Businesses across the UK have been battered by uncertainty in recent months, but a new study has shown that almost one in five of the UK’s traditional high street estate agents are at risk of insolvency.
The new research shows that 19 per cent of such agencies have experienced a ‘squeeze’ on their finances in recent months, which would mean that approximately 5,000 of the UK’s 25,560 high street agents are teetering on the brink of financial distress.
A separate industry study suggests that the property market is stagnating, with sales falling significantly in recent months, making matters even worse for the sector.
The latest data from HM Revenue & Customs (HMRC) suggests that, on a non-seasonally adjusted basis, the number of property transactions recorded in July was down by 12,320 – with just 119,820 deals recorded in comparison with the 107,500 noted in June.
Some estate agents have suffered drastic falls in profits, with Foxtons reporting that their revenue in the first quarter (Q1) of 2017 was down by up to 64 per cent, which their Chief Executive, Nic Budden, blamed on “unprecedented economic and political uncertainty.”
Meanwhile, Countrywide – which owns many prominent UK agency groups such as Bairstow Eves and Mann & Co – said that its profits were down by an astonishing 98 per cent in Q1.
Commentators have raised concerns that the rise in popularity of internet-based competitors such as Zoopla and Purple Bricks has dealt a significant blow to high street agents.
In fact, at a time when many of the UK’s prominent agencies are on the brink of insolvency, online property group Rightmove has reported a 10 per cent increase in its profits in the six months to June 2017.
