The number of UK estate agents declaring insolvency has jumped by almost a third with nearly 300 businesses going bust in the last year.
The figures underline the gloom around Britain’s property market, with the fewest home sales recorded for more than a decade hitting estate agent income.
According to figures from the Insolvency Service, 286 UK estate agency firms went out of business in the 12 months to 31 July, a 32% increase from the 216 in the previous year.
The highest cost of borrowing for 15 years has hit lettings as well as sales, according to Forvis Mazars, an international tax and advisory firm, which said investors were finding better returns away from buy to let.
Rebecca Dacre, a partner at Forvis Mazars, says: “The high level of estate agents going insolvent shows just how tough the last few years have been for the sector. Higher interest rates have proved to be a significant deterrent to virtually anyone moving up the housing ladder.
“Smaller-scale local firms can find themselves at substantial disadvantage against their larger regional rivals and an increasing number of PE [private equity]-backed consolidators who can invest more marketing spend to attract those instructions that are still coming through.”
UK residential property transactions fell by 12% in the year to 30 June to 861,210, according to HMRC data – the lowest level in more than 10 years.
However, analysis from Foxtons said that the property market was showing signs of positivity despite still “bearing scars caused by the mini-budget” of Liz Truss in September 2022, which led to a sharp rise in interest rates and a collapse in mortgage approvals.
The firm said buyers were returning to the market with greater certainty after a year of stable interest rates and buoyed up by the quarter-point cut this August. Mortgage approvals were rising and the average UK house price has increased by 2.3% over the last 11 months, after a 1.8% decline in the 12 months after the Truss tumult.
If traditional firms are struggling, Britain’s biggest online property portal, RightMove, is meanwhile considering a £6.2bn takeover approach from Rupert Murdoch’s REA group. The deadline for a formal offer is 5pm today.
