one to appreciate the value of a good pushy salesman.