Accountancy firm warns one in five high street agents may close
Traditional UK estate agents are struggling to compete with low-cost online rivals, with nearly 5,000 companies displaying signs of "financial distress" and one in five firms in danger of going out of business, according to a report by accountancy firm Moore Stephens. The report follows the drop in profits at Countrywide, which posted £447,000 ($590,000) on pre-tax revenues for H1 2017, compared to £24.3m the previous year, while Foxtons revealed a 15% slump in revenue to £58.5m over six months, with pre-tax profit dropping 64% from £10.5m to £3.8m.

One in five UK estate agents are at risk of going out of business amid a growth in online companies, new research shows.

Almost 5,000 estate agents are showing signs of “financial distress”, said accountancy firm Moore Stephens.

Traditional companies are likely to have higher property and staff costs and are struggling to compete with low-cost, fixed-fee online agents, said the report. The growth in property websites has also undermined the role of estate agents, it suggested.

Mike Finch of Moore Stephens said: “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.”

The study follows a slump in profits announced last week at two of the UK’s biggest estate agents.

Countrywide, the UK’s biggest listed estate agency, said pre-tax profits for the six months to June were £447,000, down from £24.3m in the same period last year.

Revenues and profits at Foxtons also fell in the first half as the London-focused estate agent pointed to “unprecedented” economic and political uncertainty hitting the property market.

The group said revenue fell 15% to £58.5m in the six months to 30 June, with pre-tax profit plummeting 64% from £10.5m to £3.8m.

A separate study has found that planning applications for new shops have fallen 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, said Lendy, which provides property finance and development loans.

Greater Manchester recorded the biggest fall in retail planning applications last year, it said.

Liam Brooke of Lendy added: “The continued softness in the retail property market shows no sign of abating. Retailers are shunning and shutting bricks and mortar shops.

“The government needs to find a way to encourage retailers to give the high streets a face lift.

“Big brands are continuing to shift their focus towards their online services.”