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Countrywide issues profit warning as estate agents’ shares tumble

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  • 24/11/2016
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Full-year earnings at Countrywide are expected to soften amid a backdrop of economic uncertainty and changes to buy-to-let taxation, at the same time share prices at estate agents also took a battering following the Autumn Statement yesterday.

In an announcement to the London Stock Exchange, Countrywide said changes to Stamp Duty and the EU referendum vote had contributed to “significantly lower” transaction levels compared to a year earlier, meaning it was forced to slash its growth prediction for earnings before interest, tax, depreciation and amortisation (EBITDA).

Transaction volumes for 2016 are now expected to be 6% lower than last year, with Countrywide admitting it was “likely” that the level of market transactions in 2017 will be lower than 2016.

In the mortgage broking division, Countrywide said it has been focusing on retention business, with remortgages completed for 19% of customers so far this year compared to 13% in 2015. Countrywide is aiming to have completed remortgages for 25% of clients by the end of the year.

On the day of Philip Hammond’s Autumn Statement announcement that letting agents would be barred from charging tenants upfront fees, Foxtons Group closed on the FTSE All-Share as the biggest faller, dropping by 10%, while Countrywide shares were hit the hardest on the FTSE 250, down 6.1% with LSL Properties shares also dropping 5.1%.

Firms were bracing themselves for a ban on letting agent fees in the Autumn Statement, as rumours that the Chancellor would make the move arose on Wednesday morning.

AJ Bell investment director Russ Mould, said: “Property services group Countrywide was the FTSE250’s biggest faller in early trading after warning that full-year earnings will be at the lower end of forecasts. This is based on the reduced level of transactions it has seen in the second half of this year while Chancellor Philip Hammond’s plans to ban upfront letting fees now hangs like the Sword of Damocles over the group’s future earnings. Countrywide’s shares were down by more than 14.1% in early trading.”

As yet, no timetable has been given by the government on its implementation of the ban on letting agent fees. Alison Platt, CEO at Countrywide, said the firm would work with the government through the consultation process.

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