Simon Jackson, Chief Executive Officer at SDL Surveying, has led the company for 18 years. We caught up with him to see what has changed over that time and what opportunities and challenges face the industry today.
New markets for growth
Q: Welcome, Simon. Given the changes we have seen over the last eighteen years, I wonder if a good place to start would be a quick precis of SDL as it is today, its vision, markets and strengths?
Yes. SDL Surveying is over 35 years old. It started in the world of straight panel management. Over time, we have developed our own in-house surveying proposition as well. So we have a hybrid model of 120 in-house surveyors, and a network of independently owned and operated firms, very much like a traditional panel.
That said, we don't run it in that traditional a fashion because a lot of them use the Cotality technology. We call those network rather than panel firms, and there is a bit more control for our clients in and around what happens with their work when it goes down that channel. Lastly, while we have been doing survey and valuation for 35 years working mainly with lender clients, we are now increasingly in the B2C market as well.
We have looked carefully at the changing marketplace. It’s clear standard mortgage valuations are reducing while elements like digital valuations are increasing most noticeably in the form of both AVM and desktop valuations. We now have a desktop proposition which we're deploying at scale. But, ultimately, if there are fewer physical valuations, we need to have products and services that can fill that gap while adding real value to clients and and surveyors.
Some of that will be servicing niche markets, but also looking at growth in new markets like B2C. We are also training our surveyors to take on work in the sustainability space, initially with EPCs and then with retrofit, and examining that market closely to understand its development.
If you look at the consultation about EPC standards, landlords are expected to improve their properties within, I think, fairly tight deadlines. If we don't know what an EPC looks like until some point in 2026, then that deadline is shortened even further.
The result is that the scale of such a quick improvement programme for new tenancies may be unachievable. I suspect that the 2028 deadline will be pushed out, but that the 2030 deadline will still exist because it is in the Labour Party manifesto.
The UK demographic of properties does not lend itself to a quick upscale in improved ratings. Not only do you have the logistical issue of getting these improvements done to an as yet undefined new standard, but if you remove a significant percentage of properties from the private rented sector as a result of these requirements, we will incur a massive shortage in properties. There are already 13 households for every new tenancy.
Q: What do you believe are the key challenges around the EPC piece?
There are a few. Just because we've got RICS-qualified surveyors does not mean they have all of the knowledge required to deliver in the sustainability space without putting them through training and development first.
There is a significant training requirement to really understand how a lot of those new energy measures will interact with, for example, different construction types. We are also very mindful of the fact that surveyors didn't go into the surveying profession to look at energy and sustainability per se. We are asking them to do something different and new. And there is the issue of fees, which for an EPC are not spectacular when compared to a standard mortgage valuation, and in the retrofit space, fees can be very inconsistent.
As with any new evolving market there is little standardisation, things are changing very, very quickly because there's very little regulation. Some of the market is installer led and other parts are coming out of the government funding and government schemes side. Then you also have customers who are getting their funding from their own cash or perhaps have a green mortgage.
Q: That sounds though, like you think there is plenty of room for growth in this market?
Absolutely. Lending markets have been really, really stable this year. We’ve all seen volumes in the mortgage space grow a lot more than we've seen in recent years. Notwithstanding international tensions and other market volatility, swap rates have remained remarkably resilient to all that noise and if anything are trending down. There is a strong feeling that we'll see another rate cut in August, and we already have lenders in the mortgage market with sub 4% rates. Sub 4% rates are still, in the context of my lifetime, really good.
So if you can borrow at those sorts of rates to do the work on your house, and, you've got affordability easing, inflation coming down, freeing up incomes for people, and giving some home-owners cash to be able to improve their homes even without additional borrowing, I think people will. Because the one thing that's not going down, particularly like other parts of the marketplace, are utility bills.
I think the tipping point will be when we suddenly get a whole raft of people who want to get the costs of running their home down and get their utility bills under control.
The next question will be, do we have enough people to undertake the work? We have time I believe but not an enormous amount, so we need to get commitments from people now to get properly qualified to be able to undertake the work that is required.
Unlocking data insights
Q: How important is the technology that underpins all this market evolution? Have you seen it change a lot over your time at SDL?
I think there is some technology already delivering some pretty good stuff. The Parity Projects guys, who are now part of Cotality, have done some really interesting things with data and with projections, which needs a bit more publicity.
Q: Motivating consumers is a difficult issue. How might that work?
The unintended consequence of several policy initiatives has been to leave the decision to get a survey to borrowers who understandably, in a market short of supply, have increasingly declined to do so for fear of missing out on their otherwise dream home.
We need to give homeowners this really important information in the existing framework of products rather than making them buy another entirely separate product. It should be part of the upfront proposition, not something you find out about later and go and buy.
Some recent RICS research shows only 10% of people buy a survey and somewhere between 40% and 50% of those, having bought it, stick it in a drawer and never look at it. So there has to be a significant education piece across the whole spectrum about surveys and sustainability, if we want to move the market forward in a more sustainable way. That is upon us all in the wider lending industry to support that.
Brokers, agents, surveyors, banks, conveyancers, everybody needs to be mentioning it to the customer and, and raising the profile of why it's important.
Q: There is so much data out there – is there consensus on what is important?
I think one of the challenges with data is we're all buying similar data and then deploying it independently. It’s not unheard of for different parts of the same financial organization to buy the same data multiple times across different departments who want it for varying reasons and do not liaise across the piece.
Everybody's looking at it through a slightly different filter. You’ve got one set of data, but not one version of the truth probably and consumers, again, have got their own motivations. Lenders, agents, buyers and sellers all have specific motivations for using the same data and potentially drawing different assessments.
Technology infrastructure overhaul
Q: Does the current infrastructure for data transfer and data manipulation hamper innovation?
The infrastructure has, in some key instances, been there since the day dot, and it does constrain things in terms of how much information, and therefore which information you might choose to use to actually make a decision.
It is the same as it was when I joined this business 18 years ago. The core pipe work which moves stuff around between us and lenders is broadly the same and it is hampered by kind of age. There is work going on to improve and update it which will allow more data fields to go into that process but generally we are looking at the same things and reporting them in similar ways, as we were 18 years ago.
By contrast, the software and infrastructure we use to manage our own work has improved significantly with the support of the guys at Cotality.
Q: Would you say that the upgrading of the technology between lenders and valuation firms is one of the opportunities going forward?
Yes because there's some ridiculous legacy issues in that some of those systems carry three memo lines, so when we have three things that occur, we put it into our system and it mirrors it into the system that goes to the lender so they can see it. When you get the fourth one it overwrites the first so they only ever see the last three. I think there are opportunities definitely to update that infrastructure and it'll make efficiency and visibility of what's happening across the board much better.
Also, if someone wants additional information today, it generally sits as an image attachment, such as the site plan for a new build, because it's not a core part of the reporting functionality, It might be a section of the lease, it might be floodplain information or noise pollution. An image is expedient but not efficient because then somebody's got to look at it.
Q: In terms of your own ambitions for SDL, where do you see the firm in the next five years?
We want to continue to grow the business. When I joined this was about 25 surveyors and we're now 120 surveyors. I very much want to see the adjacent markets grow, in terms of the percentage of our P&L that they represent, because they provide some longevity to the business. But new work streams offer surveyors longevity too and a chance to add more value to a career for which they have invested an incredible amount of time and effort.
