Rightmove is facing legal action from estate agents who claim the online property portal is charging them excessive and unfair fees for listing homes.
The FTSE 100 group on Thursday acknowledged receipt of a ‘potential claim’ in a short update to investors, but said it was ‘confident in the value [it provides] to partners’.
It followed reports that former Competition and Markets Authority panel member, Jeremy Newman, is leading a legal claim which could result in damages worth £1billion.
Newman argues Rightmove’s profit margin of around 70 per cent as of 2024 makes it the most profitable company in the FTSE 100 and demonstrates ‘unfair’ practices.
Estate agencies across the UK will be represented by Newman on an opt-out basis, with the ‘imminent’ case fully funded by specialist litigation funder Innsworth Capital.
Rebuttal: Rightmove says said it is ‘confident in the value’ it provides to partners
Newman said in a statement: ‘Rightmove knows that, due to its first-mover status, its product is considered a ‘must-have’ for estate agents.
‘It exploits its dominance of the online property portal market in the UK to charge excessively and unfairly high subscription fees, both at face value and when compared with its competitors.
‘Estate agents have had to absorb consistent, excessive price increases on a regular basis.
‘My case will seek to return the overpaid fees to estate agents across the country and to rebalance the relationship between Rightmove and the estate agents that use its online property portal.’
Meanwhile, managing director of Inssworth, which has previously funded mass claims against Meta and Amazon, Ian Gerrard said the legal action was ‘about levelling the playing field for businesses up and down the country.’
He added that claim would serve to deter anti-competitive behaviour and correct ‘the imbalance between big and small in the property sector’.
He added: ‘Without the opt-out collective actions regime, it would be much harder – or even impossible – for SMEs to seek redress for anti-competitive behaviour.
‘As a result of Innsworth’s funding – and at a time of considerable uncertainty for the opt-out regime – businesses within the class will not have to pay a penny towards the claim.’
Rightmove shares were down 558p in early trading.
They fell by almost a quarter last week after Rightmove spooked markets by announcing plans to supercharge profitability further through an embrace of artificial intelligence technology.
Does Rightmove charge too much?
Managing director at RBC Capital Markets Anthony Codling said: ‘The fact that estate agents don’t like paying fees to Rightmove is hardly breaking news.
‘Are the fees uncompetitively too high? Fees are in the eye of the beholder. Is a business class flight from London Heathrow to JFK too expensive? For many of us yes, but cheaper seats are available that get you to the same destination on the same plane at the same time. Some willingly choose to turn left and the rest of us turn right.
‘Rightmove offers a range of packages to its customers, and they choose which to pay for.
‘They balance the return on investment – if I spend a few pounds more will I make a greater return (win more instructions or make efficiency gains which justify the costs)?
‘Just like asking prices for houses, if the price is too high, make a lower offer or buy another house. Very few of us choose to sue the supplier.’
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