An industry analyst says some agents may find it tough to survive in 2018 if they’re hit by a double whammy - a reduction in sales transactions and, eventually, the long-awaited ban on letting fees levied on tenants.
In the latest analysis of the market in her Property Checklists newsletter, Kate Faulkner looks at transaction data produced for LSL Property Services, the National Association of Estate Agents, the Bank of England, UK Finance and the Royal Institute of Chartered Surveyors.
Faulkner concludes that “currently the numbers aren’t too bad” but warns that sales are likely to take a downturn versus last year as we get closer to Christmas.
She says agents should be able to cope with that downturn in the next two months but warns: “Some may find [it] tougher to survive in 2018, particularly those who both sell and let, as they have the added worry of losing tenant fees at some stage, potentially wiping out current lettings’ profit.”
She then gives a stark message to agents who feel their bottom line may be marginal: “Now would probably be the best time to act for those wishing to sell their business, due to concerns about the impact of the future market and increased costs/lower revenue.”
Faulkner is also concerned about the market itself for buyers and sellers, and warns that the autumn bounce of prices and activity - seen in many years - has been absent this time round and is now unlikely to appear.
“Hold onto your hats!...The question now will be how the media reacts and whether their headlines cause a slowdown/slump to worsen as buyers inevitably hold off this side of Christmas. Having said that, at times like this, since the recession we’ve tended to see poor market headlines spook sellers too, so if this fall in demand is matched by a fall in supply, then we may end up with a year or more of low growth.”
You can see Faulkner’s full analysis here.
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Most agents who will be put out of business by a downturn are unsaleable, especially if they don’t have Lettings books which have themselves gone down in value. We are entering a phase of rapid change on many fronts, tech, regulatory, leglislative and market cycle, one could call it the perfect storm. However, the storm won’t last forever and when the clouds part and the sun comes back out those strong enough to have weathered it will be set fair. So, if you are a committed pro, baton down the hatches and get ready for a bumpy ride. I’m a buyer at the moment, just in case you’re interested and I am pretty open minded, so I’ll consider an outright purchase or other variations, I think there can be strength in numbers right now if you have the right USP’ which I think we do.
Totally agree Simon!
Thanks David 👍
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