More than 50,000 construction and “real estate” firms in the UK are in significant financial distress, says an insolvency firm.
Begbies Traynor says they are among the 270,000 companies reporting severe financial challenges in the last quarter of last year – up 17% on the same period in 2014.
The firm says the challenges included expensive County Court Judgements against them, or a marked decrease in sales, working capital or profit – or a marked increase in operating costs.
It does not break down the 50,122 building or “real estate” firms it says are in financial distress, or identify how many might be estate agents.
Begbies Traynor’s Red Flag alert does however say that labour shortages and building materials inflation is plaguing the construction sector.
It claims that the manufacturing sector faces most challenges.
This sector is followed by service companies, consumer businesses and then “construction and real estate” companies.
If Begbies Traynor does go on to identify estate agency firms facing serious financial pressure, that could prove in line with observations that a housing market downturn is not necessarily to do with a crash in house prices, but a ‘crash’ in the number of properties available for sale.
Comments (8)
Transaction volumes have fallen off a cliff during 2015, if fixed costs have to be covered by fewer transactions profits drop disproportionately.
It is at times like this service suppliers need to recognise their paying customers might be hurting. Now is a very good time for suppliers to win hearts and minds.
Are you listening rightmove?
Nope! They don’t have a heart.
Or Greg, those who use the DPS custodial system!
They cannot be including letting agencies, because they have all those deposits to play with!
Not the ARLA ones!
Seriosly?! So no ARLA firm has ever disappeared with the deposits? Yeah, right!
Deposits must be lodged with a custodial scheme or the landlord. Letting Agents are should not be holding any deposits. ARLA or not.