A report published on Saturday by a leading global accountancy firm says 7,000 UK estate agents are showing signs of financial difficulties, created largely fee levels being forced down by online and hybrid competitors, it says.
Moore Stephens, which claims the estate agency has always been a bellwether of the wider economy, says the property industry has been hit by several other factors including a difficult sales market in some areas, lengthening time to sell and reducing volumes.
Latest figures from the Land Registry published last week revealed that the number of homes sold reduced by 7.5% between March and May this year, although it’s a different story in the North where Birmingham, Leeds and Manchester saw increased selling activity during the same period.
But the sales pipeline decline is most obvious among freehold properties, which dropped by 2.4% year on year, the Land Registry says, while new-builds were up by 13% year on year.
“Insolvencies of high street estate agent are increasing as online competitors continue to chip away at their sales,” says Chris Marsden, restructuring partner at Moore Stephens (pictured, left).
The accountancy firm also predicts that letting agents will find it difficult to pass on lost fees to landlords when the tenant fees ban comes in next year.
“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.”
But Moore Stephens says the number of estate agent going bust each year has held steady. Between May 2017 to May this year, 153 became insolvent compared to 150 the year before.