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.
For more read the full of article at The Guardian
