Rightmove revenues to be hit as it cuts agent charges

Rightmove said on Friday that full-year revenue will take a hit as it has decided to cut agent charges by 75% amid a slowdown in the UK housing market on the back of the coronavirus ourbreak.

The property portal said the speed of the slowdown has been "significant". In particular, it said the number of property transactions failing to complete in recent days and likely changes in tenant behaviour after the announcement of the renters’ protection by the government may put further pressure on estate and lettings agents.

"Although the likely duration of these market conditions is unclear, given this sudden challenge for customers Rightmove has chosen to offer more substantial assistance to support their businesses.

"This follows extensive dialogue we have had with many of them. We also firmly believe this rapid action is in the long term interests of our shareholders."

Rightmove will be contacting all of its agency, new homes and commercial customers to let them know that from April and for the next four months, their invoices will be discounted by 75%. This will supersede the company’s previous offer of deferred payment.

These actions will reduce revenue for the year ended 31 December 2020 by £65m to £75m.

Chief executive officer Peter Brooks-Johnson said: "At Rightmove we are doing everything in our power to rise to the challenges of Covid-19. We have chosen to utilise our position to support our customers at this difficult time."

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "On some levels Rightmove is perfectly placed to ride the coronavirus storm - it’s high margin, capital light, cash generative and debt free. Unfortunately the same cannot be said for its customers.

"Estate agents have been struggling for some time, but a spike in the number of property transactions falling through has clearly got Rightmove worried and it’s taken the decision to sacrifice profits in the short term to help customers keep their heads above water. That’s sensible, but whether it will be enough remains to be seen.

"In the long term a strong balance sheet should mean Rightmove’s well placed to weather a downturn, but if the looming economic slowdown sees a shakeout in estate agency that could have permanent consequences for revenue and profits."