For a little while now, the retail industry has found itself collapsing under the pressure from low profits and high business costs. Low consumer confidence and online competition have persistently attacked brick and mortar stores, leaving companies from all sectors vulnerable and grappling for a competitive edge.
Now it seems the spotlight has fallen on estate agent firms, with new research revealing how thousands of companies fell into insolvency last year. The new study, conducted by accountants Moore Stephens, found that 153 estate agency firms went insolvent in the year to May 2018, a small increase on the 148 the year before. This illustrates the hesitancy exercised by consumers concerning the purchase of”big-ticket” items, such as real estate and large investments. A grander effort will need to be made by the industry to shift this sentiment.
At the Credit Protection Association, our debt recovery services encourage our Members to invest in new opportunities and projects. We chase down unpaid invoices and recover residual debt, providing our Members with a greater financial stability. This has encouraged business owners to purchase new technology and equipment for their firm, once again gauging the interest of the consumer.
Last week, shares in Britain’s biggest estate agent, Countrywide Properties, plunged 25 per cent after it issued its fourth profit warning in eight months and called on shareholders to raise fresh funds to cut its debt.
Countrywide, the company behind Hamptons, Bairstow Eves, Taylors and Gascoigne-Pees, has been hit hard by a downturn in the housing market in London and the south-east, a botched revamp of the business and growing competition from new online firms such as Purplebricks.
Moore Stephens said government plans to ban letting fees charged to tenants may narrow the profit margins of some estate agents even more, as fees from tenants currently contribute significantly to the bottom line.
Chris Marsden, restructuring partner at Moore Stephens, said: “Insolvencies of high street estate agents are increasing as online competitors continue to chip away at their sales.
“With the ban on letting fees stated to come into force in 2019, estate agents will struggle to pass those fees on to landlords.”
“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.”