Edward Erdman is the “grand old man” of property. Now 84, he still goes to his office in Grosvenor Street every working day in his capacity as a consultant to the firm he founded 56 years ago, and which bears his name. He is also chairman of Chesterfield Properties and a consultant to Warnford Investments. His book People and Property, released in 1982, is full of anecdotes about his contacts, clients and friends — an awe-inspiring list which few, if any, could match and which most would envy.
In 1974 I asked Eddie to join the Central Council of the World of Property Housing Trust (now the Sanctuary Spiral Housing Group). He became chairman in 1978 — and stuck to it long after I had left to do other things. He was made life president in 1987 in recognition of the enormous amount of time and energy which he had devoted to the charity.
Few men in the property industry have commanded such respect for their honesty and integrity. He has a bubbling sense of humour to top his years and wisdom.
The views he expresses are his own — and are not attributable to the firm, the property companies with which he is connected, or the many other organisations with which he is or has been concerned.
When I read again the interview we did nearly 20 years ago, I was delighted to see that your ideas then about the change in the Use Classes Order had eventually come into effect. It had taken government a while to achieve what you suggested, but they got there in the end. That piece of forecasting — or expression of hope — encourages me to ask you to do some more. You have a wealth of years and experience and there is no better basis for prognostication. First, let us talk about the profession. Twenty years ago the profession was led largely by individualists like yourself. We now have plcs, management by committee and some very large practices. How do you view the changes — and where are we going next?
When I retired our total personnel was about 180. The firm was regarded as one of the sizeable firms in general practice based in London — but covering the entire United Kingdom with an office in Glasgow and a smaller office in Paris. Today, a practice 180-strong would probably be regarded as comparatively small. Things have changed — but I still believe that a professional practice should be judged on quality, not numbers. In my early days, partners watched each other from opposite sides of a partner’s desk. Partnership today, with partners in, say, England, Australia and America I regard as a misnomer. It is hardly a partnership at all.
As far back as 1958 my former partnership was converted into a company with special articles approved by the RICS and ISVA. It was done to facilitate speedy expansion and to accumulate reserves out of profits. Management shares retained all voting rights. Retiring partners were obliged to sell their shares to the remaining partners of the company. That was all very simple — but it introduced the committee system to replace the old autocracies. So management by committee is not new. Indecision and delay can, of course, arise if a committee is too large. If it is manned, however, by reasonable, prudent and experienced members, and if the chairman or senior partner is respected and left to make the right decisions in the best interests of the practice and after considering the views expressed by all members of the committee, it works. But competent surveyors and valuers are dissipating their energies and their fees if they spend too much time in management committees.
The present trend for early retirement at 60 will be good policy only if the retiring executive has a replacement able to undertake his role. Retiring directors must unselfishly groom successors well before the appointed date.
Today’s very large transactions demand more qualified personnel to cover the ground and to provide separate specialist departments. And these must be supported by an appropriately sized administrative and management staff aided by computers and technical machinery, all of which are expensive. My former practice always included a team of negotiators covering all leading cities and towns throughout the UK. Each was responsible for and fully conversant with the area allocated to him or her. In 1992, it will also be necessary to cover many parts of Europe.
Doesn’t modern surveying practice now demand greater resources in both personnel and money?
Yes. In future, the gulf may become wider between the large practice providing a full service and the agent or surveyor who relies principally on the commissions or half commissions on introductions. To provide a full service, a strong financial base is necessary and a few practices have brought in outside capital by floating on the Stock Exchange. Several others have merged with or been bought by financial houses and other organisations. In such cases, the vital problem will be to retain complete professional independence — which may be extremely difficult. Diversification has been the downfall of many companies recently. Particularly vulnerable are those in other fields who attempt to acquire and to run a surveying practice or buy an estate agency without an intimate knowledge or understanding of the business. The fashion, these days, is for speed of action. There was plenty of money about during the boom to acquire a business based only on an auditor’s report and certified past figures. People, management, good judgment — these are the more important attributes of a business rather than slavishly studying figures and the balance sheet. It is good to get professional advice from accountants as financial consultants as a guide — provided the final decision is taken by the commercial man acquainted with the intricacies of the particular business or profession and the strength, ability and loyalty of its personnel.
Profitability is important for the services industry plcs.
Oh, I don’t say it isn’t. Business firms are usually rated by their commercial success, the volume of their activities and their profits. Professional firms, in my view, are rated on integrity and tradition.
So strong control is vital to maintain these high standards when they have outside financial partners. A great many changes have taken place recently, perhaps too quickly, in the financial world. The surveyor in action has not really changed. The advice he gives his clients and the valuations he makes will obviously change to accord with market conditions and international political influences — but his honesty and integrity shouldn’t change in any way, whatever the market conditions, whatever the influences.
I can only sympathise with the young negotiator or graduate who has lived through a time of boom with an unprecedented rise in rents and property values. We are no longer in a seller’s market. If the young valuer or negotiator has entered into personal commitments under the illusion that his pay must always rise, the downturn is a hard lesson; a bitter pill to swallow. In time, market forces will adjust themselves. The young will outlive the temporary downturn. It has happened before. You have to tighten your belt and remember that deals are done during a slump just as well as they are during a boom. Many people are forced to sell — and it is a question of making more effort and more of the right contacts. We still don’t train people — I suspect we can’t — to have flair, to seek out and cultivate new business.
Do you have any prognostications on planning, the inner cities and housing?
I hope more flexibility can be introduced into planning. Why not, for example, prepare for future road widening when application is made to rebuild an office block? Why not arrange a set-back on the ground floor in exchange for a greater coverage on the upper floors — or allow additional upper floors to more than compensate for the loss on the ground floor. Until the rest of the thoroughfare is set back, this set-back at the entrance can form a drive-in for vehicles.
Friends of mine have been held up submitting an application for town planning consent in a particular area, waiting patiently for the local authority to introduce the amended official local plan which is overdue. I hear of many local authorities in a similar position. Perhaps the DOE will bring pressure to bear on this question. But it is vital that those plans are created and maintained. More co-ordination is necessary between planning and transport authorities. A large, new development creates more traffic and unanticipated traffic jams. In cities, heavy delivery lorries should be restricted to early hours.
On housing, I hope the Government will entrust a greater percentage of local authority housing to well-run housing associations of proven ability and standing. I think it is true to say that housing associations in general have proved their worth in assisting with the housing problem. They are cost-effective and avoid any political bias, being supervised by socially minded unpaid committees.
If you had the power to pass a law, for the benefit of society as a whole or something which would assist professional activity, what would you choose to do?
Very simply, I would stop the banks, building societies, credit card companies and insurance companies encouraging people to borrow money. There should be some restriction. I think the whole thing is getting out of hand.
There was a time when you couldn’t borrow more than £10,000 at one time if you were a company or an organisation — unless it was for the good of the country or some useful purpose. You had to justify your borrowing to the Treasury. We are going through a free trade stage and, like everything else, if you allow people freedom, you will always get some who will abuse the system.
I was on the committee advising the Treasury after the 1973-74 crash. That crash was mostly the fault of the secondary banks. In recent times, the banks have been coining money by lending — it is so eacy for companies to borrow. Advised by accountants looking at balance sheets, they have taken over other companies which they know nothing about and, suddenly, they find themselves in trouble so they sell them off again, often at a loss. People are no longer so interested as they were in building their own businesses. All they want to do is to take over somebody else’s. It’s all very well for accountants to run businesses and be financial advisers provided they have the knowledge of the particular business — but they look principally at figures. I believe you must look at people. It is people who create the figures. It is people who really matter — more than figures.
The prevalent theory that capital sunk in a freehold self-occupied is capital not earning its full potential, which should be sold with a leaseback, is sound only if the capital can be invested elsewhere to provide an adequate profit to cover the rent and possible future rent reviews.
Today, the printed matter and mass of information and statistics showered on executives as a result of modern technology, computers, word processors, telex, fax and copiers can be distracting and disturbing to executives taking decisions unless they are protected from this bombardment by competent assistants.
