A number of factors have led 19% of estate agents to the verge of bankruptcy according to new research. Many branches see unpaid rent as the straw that breaks the camel's back.
Online competition
A big problem faced by high street estate agents is competition from online counterparts. With websites like Zoopla making finding and viewing properties instant, the need for specialised staff is highly reduced. The reduction in overheads makes running an online only estate agency highly lucrative.
Users are finding they prefer to begin searching at home on an app or website rather than heading to a local branch. With buyers becoming more independent it puts pressure on high street agents to adapt and cater to current demands.
Falling markets
Two of the largest estate agents in the UK added to the worries as Countrywide (the largest agency in the UK) announced pre-tax profits for the first 6 months had fallen from £24.3 million to just £447,000 in the same period for 2017.
Another large chain, Foxtons, recorded a 64% drop in pre tax profits as they fell from £10.5 million to £3.8 million this year. With pressure already on the larger companies, times are even harder for smaller agents.
Rent risks
Estate agents can play a part in the renting of a home if a landlord wishes to have an agent take care of the leg work. However, with firms entering financial unrest due to lower customer demand and increased competition, could this service add to the problem?
Should a number of tenants at a small agency firm enter into arrears, suddenly the situation looks much worse. Many independent estate agents may build their business via selling these tertiary services. This provides landlords with less hassle and the agents valuable income.
With current borrowing trends also rising steeply, tenants in arrears could create a perfect storm of tenant debt leaving themselves at risk and both landlords and estate agents without their money. A vicious cycle that could see tenants facing eviction and agencies at risk of folding.
Resolving arrears
Not paying rent can unsettle a landlord, doing so when going through an estate agency can multiply the problem. Given an estate agency would also need paying, debts may well be chased quicker in order to satisfy both the agency and the landlord.
Companies like AYOM are here to help all businesses, landlords and agencies owed money the chance to continue functioning as they should. No business should be at risk financially due to its own client's not paying.
If you are a landlord or an agency facing difficulty with tenant debt, it is imperative you resolve the issue sooner rather than later. Having a good relationship between tenant and landlord is a must and clearing the air quickly when debt is involved can help rescue a tenancy.
If you require help with meditation, collecting, enforcement or any other legal service you can call AYOM on 0800 130 3357
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