One in five high-street estate agents in the UK are at risk of going bust following a surge in online alternatives, a new study has found.
Almost 5,000 high-street estate agents are showing signs of “financial distress”, reports accountancy firm Moore Stephens.
One in Five High-Street Estate Agents at Risk of Going Bust
Traditional firms are likely to have higher property and staff costs, and are struggling to compete with low-cost, fixed fee online estate agents, the report claims.
The research also indicates that the growth in property websites has undermined the role of estate agents.
Moore Stephens’ Mike Finch says: “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 by two of the UK’s largest high-street estate agents.
Countrywide – the UK’s biggest listed estate agent – said that pre-tax profits for the six months to June were £447,000 – down from £24.3m in the same period last year.
Revenue and profits at Foxtons also dropped in the first half of the year, as the London-focused agent pointed to “unprecedented” economic and political uncertainty hitting the property market.
The group said that revenue fell by 15% to £58.5m in the six months to 30th June, with pre-tax profits plummeting by 64%, from £10.5m to £3.8m.
A separate study has found that planning applications for new shops have dropped 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, according to Lendy, which provides property finance and development loans.
Greater Manchester recorded the greatest decline in retail planning applications last year, it reports.
Liam Brooke, of the firm, adds: “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.”
Landlords, have you considered using an online estate/letting agent?