Any offers?
Few will weep for them, but Britain’s least-loved salesmen are struggling. Now estate agencies themselves could go on the market
IN the not-so-distant days of a frothy property market, estate agents used to joke that there were more of their offices on the high street than houses. But now, the jest is wearing thin. Foxtons, worth more than £1billion four years ago, last week ran up a £2.5million loss for the first half of the year as sales in Central London collapsed.
Days later, Countrywide – which owns Hamptons International as well as 50 smaller brands including Bairstow Eves and Gascoigne-Pees – launched an £140million emergency fundraising in a desperate bid to stay afloat.
Estate agencies themselves may soon be appearing in the For Sale window.
Countrywide made a £206million loss in the first half of this year and auditor PwC has warned there is ‘material uncertainty’ around the firm’s future because its lenders could withdraw credit. Traditional estate agents have hit hard times as the number of house sales exchanged fell by almost 20 per cent in the first half of the year due to stamp duty hikes, Brexit and stagnant prices.
If the slump continues, it could spell disaster for agents that focus on middle-market sales. Traditional high street estate agents also face competition from online rivals such as Purplebricks and Emoov, which offer to sell vendors’ homes for little as a few hundred pounds.
However, these operations also face question marks. Emoov has yet to make a profit and Purplebricks posted losses of £21million for the year to April. The biggest factor depressing the property market, according to experts, is the stamp duty reform introduced in 2014.
Stamp duty of 10 per cent is charged on the purchase of homes valued from £925,001 to £1.5 million and at 12 per cent above that. There is now also a 3 per cent levy on second homes.
But stamp duty revenues fell by almost a third of a billion pounds in the second quarter of this year. The Exchequer’s takings, of just under £2billion, are lower than for the same quarter three years ago.
‘Stamp duty starts to bite between £1 million to £3 million,’ said Trevor Abrahmsohn, founder of estate agent Glentree International. ‘So people just won’t move for a small increase in space. They would rather build a basement, convert the loft or do an extension – and I don’t blame them.’
Toby Whittome, director of Chelsea sales at Jackson-Stops, said house sales in Kensington and Chelsea fell to just 81 in February, compared with 222 in the same month in 2014. He added: ‘Stamp duty is an odd tax, which stifles people’s ability to move.’