Property firms are the most likely businesses in the UK to be in financial distress, with estate and letting agents in the most trouble.
Business restructuring and insolvency specialist Begbies Traynor said yesterday that 16% of all UK businesses – 484,00 by number – are now in “significant distress” as at the end of March.
Executive chairman Ric Traynor said that for the second year running the hardest hit sector was property, with a 13% annual increase in the number of companies in “significant financial stress”.
He said that the total number of property companies affected was 48,182 at the end of the first quarter of this year.
He said: “Within this sector, companies involved in buying, selling and letting took much of the hit with a 16% increase in significant distress to 36,018.”
The numbers are very much higher than those supplied by other sources – for example, Rightmove talks about some 20,000 branch members in total, considerably fewer than the 36,000 agency businesses said to be in possible financial trouble.
Companies House shows around 22,000 businesses registered which call themselves ‘estate agents’. Some 2,415 companies calling themselves ‘estate agents’ were registered last year.
However, companies do vary markedly as to their business descriptions when they register at Companies House. Some do not call themselves ‘estate’ or ‘letting’ agents at all.
Begbies Traynor – which has acted in a number of cases where agents have gone into administration – said yesterday that construction has also suffered in the property sector, with 10% more companies in significant financial distress compared with last year.
Financial services is another sector picked out as seeing increasing levels of significant stress.
Begbies Traynor said that many UK businesses are in limbo, with consumers holding back on big ticket purchases – such as houses.
The full Red Flag report is here:
Number of estate agents in UK rises by over 500 so far this year despite market challenges
How is ‘financial distress’ or ‘in trouble’ measured?
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Like this according to Mr Micawber.
“Annual income twenty pounds; annual expenditure nineteen pounds, nineteen shillings,and six pence, result happiness. Annual income twenty pounds; annual expenditure twenty pounds ought and six, result misery.”
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I think they are possibly cross checking companies house data and seeing if the the companies have a positive or negative figures and if there has been any change from the previous year. Along with dissolved companies.
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That sounds logical. Thank you. The irony is, in this business, one really good month can pull a firm back from the brink. The worry must be the continuing downward trend.
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According to the report, it is largely based on CCJ’s totally £5k or more and/or winding up petitions/voluntary arrangements.
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They monitor any late payments for PAYE and Vat which is always an indicator, also if there is any securities held by any lenders which would indicate loans or overdraft, so if you are in the red and your payments are late then you are on the watch list, CCJ and winding up petitions normally follow which is normally the unsecured creditors.
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Needs to be a slimming down of firms.
Survival of the fittest.
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Certainly been the case for a number of Ewemove franchisees who have been forced to throw in the towel this year .Birmingham and Cardiff gone in recent weeks leaving the second city and the whole of Wales a sheep free zone. Others with a worrying amount of debt being carried in their accounts from year to year
The fact that the founders slipped off the map quickly pocketing millions must stick in their craw
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The faux Tory Government is taxing and regulating the housing market to death. Estate agents and letting agents are at the coal face.
Expect more to follow with knock on implications to related businesses that supply to this sector.
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Agreed, they appear to be setting out to decimate our industry. 30 years of voting for them, never again. Now we know what it felt like to be a miner in the 1980s.
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National and regional agents will be the most vulnerable with high unaffordable central overheads.
Nimbler high service independent agents – now is your time to shine.
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exactly – as mentioned yesterday the big boys are already maxed out on their fees – the better value independents with lower overheads and able to adjust will be well placed.
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Walk down any high street and you can see how many too many estate agents there are.
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