Some agents still financially insecure despite furlough extension

The announcement by the Chancellor of the Exchequer that he was extending the furlough scheme until the end of October appears good news on the surface but leaves some agents’ questions unanswered as to the next few months.

Agencies and other industry listed companies including Foxtons, Purplebricks, Countrywide and OnTheMarket have announced they are using furlough - many others including Haart and Dexters are believed to be using it too.

Rishi Sunak says that after the end of July there will be “flexibility” put into the furlough scheme, with an apparent guarantee that employees will receive 80 per cent of their typical income but with a broad suggestion that employers will be expected to contribute some element of that 80 per cent.

No details are given as to how much, or how that will be calculated. 

There has been broad support for the move from the agency industry.

Dominic Agace, chief executive of Winkworth, says: ”This is a welcome move. It buys employers important time to ensure they make the right decisions for their employees and for the future of their businesses, to avoid exacerbating any negative effects of the lockdown.   The extension makes perfect sense for estate agents, allowing a phased return to work and for momentum to return to the sales market. This could save many jobs which may have been lost without this continued support from the government.”

However, Sunak’s announcement gives little comfort to those self-employed agents who have had difficulty from the start of the Coronavirus crisis in tapping into the various schemes that have been introduced by the government.

For example, the much-vaunted Self Employment Income Support Scheme - not extended and separate to the Coronavirus Job Retention Scheme which runs furlough - has many qualifications and some self-employed agents have informed Estate Agent Today that they are not eligible.

In those cases, and on the advice of accountants and banks, many such agents typically operate as companies and pay the majority of their monthly income as dividends with the rest in PAYE: however, the dividend element is not included in any government financial assistance package announced so far by Sunak. 

In theory the company could furlough its directors, providing the individuals involved did no work other than run the basics of the company such as completing accounts. But at best they would be entitled to 80 per cent of their PAYE income and nothing at all to compensate for lost dividends.

The Federation of Small Businesses has expressed its support for the extension of the furlough system but says it needs details of the contributions that small firms have to make later in the scheme. 

And FSB chairman Mike Cherry adds: “Our five million-strong self-employed community is also seeking reassurances about the measures that will be taken to avoid a cliff edge moment where income support is concerned. 

“Many have benefited from the hugely ambitious income support scheme that was established for them – some have not – but they will all need additional help from this government over the coming months. Policymakers may have to look very closely at additional hardship funds for those that are currently falling through the gaps.”