One in five high-street estate agents at risk of going bust!
Following a surge in online alternatives, one in five high-street estate agents in the UK are at risk of going bust according to a new study by accountancy firm Moore Stephen.
Almost 5,000 high-street estate agents are showing signs of “financial distress”.
The report claims that traditional estate agents are likely to have higher property and staff costs and therefore are struggling to compete with low-cost, fixed fee online estate agents.
The research has also indicated that the growth in property websites has undermined the role of estate agents.
Moore Stephens’ Mike Finch says: “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.
“Many areas across the UK are over-saturated with estate agents, and competition is becoming too much for some smaller businesses.”
This study follows the UK’s two largest high-street estate agents announcing a slump in their profits. Foxtons revenue and profits have dropped in the first half of the year, with the London-focused agent pointing to “unprecedented” economic and political uncertainty impacting the property market. The group said that revenue fell by 15% to £58.5 million in the six months to 30th June, with pre-tax profits falling by 64% from £10.5 million to £3.8 million.
Furthermore, Countrywide – the UK’s biggest listed estate agent – said their pre-tax profits for the six months to June were £447,000 down from £24.3 million in the same period last year.
A separate study by Lendy, which provides property finance and development loans, has shown that applications for new shops have dropped to an eight-year low, amid continued growth of e-commerce.
There were 6,525 applications in England in the year to March – almost half the number in 2008-09 and down by 11% on 2014-15 with Greater Manchester recording the greatest decline in retail planning applications last year. These studies seem to suggest a changing climate of the UK high-street, as more services are moved online.
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