This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2016/nov/24/countrywide-profits-estate-agency-brexit-vote

The article has changed 7 times. There is an RSS feed of changes available.

Version 0 Version 1
Countrywide warns over profits amid housing slowdown Countrywide warns over profits amid housing slowdown
(about 3 hours later)
UK estate agent Countrywide said changes to stamp duty and uncertainty following the Brexit vote meant transactions were significantly lower than last year and were likely to fall further in 2017. The UK estate agent Countrywide has said the fallout from the Brexit vote and changes to stamp duty mean transactions are significantly lower than last year and likely to fall further in 2017.
Shares plunged another 14% after the company warned in a trading update for the third quarter that profits in the full year would be at the lower end of market expectations. Shares plunged another 14% to a record low of 167p after the company said sales in London had fallen 29% in the third quarter and warned that profits in the full year would be at the lower end of market expectations.
“We now expect transaction volumes for 2016 to be 6% down on 2015 and while too early to say definitively, it is likely that the level of market transactions in 2017 will be lower than 2016,” the company said. The drop was largely blamed on the impact of uncertainty arising from the referendum result, which Countrywide said had been greater than expected. The market had been forecasting underlying profits of between £85m and £100m in 2016.
Property sales are expected to fall 6% in 2016. Alison Platt, Countrywide’s chief executive, said there was nothing to suggest sales would pick up in the year ahead. “We don’t expect the market conditions for sales to change over the next year. We can’t see any catalyst for it. Taking this business forward is going to be about self help. The market isn’t going to do us any favours.”
The outlook is weaker nationwide according to Countrywide, but particularly in London, where the number of homes sold fell 29% to 2,484 over the three months to 30 September. Group revenue in the third quarter fell by 4% to £188.5m.
The gloomy update came despite evidence of consumers’ resilience in the months following the referendum. Consumers continue to be the main driver of wider economic growth.
Jim Clarke, Countrywide’s finance director, said there was a big difference between people spending money on smaller, everyday items, and their willingness to commit to buying a home.
“No one can really show them what the future is,” said Clarke. “There’s a real lack of clarity on what post-Brexit Britain looks like.”
The company pointed to Bank of England figures showing mortgage approvals were 12% lower in the third quarter compared with the same period last year.
The gloomy update came a day after Philip Hammond dealt a blow to estate agents, revealing plans to clamp down on upfront letting fees charged to tenants. Delivering his autumn statement on Wednesday, the chancellor said fees often amounted to hundreds of pounds.The gloomy update came a day after Philip Hammond dealt a blow to estate agents, revealing plans to clamp down on upfront letting fees charged to tenants. Delivering his autumn statement on Wednesday, the chancellor said fees often amounted to hundreds of pounds.
He said: “This is wrong. Landlords appoint letting agents and landlords should meet their fees. We will ban fees to tenants as soon as possible.”He said: “This is wrong. Landlords appoint letting agents and landlords should meet their fees. We will ban fees to tenants as soon as possible.”
News of the policy wiped millions off the value of Countrywide on Wednesday as the share price of the company, along with others in the sector, fell sharply.News of the policy wiped millions off the value of Countrywide on Wednesday as the share price of the company, along with others in the sector, fell sharply.
Alison Platt, Countrywide’s chief executive, said on Thursday: “In light of the chancellor’s announcement yesterday regarding letting agents’ fees, we look forward to working with the government through this consultation process.” Platt said on Thursday that she looked forward to working with the government during the consultation process.
Revenue in the third quarter fell by 4% to £188.5m. The number of homes sold in London over the three months fell by 29% to 2,484. “As ever, the devil is always in the detail. Let’s be sure there are no unintended consequences here.”
The Association of Residential Letting Agents has warned that the policy could be counterproductive, because the costs would be passed on to landlords who would, in turn, raise rents to recoup the costs.
Countrywide said changes to stamp duty in the first quarter resulted in a larger-than-usual supply of rental properties, weighing on rental growth. In some areas, rents fell.Countrywide said changes to stamp duty in the first quarter resulted in a larger-than-usual supply of rental properties, weighing on rental growth. In some areas, rents fell.
Neil Wilson, a markets analyst at ETX, described Countrywide’s assessment of the property market as “very downbeat”.
He said: “The company says it’s making good progress but today’s trading statement confirms that estate agents are facing a troubled future.
“Wednesday’s autumn statement bombshell banning letting agents from charging upfront fees to tenants couldn’t have come at a worse time for the sector. The trading statement presumably doesn’t take stock of this change so we could see a greater adverse effect as a result.”