Number of firms going bust jumps by 16%

Despite a noteworthy increase in house prices last year, the number of estate agents going out of business has shot up, according to a major accountancy firm, Moore Stephens. Residential property prices in the UK rose by 6.7 per cent in 2015, according to the ONS, led by gains in England, at 7.3 per cent, but this was not enough to prevent 185 agents going bust last year, up from 160 in 2014, as local agencies were squeezed out by larger brands and ’no frills’ rivals, such as online players like Housesimple and PurpleBricks. The volume of agencies closing bucks the UK trend of decreasing numbers of insolvencies, with the national rate of business insolvencies across all sectors declining by 9 per cent over the same period from 16,558 to 15,027. Moore Stephens believes that the fixed-fee business model of many online agencies is putting increased pressure on margins for high street agents. At the same time, Moore Stephens says that local firms are losing business to larger chains that tend to have bigger sales and marketing budgets and can break into new local markets by offering greater incentives, such as a zero-commission deal. Mike Finch, Restructuring & Insolvency Partner…