High street and estate agents hit by online companies

GROWING PRESSURES from online rivals has placed the highstreet retail sector and estate agents at risk, new research reveals.

A study published today has revealed one in five estate agents are at threat of going out of business amid a growth in online companies.

Almost 5,000 estate agents are showing signs of “financial distress”, according to an accountancy firm, Moore Stephens.

And a separate study also released today has shown that planning applications for new shops have fallen 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 per cent on 2014/15, said Lendy, which provides property finance and development loans.

The study by Moore Stephens has reported that traditional companies are likely to have higher property and staff costs and are struggling to compete with low-cost, fixed-fee online agents. The growth in property websites has also undermined the role of estate agents, the research said.

Mike Finch, of Moore Stephens, said: “Traditional highstreet 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 at two of the UK’s biggest estate agents. Countrywide, the UK’s biggest listed estate agency, said pre-tax profits for the six months to June were £447,000, down from £24.3m in the same period last year.

Revenues and profits at Foxtons also fell in the first half as the London-focused estate agent pointed to “unprecedented” economic and political uncertainty hitting the property market. The group said revenue fell 15 per cent to £58.5m in the six months to June 30, with pre-tax profit plummeting 64 per cent from £10.5m to £3.8m.