Share prices for both Foxtons and Countrywide took a battering yesterday after Philip Hammond confirmed he is banning lettings agent fees.
The Financial Times says the Chancellor stole a "Labour manifesto pledge" when he announced that "as soon as possible" the government will legislate to stop agents billing renters for simple admin work undertaken at the start of a tenancy.
Estate agents' fees have soared to an average of £337 per tenancy, with charges often made for little more than printing standard forms. The money raises an additional £380m a year for agents, who typically bill landlords at the same time, says The Times.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
But while there may be little sympathy for the companies affected by the change, there is no mistaking the shock of the announcement.
Countrywide shares tumbled to a record low this morning of 167p, says the FT, after falling around five per cent yesterday. Its share price has sunk 19 per cent since Tuesday and is now just a quarter of the peak reached in March 2014.
The drop in was exacerbated by a trading update this morning revealing a fall in house purchases that will see full-year profits come in "at the lower end of expectations", says the BBC.
Foxtons shares ended yesterday down 14 per cent. At lunchtime on Thursday, they were another 2.9 per cent lower at 103p. They're down 42 per cent this year, notes City AM.
The two companies have a big presence in the London market, where lettings fees provide strong revenue. The lettings market in the capital is by far the largest in the country – and both firms have "made a play of [their] strength in the lettings sector" to offset weakness in sales, says Estate Agent Today.
