An insolvency firm claims 153 estate agencies have gone bust in the past year with more than 7,000 “showing signs of financial distress.”
The firm, Moore Stephens, names Foxtons (which reported a 15 per cent drop in revenue in the first quarter of this year compared to the same period of 2017) and Countrywide’s tumbling share price (down yet again to under 38p by the end of Friday) as evidence to back up its contention that the UK estate agency sector is in fragile condition.
Moore Stephens says the onward march of online agencies, competing with fewer fixed costs than traditional firms, is worsening the position; likewise the forthcoming ban on letting agents’ fees levied on tenants will make income for many agencies even more marginal.
“Sales volumes appear to be in decline, with the number of property sales in London alone falling 20 per cent from 2014 to 2017 and the number of property sales UK-wide falling one per cent in just the last year” says a statement from the company.
Chris Marsden, restructuring partner at Moore Stephens, says: “Insolvencies of high street estate agent are increasing as online competitors continue to chip away at their sales and undermine commission rates.
“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.
“Estate agents with a traditional model may have to look at whether they can reduce overheads and review their service offering to effectively compete in the current market.”