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A quarter of estate agents 'in financial distress' A quarter of estate agents 'in financial distress'
(35 minutes later)
More than 7,000 UK High Street estate agents are showing signs of financial distress as they face fewer sales and online competition, a study has found.More than 7,000 UK High Street estate agents are showing signs of financial distress as they face fewer sales and online competition, a study has found.
The report - from accountancy firm Moore Stephens - suggests that some 27% of agents are struggling to survive.The report - from accountancy firm Moore Stephens - suggests that some 27% of agents are struggling to survive.
One of the main reasons is a long-term decline in property sales.One of the main reasons is a long-term decline in property sales.
Between 2014 and 2017 the number of transactions in London dropped by 20%, while sales across the UK have fallen by 1% in the past year.Between 2014 and 2017 the number of transactions in London dropped by 20%, while sales across the UK have fallen by 1% in the past year.
Last week, shares in the country's largest estate agent, Countrywide, dived by more than a quarter after it issued its second profit warning of the past 12 months. Moore Stephens said the growth of online agents such as Purplebricks and Emoov had also been a factor.
Rival chain Foxtons has also had problems, reporting a 15% decline in revenues during the first quarter of 2018.
Moore Stephens said the growth of online agents such as Purplebricks and Emoov has also been a factor.
"Insolvencies of High Street estate agents are increasing as online competitors continue to chip away at their sales and undermine commission rates," said Chris Marsden, restructuring partner at Moore Stephens."Insolvencies of High Street estate agents are increasing as online competitors continue to chip away at their sales and undermine commission rates," said Chris Marsden, restructuring partner at Moore Stephens.
"Some areas in the UK appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate.""Some areas in the UK appear to have an excess capacity of estate agents, which could mean there is not enough business to spread around as property transactions stagnate."
He also said that plans to ban letting fees to tenants - expected to come in early next year - could dent profits even more.He also said that plans to ban letting fees to tenants - expected to come in early next year - could dent profits even more.
Since 1 May the UK's largest chain of estate agents, Countrywide, has seen its share price fall by more than 60%.
It has issued two profit warnings in the last 12 months.
Rival chain Foxtons has also had problems, reporting a 15% decline in revenues during the first quarter of 2018.
Its share price has fallen by nearly 25% since the start of May.
In comparison, Purplebricks, the online agent that charges a flat fee for selling a home - rather than a commission - has only fallen by 8.2%
On Monday the firm announced further expansion in North America, with the purchase of an online estate agent in Canada. Purplebricks already has operations in Australia and the US.
Moore Stephens said the number of High Street agents in the UK in difficulty is up from 4,928 - or 19% - in 2017.