52 King Street, Southall, Middlesex, UB2 4DB

7,000 estate agents at risk of going to the wall, says study

  • Home
  • Recent Blog
  • 7,000 estate agents at risk of going to the wall, says study

High street operators face triple whammy of internet competition, falling prices and fee cuts More than 150 estate agency firms went insolvent last year and as many as 7,000 are at risk as high street operators face the triple whammy of online competition, a sagging property market and cuts to letting fees.
A study by accountants Moore Stephens found that 153 estate agency firms went insolvent in the year to May 2018, a small increase on the 148 the year before.
But it found that more than 7,000 estate agents “currently show signs of financial distress”.
Last week, shares in Britain’s biggest estate agent, Countrywide Properties, plunged 25% after it issued its fourth profit warning in eight months and called on shareholders to raise fresh funds to cut its debt.
Countrywide, the company behind Hamptons, Bairstow Eves, Taylors and Gascoigne-Pees, has been hit hard by a downturn in the housing market in London and the south-east, a botched revamp of the business and growing competition from new online firms such as Purplebricks.
Estate agents focused on the Brexit-hit London property market have been among the worst affected. Earlier this year Foxtons reported a 65% fall in profits.
Moore Stephens said government plans to ban letting fees charged to tenants may narrow the profit margins of some estate agents even more, as fees from tenants currently contribute significantly to the bottom line.
Estate agents rely on transaction activity rather than rising house prices to earn commission, and have been hit hard by the 20% fall in the number of property sales in the London area since 2014.
The extra stamp duty surcharge of 3% of the value of a buy-to-let home introduced in April 2016 has also added to the woes of estate agents, with some buy-to-let investors choosing not to add to their portfolios.
Chris Marsden, restructuring partner at Moore Stephens, said: “Insolvencies of high street estate agents are increasing as online competitors continue to chip away at their sales.
“With the ban on letting fees stated to come into force in 2019, estate agents will struggle to pass those fees on to landlords.”
“Some areas in the UK are appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate.”

Since you’re here …

… we have a small favour to ask. More people are reading The Guardian’s independent, investigative journalism than ever but advertising revenues across the media are falling fast. And unlike many news organisations, we haven’t put up a paywall – we want to keep our reporting as open as we can. So you can see why we need to ask for your help.
The Guardian is editorially independent, meaning we set our own agenda. Our journalism is free from commercial bias and not influenced by billionaire owners, politicians or shareholders. No one edits our editor. No one steers our opinion. This is important because it enables us to give a voice to the voiceless, challenge the powerful and hold them to account. It’s what makes us different to so many others in the media, at a time when factual, honest reporting is critical.
If everyone who reads our reporting, who likes it, helps to support it, our future would be much more secure. For as little as $1, you can support the Guardian – and it only takes a minute. Thank you.


Leave a Reply

Your email address will not be published. Required fields are marked *

BLOG CATEGORIES