Almost ten estate agents a week will go bust this year according to a leading property management firm. Apropos by D.J. Alexander Ltd, one of the UK’s largest family-run property management businesses, has analysed official data and found that 371 (comprising 348 in England and Wales and 23 in Scotland) businesses involved in real estate activities have entered formal insolvency proceedings in the first nine months of 2019 which, if the trend continues, would equate to 498 for the entire year.
If the trend continues in the fourth quarter the figures in England and Wales equate to 464 estate agencies entering insolvency which is the highest annual figure since 2014 when 522 real estate businesses went bust. The Scottish figure is likely to be 30 for the year which, although it is almost double the 2018 figure of 17, is the second lowest annual number for the last decade indicating the sector is in reasonably good health in Scotland.
David Alexander, managing director of apropos by D.J. Alexander Ltd, explained: “These figures highlight the impact that a declining High Street coupled with a changing marketplace is having on the traditional estate agency sector. The problems faced by the High Street are impacting on all businesses regardless of sector as we can see from the recent closure of Thomas Cook, the problems facing Mothercare, and the numerous restaurant chains which have closed their doors over the last year. These are issues of long leases, high rents and rates and declining footfall.”
“The specific issue for the estate agency sector is how to remain relevant in a market that is shifting relentlessly online. Ensuring you offer an appropriate and vital service to your clients is now not just important it is essential. Customers under 40 run their lives through their phones, tablets and computers. This group would never consider going into an estate agents’ office for information and they are the future, so the market must shift to cater for this group.”
David continued: “Most people working in the sector understand the need for an excellent online offering coupled with outstanding personal service. The days when estate agents had an office on every High Street have gone but the need for personal service remains high. Clients still want the meet and greet personal experience but backed up by a powerful, innovative online platform available 24 hours a day to answer their questions and meet their immediate needs.
“The property investment market has changed dramatically over the last few years and letting agents must also change dramatically. They must think smarter and act more efficiently to provide clients with a cost effective, pro-active, legal and financial offering to ensure the customer can access all services in one place. It is clear that the professional, large scale investor is remaining in the market, but the next few years will continue the trend for the smaller ‘amateur’ landlords to exit the market as letting becomes costlier and more complex.”
David concluded: “Astute agents will see these changes as an opportunity to shine. All businesses adapt to the changing needs of the marketplace and estate agency is no different. The pace of change has picked up and we are currently experiencing unprecedented change in the legislative, regulatory and financial structuring of the market. The best will adapt to these changes and should welcome them. All business evolves and changes to meet shifting customer needs and estate agency is no different. The online client is simply using a different method of accessing the housing market, but their demands remain as high, if not higher, than before. It is a different world but one in which the best will excel and, unfortunately, others will fail. As long as agents use the most effective online technology coupled with the best service for landlords and tenants to build trust, fairness and stability then they will survive and thrive.”