The losses will stem from the closure of banking counters within 121 of HEA’s 218 branches, and a further 1,000 or so estate agency staff will transfer to LSL when the ‘sale’ is completed early next year.
It’s not much of a surprise that Lloyd’s is getting rid of the business; estate agency is hardly a great money spinner at the moment after all, and it only ended up owning the business after its controversial ‘rescue’ of HBOS last year. The bank also has plenty of bigger fish to fry - like trying to avoid getting involved in the government’s toxic assets scheme, for one. Or as the Lloyds statement on the matter drily puts it ‘an estate agency is no longer integral to [our] business model.’
So the deal wasn’t unexpected, but the fact that Lloyd’s is giving it away must be giving the industry some food for thought. HEA is the fourth largest agency in the country, after all, and was expected to go for more like £10m. If a business that size is only worth a quid, what hope for the rest of the sector?
Back in August, Lloyd’s disposed of another unwanted post-merger subsidiary, Insight Asset Management, although for a rather better price of £235m. The bank – 43% owned by the taxpayer – is now busy mulling an £11bn rights issue in an effort to avoid placing any of its assets in the government’s Asset Protection Scheme. Involvement in the APS could incur a £15.6bn fee and see the taxpayer’s holding rise to 63% - neither of which eventualities hold much appeal for Lloyd’s management.
But the HEA deal looks like a good ’un for the lucky buyer LSL, the firm behind the YourMove, Reeds Rains and InterCounty estate agency chains. Although HEA made a £2m loss last year, its branch network is strong and will at a stroke make MSL the second largest player in the sector, right behind Countrywide, as well as positioning it well for any upturn in the property market that may materialise next year.
LSL also believes that a focus on selling financial products has meant that HEA has been underperforming on the property side of things. So the deal makes a lot of sense, although that will be scant comfort for those employees who now face the run up to Christmas knowing that they may lose their job early in the New Year.