Rayner Personnel: Furlough roll-back will cause cashflow issues for agencies
The government is providing wage support to the property industry to the amount of £122m per month, analysis by estate agency and property services recruiter Rayner Personnel has found.
However, from August, employers will be required to support the cost of furlough in respect of funding employer national insurance (NI) and pension contributions.
From September, an additional 10% will be sought as the government asks employers to pay the 10% difference between the current 80% furlough threshold and a revised 70% government contribution, followed by 60% from October, leading to an end to the scheme in November.
This will affect agencies’ cash flow, particularly as they may still be recovering from a lack of completed deals due to the crisis and lockdown.
Rayner Personnel has looked at the likely cost to the industry as each proposed stage of the furlough scheme’s roll-back is introduced.
According to the Office for National Statistics (ONS), there were approximately 51,000 estate agents working in the UK in 2019, not including thousands of support and head office staff.
On average, an estate agent in the UK earns £28,800 annually according to the ONS, Glassdoor and other resources.
The total salary burden for a UK estate agency PLC could therefore reach £122.4m each month.
Due to the rolling back of the government’s furlough scheme, August could see NI and pension costs kick in at 9% and 3%, respectively.
The average additional cost of this per employee is £216 and £72, at a total of £288.
In September an additional 10% of wages will create a total additional cost per employee £240, with a further rise of the same amount occurring in October.
In November, employees will return to full salary, at a monthly average of £2,400 plus NI and PAYE, a total of £2,688 per employee.
Josh Rayner, CEO of Rayner Personnel, said: “I’d say June and July are looking palatable for agents as they keep many of their staff on furlough, consume their government support funding and bank their completion cheques from their pre-COVID sales pipeline.
“But there’s a warning here in that our research highlights a problem coming down the tracks as the government support starts to dilute.
“As this happens, cashflow will potentially be most vulnerable – a combination of landlords insisting on backdated rent payments, Rightmove and Zoopla support waning and an absence of deal completions from a barren lockdown period – all make for a collision of circumstances that some agencies may not easily cope with come November.”