Are business rates driving estate agents off the high street?
A quirk of the business rates calculation method heaps pressure on agents
For traditional estate agents with traditional storefronts, it's a challenging time.
The challenge comes primarily from online-only agents like Purple Bricks who, freed from the shackles of expensive overheads, have massively undercut their fees. A ban on tenant fees was another blow to the sector. And thanks to business rates, yet another problem has arisen.
A strange quirk of the business rates scheme means that estate agents are categorised under 'offices' rather than 'retail', and are therefore ineligible for proposed business rates cuts.
Salt in the wound
Two industry bodies have now written a letter to Andrea Leadsom, Business Secretary, to complain about the policy.
The letter cites the remarkable fact that one of their members now pays more in business rates than it makes in profit. It also refers to the fact that 3000 estate agents have disappeared from UK high streets since 2017, while many others are teetering on the edge.
The fact that online agents have no such costs to worry about really rubs salt into the wounds of these agencies.
As Sajid Javid looks at what he can do for the business community in 2020, this is another timely reminder that business rates reform is probably the best place to start.