Tesco is moving on to the estate agents' patch

They wouldn't let it in the first time, so now it's coming to smash down the door: As if to show that it doesn't have enough on its plate, the retail giant is planning a full-scale tilt at the property market, says David Parsley
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The Independent Online

Tesco is set to take on Britain's estate agents by launching its own, comprehensive property-selling service later this year, after a failed attempt to enter the industry with a private home-sales website in 2007

The grocery group, which has expanded into clothing, electrical goods and insurance serv-ices in recent years, has set this spring as the target date for launching an estate agency that will not only go head-to-head with websites such as Rightmove.co.uk and Primelocation. com, but also, it is understood, take on established high-street businesses. Tesco is thought to be introducing its own offices, complete with sales staff, in some of the company's 2,000 stores across the country.

Tesco would not comment on the precise nature of the plans but did confirm that final details were under discussion. In a written statement, the group said: "While being an online estate agent was never our immediate intention, we are so encouraged by the positive reaction from customers to Tesco's entry into this market that we are now reviewing our business with a view to launching a new and exciting online estate-agency service.

"This would enable us to offer our customers personal advice on the sale of their homes and give them access to the leading property portal websites, which accept listings from estate agents but not from private sellers.

"As a result, customers would get their property in front of hundreds of thousands of potential buyers."

The retailer set up its own "do it yourself" home-selling service last summer in a bid to undercut traditional estate agents. The website charged £199 for homeowners to list their properties, in contrast to the thousands of pounds typically charged by more established rivals.

Tesco said more than 250,000 people visited the site in the first two weeks of its launch in June, but the company struggled to crack the market after online competitors refused to co-operate.

Rightmove works as a portal on which estate agents and developers pay to place their adverts every month. But it refused to accept any homes that were already advertised on Tescopropertymarket.com.

Tesco was forced to halt the service and currently offers only buying advice and support to home movers, as well as products including mortgages, insurance, conveyancing and home information packs. But, fronted by TV property expert Louisa Fletcher, Tescopropertymarket. com will begin displaying homes for sale both in Britain and abroad from March – traditionally the busiest period of the year for house hunters.

Once again, Tesco's plans are believed to include undercutting estate agency rivals, which charge sellers a typical fee of between 1 and 2 per cent if they sell a property. With its huge financial clout and profits of £2.3bn last year, the company is in a position to charge a flat fee of around 1 per cent on each sale it initiates, so attracting sellers away from the traditional high- street agents. Rightmove and Primelocation would also be forced, under competition rules, to list Tesco's properties if it becomes a fully fledged agent.

Ian Springett, the chief executive of Primelocation.com, said: "We are not surprised to hear that Tesco is planning to launch as an estate agent. Clearly it is an extremely powerful brand and already offers a number of services related to home moving. But it will be entering an already very competitive market and may find it difficult to gain a foothold.

"The property market is, in fact, a collection of many local markets, and buyers and sellers value, and need, the knowledge and expertise of locally established agents. It can take a long time to build this knowledge," he said.

Martin Charlick, the general manager at private home-sale site Thelittlehousecompany.co.uk, believes Rightmove and Primelocation are partly responsible for Tesco's move. "When it launched its website last year, Rightmove and Primelocation refused to advertise the properties on their sites and also complained about the launch to the Office of Fair Trading," he said.

"This led to the closure of the private-sale site but got Tesco thinking about whether or not it should go the whole hog and set up a full-blown estate agency business with a dedicated staff and even advisers in some stores. I understand the business will be launched in the spring.

"Rightmove and Primelocation will have a far bigger headache, as will many agents on the high street now Tesco is fully in the market. To some extent, they should have let Tesco get on with the original concept."

Tesco already accounts for one in every eight pounds spent on the high street, and with the launch of an estate agent, is set to take an even greater slice of our incomes. There are also plans for a computer-fixing service, where IT experts will visit homes and solve complex problems.