Estate agencies face tough times despite overall fall in company insolvencies

A study by KPMG of notices in the London Gazette shows 92 Northern companies collapsed between April and June 2018, compared with 113 in the previous quarter. Tony McDonough reports

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The rise of online estate agents is making life tough for those on the high street


Latest figures show the number of company insolvencies fell sharply in the second quarter of this year – but some high street estate agencies will face a battle for survival.

A study by KPMG of notices in the London Gazette shows that a total of 92 Northern companies went into administration between April and June 2018, compared with 113 in the previous quarter – a fall of 19% – and 108 in the corresponding period in 2017.

National figures also showed a fall in administrations during the second quarter of this year, falling 13% from 347 to 302 companies. However, this represented a modest increase on the 297 administrations seen during the second quarter of 2017.

However, it adds that sectors such as casual dining and high street retail were continuing to face a tough sales environment coupled with increased overheads from the Living Wage and business rates.

Unprecedented challenges

And the report offered a specific warning to high street estate agencies which it says are “presently facing an unprecedented set of challenges”.

David Costley-Wood, restructuring partner at KPMG, explained: “The rise of online-only agencies have combined with falling house prices, a general slowdown in sale activity and a raft of legislative changes, all of which have generated headwinds for the sector.

“I would therefore not be surprised to see operators across this sector struggle over the second half of the year and beyond.”

High street brands

On the wider picture, he added: “The drop in the number of administrations may come as a surprise to many who have followed the tribulations of certain well-known high street brands.

“Of course, we continue to see companies in the casual dining and retail spaces battle hard in the face of changing consumer attitudes towards spending, coupled with increased costs as a result of the living wage and business rates pressures.

“While a number of chains have survived through the implementation of successful CVAs or via pre-pack administrations, inevitably there have been site closures and job losses across many parts of the country. 

Positive picture

“The much-publicised pressures on the construction sector also continue to impact businesses up and down the supply chain, both large and small.

“Overall, however, the latest figures reflect a relatively positive picture for most businesses. For the most part, adopting a long-term cautious approach appears to be paying off, although sector-specific challenges and broader global economic changes will inevitably force some businesses to reconsider their operations and potentially restructure to improve efficiencies.”

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