A startling rise in the number of agencies and property management firms in ‘critical’ financial distress is being blamed partly on the Renters Rights Act.
BTG – formerly known as Begbies Traynor – says that as of the end of March this year, 7,719 real estate and property services firms were found to be in ‘critical’ financial distress.
This was a 19.1% rise in just a year.
Analysis of the data also found there were another 79,118 ‘real estate and property services’ businesses in ‘significant’ financial distress in Q1 2026, a year-on-year increase of 15.1%.
Anthony Spencer, BTG’s national managing partner, says: “The Renters Reform Bill has seen private landlords selling up with larger, professional landlords becoming more dominant and despite showing some resilience in the past year the market for sales is now feeling the challenges of uncertainty on interest rates.
“Undoubtedly, this is having an impact on property firms, particularly agents, as sales slow and rental client bases are shrinking.”
The property sub-sectors with the highest numbers of businesses in ‘significant’ financial distress were companies delivering ‘management of real estate on a fee or contract basis’; the ‘buying and selling of own real estate’; and ‘residential property management’.
In general and across the UK, the number of businesses in ‘critical’ financial distress rose by more than a third (36.9%) year-on-year to 62,193 in the first quarter, compared to the same period the year before.
Meanwhile the number of firms in ‘significant’ financial distress increased by 9.6% annually to 634,867.
Julie Palmer, managing partner at BTG, adds:“With interest rates and supply chains at risk of becoming more difficult the ripple effect on the property market can be almost instantaneous.
“It is an area of the economy that relies heavily on perception, confidence and access and affordability of money. The impact of the war in the Middle East may already starting to be felt by this sector.
“Real estate had only just started adapting to or seeing the true impact on distress of increased tax burdens for businesses. But with these challenges now exacerbated, we will inevitably see the emergence of winners and losers across real estate, with a number of firms being pushed towards and over the edge of closure.
“One potential outcome is that larger groups will have the means and the motive to sweep up the distressed property firms, acquiring their workforce, portfolio, tenants and client base in the process.
“However, no company can be completely immune to the economic shocks we are seeing and overcoming the challenges of today may be a bridge too far after years of challenges since the pandemic”
