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Estate agent shares tumble over plans to end up-front fees

Published 23/11/2016

The FTSE 100 closed flat, down 2 points at 6817.71
The FTSE 100 closed flat, down 2 points at 6817.71

Estate agent and home builder shares tumbled on Wednesday, dragging UK stock markets lower, after Chancellor Philip Hammond announced plans to end up-front letting agents' fees but stopped short of scrapping the stamp duty tax.

The FTSE 100 closed flat, down 2 points at 6817.71, weighed down by house builders despite news of multibillion-pound housing plans in Mr Hammond's Autumn Statement.

Barratt Developments fell 9.5p to 477p, Persimmon closed lower by 32p to 1,746p, and Taylor Wimpey shares dropped 2.2p to 149.1p

Connor Campbell, a financial analyst at SpreadEx, said investors were "perhaps disappointed in the lack of stamp duty-reversal," which some have blamed for slowing home sales.

Sterling moves were relatively muted in the wake of the Autumn Statement, rising 0.2% against the dollar to 1.244, and 0.9% against the euro to 1.179.

Away from the blue chip index, estate agents' shares slipped as Mr Hammond said that letting agents in England will no longer be able to charge renters fees, for example when they sign a new tenancy agreement.

Figures suggest this will stop tenants being hit with fees averaging £223 per tenancy.

Foxtons was the worst hit in the sector, closing lower by 18.25p to 104.5p, while Countrywide shares fell 10.7p to 193.9p, and Savills closed lower by 6.5p to 679.5p.

Meanwhile, investors were digesting lower growth forecasts released by the Office for Budget Responsibility (OBR).

Mr Campbell said: "There was little to distract from the bad news this Wednesday. While 2016's growth forecasts were revised to 2.1% from 2%, 2017's estimates have been slashed from 2.2% to 1.4%, with similar cuts to the years that follow.

"Hammond also revealed what has been labelled a 'Brexit black hole' amounting to £122 billion, i.e. the difference between March's OBR deficit forecasts and those produced today, while debt will rise to 90.2% of GDP by 2017/18."

Across Europe, the French Cac 40 and German Dax both closed lower, down 0.4% and 0.5%, respectively.

In oil markets, Brent crude rose by 0.2% to around 49.08 US dollars per barrel (£39.46), as investor optimism over the prospect of an Opec supply deal waned.

A deal to cut or freeze output among members and major producers like Russia could help support oil prices.

On the FTSE 100, shares in United Utilities rose 6.5p to 902p after reporting a 26% drop in half-year pre-tax profits to £158.4 million, amid rising financial costs.

Thomas Cook shares jumped 5.45p to 79p despite posting a fall in full-year profits after being hit by European terror attacks and political instability in Turkey.

Bottom-line pre-tax profits were 47% lower on a like-for-like basis, at £42 million.

Away from the top tier, shares in industrial parts business Brammer soared 70p to 167.5p on news that private equity firm Advent International has reached a deal to buy the group for £221.5 million.

The biggest risers on the FTSE 100 were Anglo American up 29.5p to 1,237p, Compass Group up 29p to 1,355p, BHP Billiton up 29p to 1,363p, and Provident Financial up 56p to 2,990p.

The biggest losers on the FTSE 100 were Fresnillo down 38p to 1,244p, Polymetal International down 21p to 741p, Tesco down 5.3p to 213.4p, and Randgold Resources down 130p to 5685p.

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