Leading high street estate agent Foxtons has been forced to lay off 60 employees (approximately 7% of its total workforce) due to plummeting annual profits. The company brought in a number of new hires last year amid a surge of London-based property activity, prior to a downturn in the latter half of 2014 which agents believe is due to pre-election reticence on the part of buyers.
According to real estate firm W.A. Ellis, house sales in Belgravia, Chelsea, Kensington and Knightsbridge have fallen 50% in January 2015 compared to the same period in 2014. “Whilst at first glance, these figures may sound alarming, it is always the same in the run up to an election, particularly when property and potential taxation surrounding it, has been at the forefront of all parties’ manifestos,” says Richard Barber, director at W.A. Ellis.
“We see the sales market remaining somewhat constrained until at least after the general election and even then we will need some certainty and clarity in the market before we can predict with any level of certainty where volumes are likely to move in the market,” says Foxtons CEO Nic Budden. In other words, they have pretty much no idea what will happen over the next twelve months. But perhaps we shouldn’t expect such insight from an agency which is known for starting its employees off on less than minimum wage and encouraging highly aggressive sales tactic
Foxtons’ fellow agent Countrywide agreed that property sales will continue to appear “sluggish” in the lead-up to the election. However, the lettings market is showing considerable signs of strength; just this week, an apartment in Soho was snapped up in just 40 minutes by a tenant who forked out £10,000 to secure it, sight unseen, from over 200 other viewers.
“The savvy investor is looking to buy to let to increase their portfolio prior to the election, foreseeing that there could well be a boom in the sales market once the uncertainty is over and a government in place for another term,” says W.A. Ellis’s lettings expert Lucy Morton. “The cautious purchaser favours renting rather than buying until the elections are over and they will then make their decision as to whether to continue renting or purchase. The lettings market thrives during uncertain times as it gives greater flexibility.”
The lettings sector’s prosperity is reflected by the healthy sign-up figures at Rentify; over 150,000 landlords have trusted Rentify with their property so far. Perhaps it’s not just the election that is putting people off companies like Foxtons, with their branded Minis and commission-obsessed staff. Maybe the era of the estate agent is simply over.
George Spencer is CEO at Rentify.