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One in five estate agencies 'at risk of going broke' warns analyst

Some 19 per cent of estate agents in the UK currently show warning signs that indicate they are at risk of going insolvent according to an accountancy firm. 

Moore Stephens says that its research of data at Companies House shows that 4,928 estate agents out of a total 25,560 are showing signs of financial distress.

It says online estate agencies - it highlights PurpleBricks, HouseSimple and eMoov -  threaten to squeeze profit margins for some traditional agencies which now have higher accommodation and staff costs. 

Moore Stephens says for this reason some traditional operators “struggle to compete with the low-cost fixed-fee model offered by online-only agents in certain residential property categories.”

The accountancy firm adds that portal growth is also undermining the role of estate agents, while corporates such as Countrywide and Connells can allocate substantial budgets to marketing and advertising to increase share.

“Traditional high street estate agents’ profit margins are being squeezed from both sides – from cut price online competitors, to their larger counterparts on the high street – who are forcing them to up their spending or give up the race” warns Mike Finch, restructuring and insolvency partner at Moore Stephens.

“Many areas across the UK are oversaturated with estate agents, and competition is becoming too much for some smaller businesses” he adds.

He concludes that by saying the ‘improve not move’ trend means sales are struggling to climb back to their pre-credit crunch peak and that from 2007 to 2017 there has been a 32 per cent collapse in transactions. 

  • Jon James

    Squeezed by emoov and housesimple don't make me laugh. Another name check for companies that only have a presence on this site. I've been squeezed harder by my six year old.

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    Rightmove will eventually be the main danger for independents.

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    I tend to agree with Ray, although I think it will be Zoopla over Rightmove who will make the foray into the market, as Zoopla feel like they work more for themselves than the agents and although Rightmove has a high costs for us agents, I don't perceive them to "go it alone". I also don't feel the threat from online agencies as in this current market (in the south east at least) they are starting to be found out. I know a few people who have joined PB recently and am surprised, but as they said they are going for something where the only need to list to earn - therein lies the problem and Propertymark should be advising people accordingly, surely its the finest example of Consumers Protection Laws they don't implicitly state that they pay a fee whether it sells or not and therefore breaking the law - just have to wait for the first test case.
    Also, trustpilot reviews are not worth their salt and this also needs to be addressed, as negative reviews to seem to stay up!

  • Phil Hathway

    Call centre agents will have to merge to survive long term, they just aren't making money. I feel sorry for the investors who will get burned.
    We are being let down by the advertising standards authority over their fee saving claims and their hidden bolt on fees that take the clients spend way over £1000 - ALL UP FRONT!!

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