Up close and personal
Hunters managing director Kevin Hollinrake shares the impact of the market downturn on the business and his family with Clare Bettelley, and explains why the future of agency relies on getting personal.
Wining and dining, luxury cars and exotic holidays are typically the first indulgences one forsakes in a recession, not their home, particularly when you’re an estate agent. But that’s the sacrifice one agent recently had to make. And we’re not talking about any agent, but about Kevin Hollinrake, managing director of Hunters, the 14 office-strong estate agency group headquartered in York, who, one would think, is a man with a fair degree of market nous to have come thus far.
But Hollinrake, like so many borrowers, rode the economic rollercoaster with gusto and saddled himself with a whopping mortgage to buy his dream home - a Grade One-listed, four-storey property complete with battlements in the garden (pictured), which he bought for a mere £2m in 2004. Then along came the market downturn, forcing him to sell the dream home and relocate his wife and four children - all under the age of 12 - to rented accommodation in neighbouring Oulston while he awaits his next suitable family home to come on the market.
“Everything was going extremely well with the business, and this was a house I’d looked at since I’d been a small child; we used to deliver milk there when my dad was a milkman, and we just wanted to be back in Crayke,” he recalls in his broad, native Yorkshire tones. “But then along came the downturn, and it was one of those luxuries that had to go.”
Hollinrake is surprisingly unfazed about the forced sale, but it doesn’t take long to realise that this approach to life is part and parcel of the laissez-faire attitude that characterises the 45-year old and which features throughout his career.
He started in agency as a trainee valuer for Claude Elmer after ditching a physics degree at Sheffield Polytechnic, which he decided wasn’t for him. But it took a while for him to warm to agency. “I hated it on my first day; I remember that vividly. It was a foreign environment; I’d never had a proper job. I’d always worked for myself or been in education, so to have that kind of structure was a bit of a culture shock.” Nevertheless, six months after joining, Hollinrake was promoted to succeed the firm’s long-serving valuer.
“It was a sink or swim situation and I managed to swim,” he quips. Hollinrake continued swimming at Prudential where he spent three years as an area manager until he got himself fired for running a video rental business on the side, an incident he dismisses as a personality clash with his boss. It was then that he set about creating Hunters with his colleague, John Waterhouse.
But it could have been any sector in which Hollinrake made his mark, so long as it had the potential to fulfil his lifelong ambition of making a serious amount of money. “I’ve been in other business sectors, and I think the success factors for a business are the same whatever business you choose. It’s helpful if you have some industry knowledge and experience, because what you perceive a business to be from the outside is not always what it’s like on the inside.”
But not even Hollinrake’s industry knowledge could protect him from the severity of the current market downturn. Having grown the group extensively since its launch in 1992 to 24 offices and over 200 staff covering sales, lettings and new homes, 17 years later he faces a business with 14 offices and 80 staff, plus three leases for properties that are now empty, which Hollinrake merely describes as a pain.
“People are the most difficult fixed costs; they’re the most difficult costs to change when things are tough. To reduce our headcount has cost an awful lot of money in redundancies – the best part of £500,000 over the last two years.”
Nonetheless, Hollinrake insists that the downturn has been educational for him, particularly in terms of controlling the growth of the business. “We’re guilty of allowing departments to grow organically; marketing and IT in particular. There was almost an element of empire building in those departments and it was mistake to let this happen.”
Hollinrake claims to have started culling staff in 2007, particularly in his new homes division where he previously employed 30 staff. He has since integrated the team into the sales division and closed the inhouse mortgage division, appointing Mortgage Advice Bureau to undertake the group’s financial services business. “We’re now more focussed on the core areas of the business - residential sales and lettings. We do new homes, but we don’t have a separate department and most of the business is now franchised, which we see as the way forward. “We’re a lot leaner and in better shape to cope with the market we’ve got currently. We’re dealing with 50% less transactions, therefore we need to be 50% smaller.”
Hollinrake believes passionately about Hunters Personal, the franchised part of the group, which he believes he’s got right from the outset of launching it last July. The model, which he says he developed as a means with which to grow the business without increasing its overheads, is a subsidiary of the Hunters group and offers three licensed options. Individuals can either stump up £3,000 for a field sales agent license, which enables them to be home-based with the support of a local ‘hub’ where they can hot desk and access services including IT, training and marketing; £15,000 for an office, which they can turn into a hub or run as a traditional agency office; or £37,500 to create a master franchise, which involves replicating Hunters’ primary model - opening a hub and recruiting field sales agents on a self-employed basis.
Hollinrake points to the growth of property portals and the home-based, profile-led agency market in the US as evidence of the potential future success of Hunters Personal. Nevertheless, he acknowledges that it may be some time before it is fully embraced by Brits. So, for now, he is focused on pitching the master franchise model to fellow agents, with talks underway in Leeds, Manchester and parts of Wales, and other parts of Yorkshire on the cards.
And, as much as Hollinrake believes he’s got the franchise model right - even the 20% royalty fee - and considers office costs and demands a headache, he insists he has no plans to migrate the group’s traditional agency business into the Hunters Personal framework.
Hollinrake has had a tough balancing act to perform with the group’s cost base to ensure that increasing costs relating to new initiatives do not negate the positive impact of the cost cutting exercise he has been undertaking with offices and staff over the last two years.
Hunters Personal has cost him between a hefty £600,000 and £700,000 to establish and now £300,000 per year to run, 50% of which Hollinrake says is being ploughed into the group’s training school, Hunters Academy, to prepare field agents for the role. In addition to training, which ensures that all agents throughout the group are up-to-date on, for example, the Property Misdescriptions Act and money laundering legislation through City & Guilds-accredited courses, field agent costs relate to subsequent auditing, as well as credit checks and psychometric testing.
Vizzihome is a further initiative that Hollinrake has been busy rolling out over the last year. The software, which is being used by agents across the country, including Connells, Countrywide and Spicerhaart, tracks agents’ market share.
Hollinrake believes the business is suitably repositioned to survive the remainder of the market downturn. After two years of losses, the group has returned to profitability. “And we’ll definitely make a profit over the next three months and that’s despite the fact that we’ve got significant costs . We’re very positive about the future, providing mortgage funding stays in place and the issues in the job market don’t get out of hand.”
As well as pitching his new business initiatives, Hollinrake is now busy further rebalancing the group’s cost income ratio. “We’re very focused on paying down our debt and getting back on a strong financial footing. Once we’re at a stage where that work is completed, then I think I can focus on other things again.”
This could mean a return to politics – a sideline career Hollinrake was forced to ditch along with his home when the market took a nosedive and he needed to give 100% of his attention to the business.
He was a Conservative candidate for Dewsbury for a year until last October and is keen to return to the post to tackle his dissatisfaction with how the country is being run, with immigration being a particular frustration.
But for now, while his home may no longer be his castle, Hollinrake will continue growing Hunters in the hope that it starts showing him the serious money again, so that maybe one day he’ll be able to revisit his property dream.
1992-present: Managing director, Hunters
1987-1991: Area manager, Prudential
1985-1987: Trainee valuer, Claude Elmer
On the side
Status: Married with four children
First property: A two-bedroom bungalow in Strensall, Yorkshire, for £45,000 in 1988.
Last property: Crayke Castle (pictured) for £2m in 2004.
Last holiday: Porta Polenta, Majorca
Favourite tipple: Theakson’s Ale
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