August’s mortgage details mean estate agents earned £241 per *office*

Estate agents typically get about 2% of a house sale, don’t they? Hang on, it’s 1.5% + VAT. (They don’t get to keep the VAT, of course – it’s passed on to the government.)

OK. Now notice that mortgage lending rose by barely anything in August:

Mortgage lending rose by just £143 million last month, a mere two percent of what was advanced in August 2007 and the weakest growth since the series began in April 1993.

Of course, the mortgage won’t be the whole price of the house – but it’ll typically be quite a large slice. Let us, for the purposes of a vague argument, assume that in fact in those mortgages, a full 50% of the house sale price was actually covered by cash (from the sale of the previous property in the chain, say).

That means that estate agents got 1.5% of £286m. In other words, £4.29m, in August.

Not bad, you think? Except that that’s for every estate agent across Britain.

And a 2006 figure tells us…

According to latest statistics from UK Property Shop, publishers of the online National Directory of Estate Agents, the total number of offices of UK estate agents and letting agents now exceeds 17,800. There are over 14,700 offices providing estate agency services with property for sale, 10,000 offices providing letting agency services with property to rent and around 1,100 offices offering student accommodation.

OK, so they’ll have turned their hands to letting, and we’re ignoring commercial property lettings and sales (not that those are anything to cheer about, I hear), and closures since then. But if those figures have stayed anything like static, then the average estate agent in August brought in from house sales a grand total of…


And of course, that’s allowing (generously) for the mortgage being quite a small part of the house sale (50%). Rank it up higher – say, to 90% of the sale price – and you’re getting £133 per office. It hardly covers the bill for the electricity.


  1. The actual figure might not be quite that bad, but it’s still incredibly bleak.

    The total number of mortgages approved in August was 32,000 (5% of the equivalent month last year!). With 17,800 agents out there, that means an average of 1.79 sales per office. With the average sale price of a house now £166,000, that means the average office will have taken in about £4500 (1.5% of £166,000, times 1.79). Still a loss-making enterprise, but not quite at the level where they’ll have to sell the Porsche, yet.

    Of course, the reality of a number of sales that low is that quite a few offices won’t have made a single sale in August. And a lot will depend on the area they are in and the type of property they specialise in. Anyone in an area where house prices are significantly below the national average will be going out of business, fast.

  2. Charles

    Thursday 2 October 2008 at 2:36 pm

    Interesting, Ian. Though here’s the thing. Mortgage lending: up by £143m. Let’s take it those are the new mortgages? Your number: 32,000 approved. That would be an average per mortgage of £4,468, which seems much too low.

    I’m not saying you’re wrong. Just wondering where my numbers have gone wrong, since yours look pretty persuasive. (Of course “average sale price” doesn’t tell us much about the spread of prices… which could have a huge effect. Sell a £1m house and 1.5% looks OK. Sell a £100K house, and it’s £1,500. Hmm, still not so shabby.)

  3. Charles, hope this helps with the calculations

    If you look at the transactions figures provided by HMRC (see link below) you will find the number of deals above £40k for residential property. They come in for August(in thousands and seasonally unadjusted) at Eng 60, Sco 9, Wal 3, NI 1, taking out rounding that is 72,000 for the UK.

    Make an assumption for home many go through estate agents and an assumption on the average house price (anywhere from £170,000 to £200,000), make an assumption for the number of estate agents offices selling houses, make an assumption on the fee, and you should get a rough clue.

    On your figures of 17,800 estate agent offices, that comes in at about 4 per office (probably a bit less as some homes will be sold by auction, see link).

    Say, each sale nets about £2,500 on average and you get a figure a bit south of £10k.

    Quick double check with the RICS figures (see link below) that show the average number of sales per surveyor for the quarter to August at 12.7. Which suggests we are in the right ball park.

    All the assumptions are a bit open to guesswork but I hope this helps

    The relevant links are


    RICS survey:


  4. The reality is of course that the estate agents all went crazy and started doing take overs and opening new offices all over the place, *AND* trying selling on the web. That was never going to work out well was it? And now they’ve been bitten.

  5. What a shame. Maybe they can console themselves by jumping around on the huge piles of money they’ve made during the last ten years.

    Aaaaaaaaand end ill-informed bitterness.

  6. If mortgages have fallen to 2% of their level of a year ago, I’d think your figures are right on the money.

  7. Chas, Not arguing with your basic premise that businesses involved in the property market aren’t exactly busy – but is the bit you’ve missed in your figures that of churn. Lending has increased by £143m, but there will be a substantial amount of re-mortgaging, plus new mortgagees balanced out by those whose mortgage has ceased (yippee for them).

Comments are closed.