The wobbling economy is having a direct impact on the property industry with the number of companies in critical distress doubling year-on-year to 8,018, a significant since the Spring.
Leading insolvency firm Begbie Traynor’s latest Red Flag report also shows that the number of companies facing ‘significant’ financial distress has increased by 31% to 91,088.
The firm has consequently said that the Budget later this month will be ‘crucial’ for businesses across the economy, which “need to see confidence improve”.
The property sectors covered by the report include both residential and commercial property service providers, which are suffering more than other business sectors, the report reveals.#]
Critical point
Julie Palmer, Managing Partner at Begbies Traynor, says: “As the number of businesses in ‘critical’ distress continues to soar and unemployment figures look to be on the rise, boardrooms across the UK need this next budget to release pressure and uncertainty from their financial outlook.
“The uncertainty from buyers in the market and reports of falling prices adds a layer of uncertainty to estate agents, who not only seek clarity for the sake of their businesses but to see confidence rise in their customer base and the property market too.
“In this climate there will be restructuring, just as much as there will be opportunities for larger companies to give the ideas and assets of businesses that perish a second chance through acquisition and rescue.
“This is not only the case for those companies in property and real estate themselves, but also for these companies to support clients from across sectors to sell and acquire the property and assets within this shift to deliver maximum value for all.”
Uncertainty
Andy Thompson, director at property consultancy, Eddisons says: “While the uncertainty in the property market has been clearly having an impact for agents and their clients, there are still opportunities to diversify and grow business through slower and more challenging markets.
“For instance, partnering with an auction provider to offer an additional route to market for suitable homes, particularly ones that have been on the market for a while or where customers need a quick sale, could be a way to drive more business.
“There are plenty of reports around the lack of certainty, confidence and reliability in the property market at present.
“For the right properties, auctions can bring speed, transparency and security of sale that improves confidence from buyers and sellers and gets the market moving for agents.”
Read more about the Red Flag Report.